German Corporate Governance Code
D. Supervisory Board procedures
I. Rules of Procedure | |
Recommendation: | |
D.1 | The Supervisory Board shall adopt its own rules of procedure and shall publish these on the company’s website. |
II. Cooperation within the Supervisory Board and with the Management Board | |
1. General requirements | |
Principle 13 | The Management Board and the Supervisory Board cooperate on a trust basis to the benefit of the enterprise. Good corporate governance requires an open dialogue between the Management Board and Supervisory Board, as well as between the members of these individual Boards. Comprehensive observance of confidentiality is of paramount importance in this regard. |
2. Supervisory Board committees | |
Principle 14 | The establishment of committees generally supports the effectiveness of the Supervisory Board’s work for larger companies. An audit committee is to be established. |
Recommendations: | |
D.2 | Depending on the specific circumstances of the enterprise and the number of Supervisory Board members, the Supervisory Board shall form committees of members with relevant specialist expertise. The respective committee members and the committee chairs shall be provided in the Corporate Governance Statement. |
Principle 15 | At least one member of the Audit Committee must have expertise in the field of accounting and at least one other member of the audit committee must have expertise in the field of auditing. |
Recommendations: | |
D.3 | The expertise in the field of accounting shall consist of special knowledge and experience in the application of accounting principles and internal control and risk management systems, and the expertise in the field of auditing shall consist of special knowledge and experience in the auditing of financial statements. Accounting and auditing also include sustainability reporting and its audit and assurance. The chairman of the audit committee shall have appropriate expertise in at least one of the two areas. The corporate governance statement shall name the relevant members of the audit committee and provide details of their expertise in the areas mentioned. The Chair of the Supervisory Board shall not chair the Audit Committee. |
D.4 | The Supervisory Board shall form a Nomination Committee, composed exclusively of shareholder representatives, which names suitable candidates to the Supervisory Board for its proposals to the General Meeting. |
3. Provision of information | |
Principle 16 | The Management Board is responsible for keeping the Supervisory Board informed. Nevertheless, the Supervisory Board must itself ensure that it obtains sufficient information. The Management Board informs the Supervisory Board regularly, without delay and comprehensively about all issues that are relevant to the enterprise, in particular regarding strategy, planning, business development, the risk situation, risk management and compliance. The Management Board addresses departures in the current business development from its existing projections and agreed targets, indicating the reasons for any such departures. The Supervisory Board may at any time require the Management Board to provide additional information. |
Principle 17 | The Management Board Chair or Spokesperson informs the Supervisory Board Chair without undue delay of major events that are of material importance for the assessment of the enterprise’s status and performance, and for the management of the enterprise. The Supervisory Board Chair subsequently has to inform the Supervisory Board and, if required, convenes an extraordinary Supervisory Board meeting. |
Recommendation: | |
D.5 | Between meetings, the Supervisory Board Chair shall be in regular contact with the Management Board – in particular, the Management Board Chair or Spokesperson, in order to discuss with them issues of strategy, business development, the risk situation, risk management and compliance of the enterprise. |
4. Meetings and adoption of resolutions | |
Recommendations: | |
D.6 | The Supervisory Board shall also meet on a regular basis without the Management Board. |
D.7 | It shall be noted in the report of the Supervisory Board how many meetings of the Supervisory Board, and of the committees were held in person or as video or telephone conferences and how many meetings of the Supervisory Board and the committees the individual members attended in each case. |
III. Cooperation with the external auditors | |
Principle 18 | The external auditors support the Supervisory Board and – where applicable – the Audit Committee in monitoring the management, particularly in relation to the review of the accounting and the monitoring of the accounting-related control and risk management systems. The external auditors’ audit opinion informs the capital market about the compliance of financial reporting with generally accepted accounting principles. |
Recommendations: | |
D.8 | The Supervisory Board, or the Audit Committee, shall arrange for the external auditors to inform it, without undue delay, about all findings and issues of importance for its tasks which come to the knowledge of the external auditors during the performance of the audit. |
D.9 | The Supervisory Board, or the Audit Committee, shall arrange for the external auditors to inform it and note in the audit report if, during the performance of the audit, the external auditors identify any facts that indicate an inaccuracy in the Declaration of Compliance regarding the recommendations of the Code issued by the Management Board and Supervisory Board. |
D.10 | The Audit Committee shall discuss with the auditor the audit risk assessment, the audit strategy and audit planning, and the audit results. The chairman of the audit committee shall regularly discuss the progress of the audit with the auditor and report thereon to the committee. The Audit Committee shall consult with the external auditors on a regular basis without the Management Board. |
IV. Training and professional development | |
Principle 19 | The members of the Supervisory Board take responsibility for undertaking any training or professional development measures necessary to fulfil their duties. |
Recommendation: | |
D.11 | The company shall support Supervisory Board members sufficiently upon their appointment and during training and professional development measures, and shall disclose such measures in the report of the Supervisory Board. |
V. Self-assessment | |
Recommendation: | |
D.12 | The Supervisory Board shall assess, at regular intervals, how effective the Supervisory Board as a whole and its committees fulfil their tasks. The Supervisory Board shall report in the Corporate Governance Statement if (and how) the self-assessment was conducted. |