- published: 23 Jun 2016
- views: 6
A supervisory board or supervisory committee, often called board of directors, is a group of individuals chosen by the stockholders of a company to promote their interests through the governance of the company and to hire and supervise the executive directors and CEO.
Corporate governance varies between countries, especially regarding the board system. There are countries that have a one-tier board system (like the U.S.) and there are others that have a two-tier board system (like Germany).
In a one-tier board, all directors (both executive directors as well as non-executive directors) form one board, called the board of directors.
In a two-tier board there is an executive board (all executive directors) and a separate supervisory board (all non-executive directors).
German corporation law Aktiengesetz requires all Aktiengesellschaften to have two boards: a management board called Vorstand and a supervisory board called Aufsichtsrat.
In Germany the supervisory board of large corporations is composed of 20 members, 10 of which are elected by the shareholders, the other 10 being employee representatives. The supervisory board oversees and appoints the members of the management board and must approve major business decisions.
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