The biggest misconceptions in connection with the new German Corporate Governance Code

The announcement of the German Corporate Governance Code as amended on May 26, 2010 was published in the electronic Federal Gazette on July 02, 2010 to great press acclaim. Whereas the Code previously contained only non-binding recommendations for action, it is now gradually approaching mandatory legal requirements; since July 02, 2010, listed stock corporations have not only had to explain but also justify whether and why they deviate from the recommendations contained in the Code.

The subject of this article, however, is not the question of the formal binding nature of the regulations contained therein (especially since in recent years it has been noted that numerous recommendations have in any case been successively cast into mandatory law by the legislature and compliance with the Code is also recommended for non-listed companies), but rather the discussion of content: For example, the Code contains recommendations of the highest explosive nature; the proportion of women and international representatives on German supervisory boards is to be increased; the management board is to pay attention to diversity when filling management positions in the company and ensure this in particular by striving for greater consideration of women there as well; the Annual General Meeting is to be able to decide on management board salaries.

These topics have recently been the subject of considerable discussion; the fact that numerous misinterpretations and errors can be observed here must be taken into account, as must the question of how to deal with them.

The biggest misconceptions in connection with the new German Corporate Governance Code

Will there be a women's quota on the Supervisory Board in the future?

The new provisions of the Code were strikingly paraphrased in public with the words that in the future a statutory quota regulation of the content more women on the supervisory board was imminent. Indeed, the new version of the Code is of particular relevance in the area of the composition of the Supervisory Board.