Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Chapter 2
Supervisory board
Section 95
Number of members of the supervisory board
The supervisory board shall consist of three (3) members. The by-laws may specify a certain higher number. Where necessary in order to comply with the requirements of the laws governing co-determination rights, the number must be divisible by three. The maximum number of members of the supervisory board shall be as set out below for companies having a share capital
of up to
1,500,000 euros: nine,
of more than
1,500,000 euros: fifteen,
of more than
10,000,000 euros: twenty-one.
The above regulations shall not affect any regulations in derogation herefrom made in the Employee Co-Determination Act (MitbestG) of 4 May 1976 (Federal Law Gazette (Bundesgesetzblatt) I p. 1153), the Act on the Co-Determination by Employees in the Supervisory Boards and Management Boards of Mining Enterprises and Enterprises in the Iron- and Steel-Producing Industry (MontanMitbestG), and the Act Amending the Act on the Co-Determination by Employees in the Supervisory Boards and Management Boards of Mining Enterprises and Enterprises in the Iron- and Steel-Producing Industry (MontanMitbestGErgG) in the clean version published in the Federal Law Gazette Part III, classification number 801-3.
Section 96
Composition of the supervisory board
(1) The supervisory board shall be composed as follows:
In the case of companies to which the Employee Co-Determination Act (MitbestG) applies: of members of the supervisory board representing the stockholders and the employees;
In the case of companies to which the Act on the Co-Determination by Employees in the Supervisory Boards and Management Boards of Mining Enterprises and Enterprises in the Iron- and Steel-Producing Industry (MontanMitbestG) applies: of members of the supervisory board representing the stockholders and the employees and of further members;
In the case of companies to which sections 5 to 13 of the Amending Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestGErgG) apply: of members of the supervisory board representing the stockholders and the employees and of one further member;
In the case of companies to which the Act on One-Third Employee Representation in the Supervisory Board (DrittelbG) applies: of members of the supervisory board representing the stockholders and the employees;
In the case of companies to which the Act on Employee Co-Determination in the Case of a Cross-Border Merger (MgVG) of 21 December 2006 (Federal Law Gazette (Bundesgesetzblatt) I p. 3332) applies: of members of the supervisory board representing the stockholders and the employees;
In the case of any other companies: solely of members of the supervisory board representing the stockholders.
(2) In the case of companies listed on the stock exchange, to which the Employee Co-Determination Act (MitbestG), the Act on the Co-Determination by Employees in the Supervisory Boards and Management Boards of Mining Enterprises and Enterprises in the Iron- and Steel-Producing Industry (MontanMitbestG) or the Amending Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestGErgG) applies, the supervisory board shall be composed of women at a minimum ratio of 30 percent and of men at a minimum ratio of 30 percent. The minimum ratio is to be fulfilled by the supervisory board as a whole. Where, prior to the election, the side of the shareholder representatives or the side of the employee representatives raises an objection with the chairman of the supervisory board, based on a resolution adopted by a majority, against the fulfilment of the ratio by the supervisory board as a whole, the minimum ratio for that election is to be fulfilled separately by the side of the shareholder representatives and by the side of the employee representatives. In all cases, the ratio is to be mathematically rounded up or down in order to achieve full numbers of persons. If, in the case of the ratio being fulfilled by the supervisory board as a whole, the higher ratio of women of one side is reduced subsequently and that side then objects to the fulfilment of the ratio by the supervisory board as a whole, this shall not cause the composition of the respective other side to be invalid. Where an election of members of the supervisory board by the general meeting and their delegation to the supervisory board violates the requirement as to the minimum ratio, this election shall be null and void. Where an election is declared to be null and void for other reasons, the elections performed in the meantime do not violate the requirement as to the minimum ratio in this regard. The acts governing co-determination set out in the first sentence are to be applied to the election of members of the supervisory board representing the employees.
(3) In the case of companies listed on the stock exchange that have resulted from a cross-border merger, whose supervisory or administrative organ consists, in accordance with the Act on Employee Co-Determination in the Case of a Cross-Border Merger (MgVG), of the same number of shareholder representatives and of employee representatives, the ratio of women and men sitting on the supervisory or administrative organ must constitute at least 30 percent. Subsection (2), second, fourth, sixth, and seventh sentences, shall apply mutatis mutandis.
