German co-determination and corporate governance

Seminar paper from the year 2008 in the subject Law - Miscellaneous, grade: B+, The University of Hong Kong (Faculty of Law), course: Corporate Governance and Shareholder Remedies, language: English, abstract: In Germany, co-determination has a long tradition. Beginning in the late 19th century, the German co-determination system has been developed over more than 100 years to become one of the most dominant co-determination systems in the world. Employees co-determination in Germany becomes visible in two different forms: employees participation in works councils (Betriebsrat) at establishment level (betriebliche Mitbestimmung) and labour (employees and trade union representatives) participation in supervisory boards on board level (Unternehmensmitbestimmung). German corporate law distinguishes between the management board (Vorstand/ Geschنftsführung) and the supervisory board (Aufsichtsrat) (two-tier boards system as opposed to the Anglo-American one-tier system). Co-determination on board level refers to the representation of employees on the supervisory board. Depending on the industry, the corporation is operating in and the size of labour force, the supervisory board composes of one third (third part participation) to half (parity participation) of employees representatives. Corporate governance, the regulations for legal and actual distribution of management and supervision tasks between the supervisory board, the management board and the shareholders has lead in many countries to the development of codes since the 1990s. Germany also has drawn up a corporate governance code meanwhile - the German Corporate Governance Code. The code builds together with the Stock Corporation Act and the different co-determination acts the legal framework for corporate governance principles in Germany. It aims to make Germanys corporate governance rules transparent for both national and international investors, thus strengthening confi