Aufsichtsrat

Aufsichtsrat is the supervisory board in the German two-tier corporate governance system, primarily in Aktiengesellschaften (AG) and certain partnerships. It does not manage day-to-day business; that task belongs to the Vorstand (management board). The Aufsichtsrat monitors and advises the Vorstand, supervises its conduct of business, and approves or vetoes major corporate decisions. It also represents the interests of shareholders and, in many companies, employees.

Composition and elections: Members are elected by the shareholders’ meeting, while in companies subject to co-determination a portion of seats is filled by elected employee representatives. The exact size and representation depend on company law, size and sector. The board elects a chair (Vorsitzender) and often a deputy, who chairs meetings and represents the body externally.

Responsibilities and powers: The Aufsichtsrat appoints and can dismiss members of the Vorstand; it supervises the management’s performance, approves the annual financial statements and budgets, and oversees risk management, internal control and compliance. It approves strategic decisions with long-term impact and may demand information and meetings as needed. In large companies, the board may rely on committees for specialized work.

Committees and practice: Common committees include a Prüfungsausschuss (audit committee) focused on financial reporting, internal audit and risk; other committees cover nominations and remuneration. The body operates under duties of loyalty and independence, with rules on conflicts of interest and confidentiality.

Legal framework: The Aufsichtsrat is established under the German Aktiengesetz (AktG) and, for large companies, reflects co-determination laws (Mitbestimmung) that affect representation. Terms are typically four years, with re-election possible.