(4) The composition of the supervisory board may be governed by other than the statutory regulations last applied only in cases in which, pursuant to section 97 or pursuant to section 98, the statutory regulations set out in the notice published by the management board or set out in the court decision are to be applied.
Section 97
Publication by notice of the composition of the supervisory board
(1) Where the management board takes the view that the supervisory board is not composed in accordance with the statutory regulations relevant in this regard, it is to give notice of this view, without undue delay, in the company’s publications of record and is to concurrently post such notice by displaying it in any and all of the company’s operations and the group member companies. The notice is to cite the statutory regulations that are relevant in the view taken by the management board. The notice is to indicate that the supervisory board will be constituted in accordance with these regulations unless parties entitled to file a petition pursuant to section 98 (2) refer the matter to the court having jurisdiction pursuant to section 98 (1) within one (1) month of the notice having been published in the Federal Gazette (Bundesanzeiger).
(2) Where the matter has not been referred to the court having jurisdiction pursuant to section 98 (1) within one (1) month of the notice having been published in the Federal Gazette (Bundesanzeiger), the new supervisory board is to be constituted in accordance with the statutory regulations cited in the notice published by the management board. The stipulations of the by-laws regarding the composition of the supervisory board, the number of members of the supervisory board, as well as concerning the election, removal from office, and delegation of members of the supervisory board shall cease to have effect at the closure of the first general meeting convened following expiry of the period for referring the matter to the court, and at the latest six (6) months following expiry of said period, inasmuch as they contradict the statutory regulations that are then to be applied. At the same point in time, the office of the current members of the supervisory board shall expire. A general meeting taking place within the six-month period may adopt, by a simple majority of the votes cast, new stipulations for the by-laws that are to take the stead of the ineffective stipulations of the by-laws.
(3) For as long as court proceedings pursuant to sections 98, 99 are pending, no notice may be published regarding the composition of the supervisory board.
Section 98
Court decision on the composition of the supervisory board
(1) Where it is in dispute or uncertain which statutory regulations are to govern the composition of the supervisory board, exclusively that regional court (Landgericht) shall take a decision on the matter, upon a corresponding petition having been filed, in the judicial district of which the company has its seat.
(2) The following parties are entitled to file such a petition:
1. The management board,
2. Each member of the supervisory board,
3. Each stockholder,
4. The central works council of the company or, where only a single works council exists for the company, the works council,
5. The central committee, or corporate council, representing the executive staff of the company or, where only a single council representing the executive staff exists for the company, the council representing the executive staff,
6. The central works council of some other enterprise, the employees of which themselves vote, pursuant to the statutory regulations the application of which is in dispute or uncertain, to elect members of the company’s supervisory board, or who vote through delegates, or, where only a single works council exists in the other enterprise, the works council,
7. The central committee representing the executive staff, or the corporate council representing the executive staff, of some other enterprise, the employees of which themselves vote, pursuant to the statutory regulations the application of which is in dispute or uncertain, to elect members of the company’s supervisory board, or who vote through delegates, or, where only a council representing the executive staff exists in the other enterprise, the council representing the executive staff,
8. At least one tenth or one hundred of the employees who themselves vote, pursuant to the statutory regulations the application of which is in dispute or uncertain, to elect members of the company’s supervisory board, or who vote through delegates,
9. Umbrella organisations of the unions that would have a nomination right pursuant to the statutory regulations the application of which is in dispute or uncertain,
10. Unions that would have a nomination right pursuant to the statutory regulations the application of which is in dispute or uncertain.
Where the application of the Employee Co-Determination Act (MitbestG) or the application of regulations of the Employee Co-Determination Act is in dispute or uncertain, then besides the parties entitled to file a petition pursuant to the first sentence, one tenth, in each case, of the employees designated in section 3 (1) no. 1 of the Employee Co-Determination Act having voting rights or of the executives having voting rights in the sense of the Employee Co-Determination Act shall also be entitled to file a petition.
(3) Subsections (1) and (2) shall apply mutatis mutandis if it is in dispute whether or not the auditor of the annual accounts has correctly assessed the ratio of the turnover that is relevant pursuant to section 3 or section 16 of the Amending Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestGErgG).
(4) Where the composition of the supervisory board does not correspond to the decision taken by the court, the new supervisory board is to be constituted in accordance with the statutory regulations set out in the decision. Section 97 (2) shall apply mutatis mutandis subject to the proviso that the period of six (6) months is to commence running upon the ruling having become final and conclusive.
