The German Corporate Governance Code.
The Code was first published in February 2002. The third edition of the Code was adopted on 21 May 2003. It is reviewed at least once a year by the government commission of the German Corporate Governance Code
Listed Companies on government recognized stock exchanges. They make a Declaration of Compliance annually.
The key sections of the Code are:
- Shareholders and the General Meeting
- Cooperation between Management Board and Supervisory Board
- Management Board
- Supervisory Board
- Transparency
- Reporting and Audit of the Annual Financial Statements
The Code makes a distinction between compulsory 'recommendations' and non-compulsory 'suggestions'. While listed companies are not legally obliged to comply with these recommendations, they must disclose any non-compliance and explain it ('comply or explain'). The suggestions may be deviated from without disclosure.
Under the German system the Board is two-tiered. The Management Board is responsible for managing the company, whereas the Supervisory Board consists of non-management members including employee and shareholder representatives and appoints, supervises, and advises the members of the Management Board.
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