In Germany, ‘co-determination’ has a long tradition. Beginning in the late 19th century, the German co-determination system has been developed over more than 100 years to become one of the most dominant co-determination systems in the world.
Employees’ co-determination in Germany becomes visible in two different forms: employees’ participation in ‘works councils’ (‘Betriebsrat’) at establishment level (‘betriebliche Mitbestimmung’) and labour (employees and trade union representatives) participation in ‘supervisory boards’ on board level (‘Unternehmensmitbestimmung’).
German corporate law distinguishes between the ‘management board’ (‘Vorstand/ Geschäftsführung‘) and the ‘supervisory board’ (‘Aufsichtsrat‘) (‘two-tier boards system’ as opposed to the Anglo-American ‘one-tier system’). Co-determination on board level refers to the representation of employees on the supervisory board. Depending on the industry, the corporation is operating in and the size of labour force, the supervisory board composes of one third (‘third part participation’) to half (‘parity participation’) of employees’ representatives.
‘Corporate governance’, the regulations for legal and actual distribution of management and supervision tasks between the supervisory board, the management board and the shareholders has lead in many countries to the development of codes since the 1990s. Germany also has drawn up a corporate governance code meanwhile – the ‘German Corporate Governance Code’. The code builds together with the ‘Stock Corporation Act’ and the different co-determination acts the legal framework for corporate governance principles in Germany. It aims to make Germany’s corporate governance rules transparent for both national and international investors, thus strengthening confidence in the management of German corporations. The code addresses with its ‘recommendation’ and ‘suggestions’ to all major criticisms from the international community against German corporate governance, for instance the inadequate focus on shareholder interests and the two-tier system of management board and supervisory board.
In between time the ‘German Corporate Governance Code’ has achieved a high level of acceptance; in particular in the DAX companies, who set the trend in corporate governance in Germany.
Inhaltsverzeichnis (Table of Contents)
- Abstract of research
- Definition of terms related to 'co-determination' and 'corporate governance'
- 'Co-determination' (Mitbestimmung)
- 'Works Constitution' (Betriebsverfassung)
- 'Works Council' (Betriebsrat)
- 'Supervisory board' (Aufsichtsrat)
- Historical development of ‘co-determination' in Germany
- Legal framework of 'co-determination' and 'corporate governance' in Germany
- 'Two-Tier Board System' in German corporations
- 'Co-determination' in Germany
- ‘Corporate Governance' in Germany
- Résumé
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This research paper examines the intricate relationship between German co-determination and corporate governance. The paper aims to explore the historical evolution, legal framework, and practical implications of co-determination in German companies. It analyzes the unique "two-tier board system" and its impact on corporate decision-making, particularly in the context of shareholder interests and corporate governance principles.
- Historical development of co-determination in Germany
- Legal framework of co-determination and corporate governance
- Impact of co-determination on corporate governance practices
- The "two-tier board system" and its influence on decision-making
- Comparison of German corporate governance with other models
Zusammenfassung der Kapitel (Chapter Summaries)
The first chapter defines the key terms related to co-determination and corporate governance, providing a foundational understanding of the subject matter. It examines the historical evolution of co-determination in Germany, highlighting its development over more than 100 years. This chapter also delves into the legal framework that governs co-determination and corporate governance in Germany, exploring the relevant legislation and regulations.
The following chapters examine the "two-tier board system" in German corporations, highlighting the roles and responsibilities of the management board and the supervisory board. The paper then explores the specifics of co-determination in Germany, analyzing the different forms of employee participation at various levels within companies. This includes an examination of the "works council" and its functions, as well as the representation of employees on the supervisory board. Finally, the paper analyzes corporate governance in Germany, examining the principles and practices that shape decision-making in German corporations. It explores the "German Corporate Governance Code" and its impact on the country's corporate governance landscape.
Schlüsselwörter (Keywords)
This research paper focuses on the keywords co-determination, corporate governance, Germany, two-tier board system, supervisory board, management board, works council, Betriebsrat, Aufsichtsrat, Vorstand, German Corporate Governance Code, and employee participation.
- Quote paper
- Diplom-Wirtschaftsjurist (FH) Marc Oliver Cleiss (Author), 2008, German co-determination and corporate governance, Munich, GRIN Verlag, https://www.grin.com/document/130334