Section 99
Procedure
(1) Unless stipulated otherwise in subsections (2) to (5), the procedure shall be governed by the Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction (FamFG).
(2) The regional court (Landgericht) is to give notice of the petition in the company’s publications of record. The management board and each member of the supervisory board as well as the works councils, councils representing the executive staff, umbrella organisations, and unions that are entitled to file a petition pursuant to section 98 (2) shall be heard.
(3) The regional court (Landgericht) shall issue its decision by way of a court order setting out the reasons for such decision. A complaint may be lodged against the decision taken by the regional court. Such complaint may be based solely on a violation of the law; section 72 (1), second sentence, and section 74 subsections (2) and (3) of the Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction (FamFG) as well as section 547 of the Code of Civil Procedure (ZPO) shall apply mutatis mutandis. The complaint may be lodged only by filing a brief on appeal signed by a lawyer. Where this serves to ensure uniform adjudication, the Land government may transfer the decision regarding the complaint, by an ordinance having the force of law for the judicial districts of several higher regional courts (Oberlandesgerichte), to one of the higher regional courts or to the highest Land court (Oberstes Landesgericht). The Land government may transfer the corresponding authorisation to the Land department of justice.
(4) The court is to serve its decision to the petitioner and to the company. Further, it is to give notice of same, without providing the reasoning, in the company’s publications of record. Any party entitled to file a petition pursuant to section 98 (2) may lodge a complaint. The period within which a complaint must be lodged shall commence running upon the decision being published by notice in the Federal Gazette (Bundesanzeiger); however, it shall not commence running for the petitioner and the company prior to the decision having been served to them.
(5) The decision shall enter into force only once it becomes final and conclusive. It shall take effect for and against all parties. The management board is to submit the final and conclusive decision to the Commercial Register without undue delay.
(6) The costs may be imposed, as a whole or in part, on the petitioner where this is equitable. The parties involved shall not be reimbursed for their costs.
Section 100
Personal pre-requisites to be fulfilled by members of the supervisory board
(1) Solely a natural person having legal capacity without any restrictions may be a member of the supervisory board. A person who, as a person under custodianship as concerns matters of his property, is subject wholly or in part to a reservation of consent (section 1903 of the Civil Code (BGB)), is prohibited from being a member of the supervisory board.
(2) No-one may be a member of the supervisory board who
1. Is already a member of the supervisory boards of ten (10) trading companies obligated by law to form a supervisory board;
2. Is a legal representative of an enterprise controlled by the company;
3. Is a legal representative of some other share capital company, the supervisory board of which counts a member of the management board of the company among its members; or
4. Was a member of the management board of the same company listed on the stock exchange in the course of the past two (2) years unless he is elected upon having been nominated by stockholders holding more than 25 percent of the voting rights in the company.
A number of up to five (5) of the seats on the supervisory board shall not be included in computing the maximum number pursuant to the first sentence, no. 1, that a legal representative (in the case of a sole trader: the business owner) of the controlling enterprise of a group of enterprises will hold in the trading companies forming part of the group that are under obligation to form a supervisory board. The memberships in supervisory boards in the sense of no. 1, in which the member in question has been elected chairman, are to be counted double in establishing the maximum number pursuant to the first sentence, no. 1.
(3) The other personal pre-requisites to be fulfilled by the members of the supervisory board representing the employees as well as the further members are governed by the Employee Co-Determination Act (MitbestG), the Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestG), the Amending Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestGErgG), the Act on One-Third Employee Representation in the Supervisory Board (DrittelbG), and the Act on Employee Co-Determination in the Case of a Cross-Border Merger (MgVG).
(4) The by-laws may demand the fulfilment of personal pre-requisites only by those members of the supervisory board who are elected by the general meeting without the latter being bound by nominations, or who are delegated to the supervisory board by reason of the by-laws.
(5) In the case of companies that are publicly traded in the sense of section 264d of the Commercial Code (HGB), which are credit institutions as defined by the Capital Requirements Regulation (CRR) in the sense of section 1 (3d), first sentence, of the Banking Act (KWG), to the exception of the institutions named in section 2 (1) nos. 1 and 2 of the Banking Act, or which are insurance undertakings in the sense of Article 2 paragraph 1 of Council Directive 91/674/EEC of 19 December 1991 on the annual account and consolidated accounts of insurance undertakings (OJ L 374 of 31 December 1991, p. 7), last amended by Directive 2006/46/EC (OJ L 224 of 16 August 2006, p. 1), at least one member of the supervisory board must have expertise in the fields of accounting or auditing; the members of the supervisory board as a whole must be familiar with the sector in which the company pursues its activities.
