News from Pohlmann & Company


German Corporate Governance Code: Code reform 2019 adopted

As announced by the Commission, Regierungskommission Deutscher Corporate Governance Kodex, a new version of the German Corporate Governance Code (“Code”) was adopted on May 9, 2019.

Both its draft version of November 6, 2018 and the new Code are characterized not only by numerous changes in content, but also by a completely new structure and system.

Compared with the old Code of February 7, 2017, the new Code contains five key changes:

1. Introduction of 25 Principles

In addition to the already known recommendations (which are identified in the text by the use of the word “shall” (soll), combined with the principle of “comply or explain”) and suggestions (whose non-compliance does not need to be disclosed; these are identified by the term “should” (sollte)), the new category of principles is now introduced. The new Code contains 25 principles, most of which, however, were already contained in the old Code. According to the new Code, the principles should “reflect essential legal requirements for responsible corporate management and serve to inform investors and other stakeholders”. Examples are: The management board’s concern for compliance with statutory provisions (Principle 5) and the supervisory board’s task of appointing and dismissing the management board (Principle 6).

2. Recommendations on the Remuneration of the Management Board

As expected, the Code contains extensive recommendations for determining the remuneration system for the management board and the specific total remuneration of the its members. Among other things, it is recommended that “[…] the maximum remuneration in comparison to the employees […] can be explained to the public” and that “[…] the long-term variable remuneration […] should be granted predominantly in shares of the company”. However, the Code does not contain any further recommendations or suggestions regarding the new remuneration report pursuant to Section 162 AktG-E (so-called Vergütungsbericht) as this new provision itself will contain extensive requirements for the disclosure of remuneration and benefits to management board members. Accordingly, the previous model tables have also been discontinued.

3. Definition of the Independence of Shareholder Representatives in the Supervisory Board

The new version of the Code recommends that more than half of the shareholder representatives should be independent of the company and the management board. In this respect, the new Code also introduced a catalogue of indicators regarding the lack of independence of shareholder representatives on the supervisory board. As soon as an indicator is fulfilled, the relevant supervisory board member is no longer considered independent. However, the company has the option of considering a member to be independent in good faith, i.e., for good reasons, even though a catalogue indicator is triggered. This circumstance must then, however, be disclosed in the corporate governance statement.

4. Independence of Supervisory Board Members from a Controlling Shareholder

The new Code also recommends that an appropriate number of supervisory board members should be independent of a controlling shareholder. If a supervisory board has up to six members, at least one shareholder representative and – in case a supervisory board has at least seven members – two shareholder representatives shall be independent from a controlling shareholder.

5. Limitation of the Number of Supervisory Board Mandates

The old Code repeats the statutory obligation of the members of the supervisory board to devote the necessary time to the performance of their duties. This determination will now be continued as a principle. In addition, the new Code of 2019 now recommends a concrete restriction to up to five supervisory board mandates. In addition, members of the management boards of listed companies should not hold more than two supervisory board mandates. The chairmanship of a supervisory board mandate always counts double.


The new Code will not enter into force until it has been published in the federal gazette (Bundesanzeiger) by the Federal Ministry of Justice and Consumer Protection. However, it will take some time before the new Code comes into force, as the submission for publication of the Code by the ministry has been postponed. The reason for this is the implementation of the second Shareholders’ Rights Directive in German law (SRD II); any changes and adjustments to the German Stock Corporation Act (Aktiengesetz) that will result after SRD II has come into force shall be reflected in the Code.

Until the new Code is published in the Federal Gazette and comes into effect, the version of the Code dated February 7, 2017 will remain valid. (here to the Code 2017). You can find the Code of 2019 here. You will also find the press release of the Commission, Regierungskommission Deutscher Corporate Governance Kodex here as well as an annotated version with justifications here.