Section 101
Appointment of members to the supervisory board
(1) The members of the supervisory board shall be elected by the general meeting unless they are to be delegated to the supervisory board or are to be elected as members of the supervisory board representing the employees pursuant to the Employee Co-Determination Act (MitbestG), the Amending Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestGErgG), the Act on One-Third Employee Representation in the Supervisory Board (DrittelbG), or the Act on Employee Co-Determination in the Case of a Cross-Border Merger (MgVG). The general meeting shall be bound by nominations exclusively pursuant to sections 6 and 8 of the Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestG).
(2) Solely the by-laws may establish a right to delegate members to the supervisory board, and this only for certain stockholders or for the respective holders of certain shares of stock. The delegation right may be conferred upon the holders of certain shares of stock only if the shares of stock are registered in the names of their holders and their transfer is bound to the consent of the company. The shares of stock held by the parties entitled to delegate representatives shall not be deemed a special class of stock. The delegation rights may be conferred, in the aggregate, for at most a third of the number of members of the supervisory board representing the stockholders as stipulated by the law or the by-laws.
(3) No deputies of members of the supervisory board may be appointed. However, a substitute member may be appointed for each member of the supervisory board, to the exception of the further member elected at the nomination of the remaining members of the supervisory board pursuant to the Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestG) or the Amending Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestGErgG); this substitute member shall become a member of the supervisory board if the member of the supervisory board ceases to hold such office prior to expiry of his term of office. The substitute member may be appointed only concurrently with the member of the supervisory board. The regulations applying to the member of the supervisory board are to be applied to the appointment of the substitute member, as well as to cases in which the appointment is invalid or an action is brought to set it aside as null and void.
Section 102
Term of office of the supervisory board members
(1) The members of the supervisory board may not be appointed for a term of office extending beyond the time at which that general meeting is closed that is to adopt a resolution regarding the approval of the management’s actions taken in the fourth financial year following the commencement of their term of office and regarding the discharge to be granted to the management. The financial year in which the term of office begins shall not be counted.
(2) The office of a substitute member shall cease to exist at the latest upon expiry of the term of office of the supervisory board member who has ceased to hold office.
Section 103
Removal from office of supervisory board members
(1) Members of the supervisory board who have been elected by the general meeting without the latter having been bound by nominations may be removed from office prior to expiry of their term. The resolution adopted shall require a majority comprising at least three quarters of the votes cast. The by-laws may stipulate a greater majority ratio and may impose further requirements.
(2) A member of the supervisory board delegated to the supervisory board by reason of the by-laws may be removed from office at any point in time by the party entitled to delegate representatives and may be replaced by a different member. Where the pre-requisites of the by-laws for the right to delegate representatives have ceased to exist, the general meeting may remove the delegated member from office by a simple majority of the votes cast.
(3) Upon the supervisory board filing a corresponding petition, the court is to remove a member of the supervisory board from office if grave cause is given in the person of that member. The supervisory board shall adopt a resolution by simple majority on whether or not to file such a petition. Where the member of the supervisory board has been delegated to same on the basis of the by-laws, also those stockholders may file such petition whose shares of stock, in the aggregate, are at least equivalent to one tenth of the share capital, or to a stake of one million euros. A complaint may permissibly be lodged against the decision taken.
(4) For the removal from office of members of the supervisory board who were neither elected by the general meeting without being bound by a nomination, nor delegated to the supervisory board on the basis of the by-laws, the following shall apply besides subsection (3): the Employee Co-Determination Act (MitbestG), the Act on the Co-Determination by Employees in the Supervisory Boards and Management Boards of Mining Enterprises and Enterprises in the Iron- and Steel-Producing Industry (MontanMitbestG), the Amending Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestGErgG), the Act on One-Third Employee Representation in the Supervisory Board (DrittelbG), the Act on the Involvement of Employees in a European Company (SEBG), and the Act on Employee Co-Determination in the Case of a Cross-Border Merger (MgVG).
(5) The regulations applying to the removal from office of the member of the supervisory board for whom the substitute member has been appointed shall apply to the removal from office of that substitute member.
Section 104
Appointment by the court
(1) Where the supervisory board is not comprised of the number of members required for it to have a quorum, the court is to appoint the additional members until the full number is obtained, upon a corresponding petition being filed by any of the following: the management board, by a member of the supervisory board, or by a stockholder. The management board is under obligation to file such petition without undue delay unless it is to be expected that the additional appointment will be made in due time prior to the next meeting of the supervisory board. Where the supervisory board is to be comprised also of members representing the employees, the following parties may also file the petition:
1. The central works council of the company or, where only a single works council exists for the company, the works council, as well as, in the case of the company being the controlling enterprise of a group of enterprises, the group works council,
2. The central committee, or corporate council, representing the executive staff of the company or, where only a single council representing the executive staff exists for the company, the council representing the executive staff, as well as, in the case of the company being the controlling enterprise of a group of enterprises, the group council representing the executive staff,
3. The central works council of some other enterprise, the employees of which vote themselves in the election, or vote through delegates, or, where only a single works council exists in the other enterprise, the works council,
4. The central committee representing the executive staff, or the corporate council representing the executive staff, of some other enterprise, the employees of which vote themselves or vote through delegates, or, where only a council representing the executive staff exists in the other enterprise, the council representing the executive staff,
5. At least one tenth or one hundred of the employees who vote themselves in the election or who vote through delegates,
6. Umbrella organisations of the unions that have the right to nominate members of the supervisory board representing the employees,
7. Unions that have the right to nominate members of the supervisory board representing the employees.
Where, pursuant to the Employee Co-Determination Act (MitbestG), the supervisory board is to consist also of members representing the employees, then besides the parties entitled to file a petition pursuant to the third sentence, one tenth, in each case, of the employees designated in section 3 (1) no. 1 of the Employee Co-Determination Act having voting rights or of the executives in the sense of the Employee Co-Determination Act having voting rights shall be entitled to file a petition. A complaint may permissibly be lodged against the decision taken.
(2) Where, for a period longer than three (3) months, the supervisory board is comprised of fewer members than the number stipulated by the law or in the by-laws, the court is to appoint the additional members, upon a corresponding petition having been filed, until the full number is obtained. In urgent cases, the court is to appoint the additional members to the supervisory board also prior to expiry of said period upon a corresponding petition having been filed. The entitlement to file a petition shall be governed by subsection (1). A complaint may permissibly be lodged against the decision taken.
(3) Subsection (2) shall be applied to a supervisory board in which employees have a co-determination right pursuant to the Employee Co-Determination Act (MitbestG), the Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestG), or the Amending Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestGErgG), subject to the proviso
1. That the court may not make an appointment to the supervisory board to obtain the full number as regards the further member who is elected, pursuant to the Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestG) or the Amending Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestGErgG), upon being nominated by the other members of the supervisory board,
2. That any case will invariably be an urgent case if the supervisory board is not comprised of all members – to the exception of the further member set out in no. 1 – of which it is to be comprised by law or in accordance with the by-laws.
(4) Where the supervisory board is to include members of the supervisory board representing the employees as well, the court is to appoint additional members to same to obtain the full number such that the ratio relevant for its composition is obtained. Where additional members are appointed to the supervisory board in order to obtain the full number required for it to have a quorum, this shall apply only insofar as the number of members of the supervisory board required for it to so have a quorum enables this ratio to be maintained. Where a member of the supervisory board is to be replaced by a member who, according to the law or the by-laws, must meet particular pre-requisites as regards his person, the court-appointed member of the supervisory board must also meet these pre-requisites. Where a member of the supervisory board is to be replaced by a member regarding the election of whom an umbrella organisation of the unions, a union, or the works councils would have nomination rights, the court should consider the nominations made by these bodies unless overriding interests of the company or of the general public contravene the appointment of the person so nominated; the same shall apply, if the member of the supervisory board were to be elected by delegates, to common nominations submitted by the works councils of the enterprises in which delegates are to be elected.
(5) In the case of companies listed on the stock exchange, to which the Employee Co-Determination Act (MitbestG), the Act on the Co-Determination by Employees in the Supervisory Boards and Management Boards of Mining Enterprises and Enterprises in the Iron- and Steel-Producing Industry (MontanMitbestG), or the Amending Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestGErgG) applies, the appointment by the court of additional members to the supervisory board is to be performed subject to the stipulations of section 96 (2), first to fifth sentences.
(6) The office of the court-appointed member of the supervisory board shall cease to exist in any case as soon as the deficiency is remedied.
(7) The court-appointed member of the supervisory board shall be entitled to reimbursement for his reasonable cash expenditures and, if remuneration is granted to the members of the company’s supervisory board, to remuneration for his activities. Upon the member of the supervisory board filing the corresponding petition, the court shall establish the expenditures and the remuneration. A complaint may permissibly be lodged against the decision taken; filing a complaint on points of law is precluded. Based on the decision taken, compulsory enforcement may be pursued in accordance with the Code of Civil Procedure (ZPO).
Section 105
Incompatibility of membership in the management board and in the supervisory board
(1) A member of the supervisory board may not concurrently be a member of the management board, nor may he permanently be a deputy of members of the management board, an officer of the company vested with full commercial power of attorney (Prokurist), or an agent of the company empowered to bind the company in all aspects of its business (Handlungsbevollmächtigter).
(2) The supervisory board may appoint individual of its members as deputies of lacking members of the management board or of members of same who are prevented from serving as such, but may do so solely for a period of time limited in advance, and at a maximum for one (1) year. A re-appointment or extension of the term of office is permissible if this does not result in the term of office exceeding a total duration of one (1) year. During their term of office as deputies of members of the management board, the members of the supervisory board may not pursue any activities as a member of the supervisory board. The prohibition of competition set out in section 88 does not apply to them.
Section 106
Notice of modifications of the supervisory board’s composition
The management board is to file with the Commercial Register, without undue delay following any change, a list of the members of the supervisory board showing the members’ family names, first names, profession exercised, and places of residence; the court is to publish a notice pursuant to section 10 of the Commercial Code (HGB) indicating that the list has been filed with the Commercial Register.
Section 107
Internal organisation of the supervisory board
(1) In accordance with the more detailed provisions of the by-laws, the supervisory board is to elect from among its midst a chairman and at least one (1) deputy chairman. The management board is to file an application for entry in the Commercial Register of the persons elected. The deputy chairman shall have the rights and obligations of the chairman only when the latter is prevented from serving as such.
(2) Minutes are to be prepared of the supervisory board meetings that the chairman is to sign. The minutes are to state the place and date of the meeting, the persons in attendance, the business set out in the agenda, the essential content of the deliberations, and the resolutions adopted by the supervisory board. A violation of the first sentence or second sentence will not cause the resolution to be invalid. Upon a corresponding demand being made, a copy of the minutes of the meeting is to be physically handed over to each member of the supervisory board.
(3) The supervisory board may appoint from among its midst one or several committees, particularly for purposes of making preparations for its deliberations and resolutions, or in order to monitor the implementation of its resolutions. In particular, it may appoint an audit committee that is to monitor the accounting process, the effectiveness of the internal control system, the risk management system, and the internal accounting control system as well as the auditing of financial statements, and in this regard particularly the selection and the independence of the auditor of the annual accounts and the services additionally provided by the auditor of the annual accounts. The audit committee may make recommendations or suggestions on how to warrant the integrity of the accounting process. The adoption of resolutions on the tasks pursuant to subsection (1), first sentence, section 59 (3), section 77 (2), first sentence, section 84 (1), first and third sentences, subsections (2) and (3), first sentence, section 87 subsections (1) and (2), first and second sentences, section 111 (3), section 171, section 314 subsections (2) and (3), as well as resolutions to the effect that certain types of business transactions may only be implemented with the consent of the supervisory board may not be transferred to a committee instead of the supervisory board. Reports on the work done by the committees are to be submitted to the supervisory board on a regular basis.
(4) Where the supervisory board of a company that is publicly traded in the sense of section 264d of the Commercial Code (HGB), that is a credit institution as defined by the Capital Requirements Regulation (CRR) in the sense of section 1 (3d), first sentence, of the Banking Act (KWG), to the exception of the institutions named in section 2 (1) nos. 1 and 2 of the Banking Act, or that is an insurance undertaking in the sense of Article 2 paragraph 1 of the Directive 91/674/EEA, institutes an audit committee in the sense of subsection (3), second sentence, then the pre-requisites set out in section 100 (5) must be met.
Section 108
Resolutions adopted by the supervisory board
(1) The supervisory board shall take its decisions by way of adopting resolutions.
(2) Unless this has been stipulated by law, the quorum of the supervisory board may be determined in the by-laws. Where the quorum has been stipulated neither by law nor in the by-laws, the supervisory board shall have a quorum only if at least one half of the members of which it must be comprised overall, according to the law or the by-laws, participates in the adoption of the resolution. In any case, at least three (3) members must participate in adopting the resolution. The supervisory board shall not be prevented from having a quorum by the fact that fewer members belong to the supervisory board than the number specified by law or in the by-laws even if the ratio relevant to its composition has not been maintained.
(3) Absent members of the supervisory board may participate in the adoption of resolutions by the supervisory board and its committees by having written absentee votes delivered. The written absentee votes may be delivered by other members of the supervisory board. They may also be physically handed over by persons who are not members of the supervisory board if such persons are entitled to participate in the meeting pursuant to section 109 (3).
(4) The supervisory board and its committees may permissibly adopt resolutions in writing, by telephone, or by other comparable forms, subject to a more detailed provision in the by-laws or in the rules of procedure of the supervisory board, only if no member objects to proceeding in this manner.
Section 109
Participation at meetings of the supervisory board and its committees
(1) No persons should attend the meetings of the supervisory board and its committees if they are members neither of the supervisory board nor of the management board. Experts and persons delegated for purposes of furnishing information may be involved in the consultations on individual matters.
(2) Members of the supervisory board who are not members of a committee may attend its meetings unless determined otherwise by the chairman of the supervisory board.
(3) The by-laws may allow persons who are not members of the supervisory board to attend the meetings of the supervisory board and its committees instead of those members of the supervisory board who are unable to attend, provided the latter have granted authority to them in text form.
(4) Any statutory regulations in derogation herefrom shall remain unaffected.
Section 110
Convening the supervisory board
(1) Each member of the supervisory board or of the management board may demand, citing the purpose and the reasons for his demand, that the chairman of the supervisory board convene a meeting of the supervisory board without undue delay. The meeting must take place within two (2) weeks of having been convened.
(2) Should this demand not be complied with, the member of the supervisory board or of the management board may himself convene a meeting of the supervisory board, including a notice of the facts and circumstances and an agenda with the invitation convening the supervisory board.
(3) The supervisory board must come together for two (2) meetings per calendar half year. The supervisory board of companies not listed on the stock exchange may resolve that it is to come together for one (1) meeting per calendar half year.
Section 111
Tasks and rights of the supervisory board
(1) The supervisory board is to supervise the management board.
(2) The supervisory board may inspect and audit the books and records of the company as well as its assets, particularly the company’s cash and the inventory of securities and goods. It may also instruct individual members to perform these tasks, or may commission special experts for certain tasks. The supervisory board shall instruct the auditor of the annual accounts to audit the annual accounts and consolidated financial statements pursuant to section 290 of the Commercial Code (HGB). Moreover, the supervisory board may instruct that an external audit be performed of the substance of the non-financial statement or of the separate non-financial report (section 289b of the Commercial Code (HGB)), or of the consolidated non-financial statement or the separate consolidated non-financial report (section 315b of the Commercial Code (HGB)).
(3) The supervisory board is to convene a general meeting where this is required by the company’s best interests. It shall suffice for the corresponding resolution to be adopted by a simple majority.
(4) The measures to be taken by the management may not be transferred to the supervisory board. However, it is to be determined in the by-laws or by the supervisory board that certain types of business transactions may only be implemented with the supervisory board’s consent. Where the supervisory board refuses to grant such consent, the management board may demand that the general meeting adopt a resolution concerning such consent. The resolution by which the general meeting grants its consent shall require a majority of at least three quarters of the votes cast. The by-laws may neither stipulate a greater majority ratio, nor may they impose further requirements.
(5) The supervisory board of companies that are listed on the stock exchange or that are subject to co-determination rights shall stipulate target values for the percentage of women sitting on the supervisory board and the management board. Where the percentage of women is lower than 30 percent at the time the target values are stipulated, the target values stipulated may not be lower than the percentage respectively attained at that time. Concurrently, periods are to be set within which the target values are to be attained. In each case, the periods may not be longer than five years. Inasmuch as a quota pursuant to section 96 (2) already applies to the supervisory board, the stipulations shall be made solely for the management board.
(6) The members of the supervisory board may not have others perform the tasks incumbent on them.
Section 112
Representation of the company vis-à-vis members of the management board
The supervisory board shall represent the company vis-à-vis members of the management board in court and outside of court. Section 78 (2), second sentence, shall apply mutatis mutandis.
Section 113
Remuneration of the members of the supervisory board
(1) The members of the supervisory board may be granted remuneration for their activities. This may be specified in the by-laws or granted by the general meeting. The remuneration should be appropriate in relation to the tasks of the members of the supervisory board and to the company’s economic situation. Where the remuneration is specified in the by-laws, the general meeting may adopt a resolution by a simple majority of the votes cast to amend the by-laws such that the remuneration is reduced.
(2) Solely the general meeting may grant remuneration to the members of the first supervisory board for their activities. The corresponding resolution may be adopted only in that general meeting that resolves regarding the approval of the actions taken by the members of the first supervisory board and regarding the discharge to be granted to them.
(3) Where a participation in the company’s profit for the year is granted to the members of the supervisory board, that participation shall be calculated based on the net income, reduced by an amount of at least four (4) percent of the contributions paid in for the minimum issue price of the shares of stock. Any contravening stipulations are null and void.
Section 114
Contracts with members of the supervisory board
(1) Where a member of the supervisory board enters into obligation vis-à-vis the company, outside of his activities in the supervisory board, under a service agreement that does not establish an employment relationship, or under a contract for work and services directed at the achievement of a particular result, to perform activities of a higher nature, then the contract’s entry into force shall be contingent on the supervisory board’s consent.
(2) Where, based on such contract, the company grants remuneration to the member of the supervisory board without the supervisory board having consented to the contract, the member of the supervisory board is to repay the remuneration unless the supervisory board authorises the contract. Any claim the member of the supervisory board may have vis-à-vis the company to having the enrichment achieved by the activities performed surrendered to him shall remain unaffected; however, this claim may not be set off from the claim to restitution.
Section 115
Loans granted to members of the supervisory board
(1) The company may grant loans to the members of its supervisory board only subject to the consent of the supervisory board. A controlling company may grant loans to the members of the supervisory board of a controlled enterprise only subject to the consent of the controlling company’s supervisory board; a controlled company may grant loans to the members of the supervisory board of the controlling enterprise only subject to the consent of the supervisory board of the controlling enterprise. Such consent may be granted only for specific loan transactions, or types of loan transactions, and may not be adopted longer than three (3) months in advance of same. The resolution as to the consent is to provide for the interest accruing on the loan and the redemption of same. Where the member of the supervisory board pursues a trading activity as a sole trader, no such consent shall be required if the loan is granted in order to enable the payment for goods that the company delivers for the sole trader’s trading business.
(2) Subsection (1) shall apply also to loans granted to spouses, partners in a civil union, or a minor child of a member of the supervisory board and to loans granted to a third party acting for the account of these persons or for the account of a member of the supervisory board.
(3) Where a member of the supervisory board concurrently is a legal representative of some other legal entity or partner of a commercial partnership, the company may grant a loan to such legal entity or commercial partnership only with the consent of the supervisory board; subsection (1), third and fourth sentences, shall apply mutatis mutandis. This shall not apply if the legal entity or the commercial partnership is affiliated with the company or if the loan is granted in order to enable the payment for goods that the company delivers to the legal entity or the commercial partnership.
(4) Where a loan is granted in contravention of the stipulations of subsections (1) to (3), the loan is to be repaid immediately, irrespective of any agreements to the contrary, unless the supervisory board retroactively grants its consent.
(5) Where the company is a credit institution or financial services provider to which section 15 of the Banking Act (KWG) is to be applied, the regulations of the Banking Act shall apply instead of subsections (1) to (4).
Section 116
Duty of the members of the supervisory board to exercise skill and care, liability and responsibilities
Section 93 shall apply mutatis mutandis to the duty of the members of the supervisory board to exercise skill and care as well as to their liability and responsibilities, to the exception of subsection (2), third sentence concerning the duty of the members of the management board to exercise skill and care as well as their liability and responsibilities. In particular, the members of the supervisory board shall be under an obligation of secrecy regarding any confidential reports they may have received as well as their confidential deliberations. Particularly, they shall be under obligation to provide compensation should they have established remuneration that is inappropriate (section 87 subsection (1)).
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