Which system is better?
It’s a matter of fact, that in stock company the management leads the business and not the shareholders itself. In Germany, we have a Management Board (MB) and a Supervisory Board (SB).
The SB should monitor the MB, to anticipate that the MB doesn’t act in the interest of the shareholders and creditors. For Example, in the form of inadequate salary payment, inadequate redundancy payments and nepotism.
In the unitary-board system of the UK aren’t exist a SB, but there are so- called Executive directors which operates beside the Non-executive directors. The Executive directors have the same function like the SB in the German stock company.
The dual board system is prescribed by law for German stock corporations.
The Management Board (MB) is appropriate for managing the enterprise. Its members are jointly accountable for the management of the concern. The Chairman of the MB coordinates the work of the MB.
The Supervisory Board (SB) appoints, supervises and advises the member of the MB and is directly involved in decisions of fundamental importance to the company.
The Members of the SB are chosen by the shareholders at the General Meeting. In enterprises having more than 500 or 2000 employees in Germany, employees are also represented in the SB. In practice, the dual-board system is also established in other continental European countries.
The unitary-board system, which exists in the UK, has only one organ, the board...
Where is the COMI?
One of the performances of cross-border insolvency is that debtors may seek to open proceedings in a state having insolvency legislation more favourable to their particular circumstances. This is labelled as “forum shopping”. The Regulation attempts to stop forum shopping by requiring that the main proceeding be opened in the member state where the debtor’s “centre of main interests” (COMI) is situated.
According to Art. 3 EU Insolvency Regulation, the international Courts of the particular Member state are responsible for the opening of an insolvency proceeding, where the debtor’s centre of main interest is. The European Court of Justice (ECJ) assumes that this is basically there, where „the debtor’s registered office “is. It’s where the administration of its interests "on a regular basis“is and it must be „therefore ascertainable by third parties."
Inhaltsverzeichnis (Table of Contents)
- Where is the COMI?
- Critically discuss whether the German two-tier board system is better for shareholder-accountability than the UK unitary board system.
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
The objective of this essay is to determine the Centre of Main Interest (COMI) of ThyssenKrupp AG, a company operating in both Germany and the UK, and to critically compare the German two-tier board system with the UK unitary board system in terms of shareholder accountability.
- Determination of COMI based on legal criteria and company activities.
- Analysis of the German two-tier board system (Management Board and Supervisory Board).
- Analysis of the UK unitary board system (Executive and Non-executive Directors).
- Comparative assessment of shareholder accountability in both systems.
- Application of legal frameworks and corporate governance codes to the case study.
Zusammenfassung der Kapitel (Chapter Summaries)
Where is the COMI?: This section investigates the location of ThyssenKrupp AG's Centre of Main Interest (COMI) in accordance with EU insolvency regulations. It examines the criteria for determining COMI, emphasizing the importance of the debtor's administration, regular business operations, and the accessibility of this information to third parties. While ThyssenKrupp AG generates 64% of its turnover outside of Germany, the essay argues that its COMI remains in Germany due to its central administration and organizational structure being based there. The significant presence of its numerous associated companies abroad, particularly in the UK (ranking 5th in turnover), does not override this central administrative focus within Germany. The historical development of the company further supports this conclusion. The essay stresses that the determination of COMI is based on the conditions at the time of application and not on historical activity.
Critically discuss whether the German two tier board system is better for shareholder- accountability than the UK unitary board system.: This section provides a comparative analysis of the German two-tier board system (Management Board and Supervisory Board) and the UK unitary board system (Executive and Non-executive Directors) regarding shareholder accountability. The German system emphasizes a separation of management and supervision, with the Supervisory Board overseeing the Management Board's actions to protect shareholder and creditor interests. The UK system, conversely, combines these functions within a single board, albeit with a distinction between executive and non-executive directors. The essay highlights the legal mandate for the dual-board system in Germany, including employee representation on the Supervisory Board under certain conditions. It contrasts this with the UK system's reliance on shareholder elections and the limited direct influence shareholders have on board composition, except in extreme cases of misconduct or poor performance. The essay implies a comparison of the relative strengths and weaknesses of each system in ensuring accountability to shareholders.
Schlüsselwörter (Keywords)
Centre of Main Interest (COMI), EU Insolvency Regulation, ThyssenKrupp AG, Corporate Governance, Two-tier Board System, Unitary Board System, Shareholder Accountability, Management Board, Supervisory Board, Executive Directors, Non-executive Directors, German Corporate Governance Code.
Frequently Asked Questions: A Comprehensive Language Preview
What is the main topic of this language preview?
This preview covers a comparative analysis of the German two-tier board system and the UK unitary board system in relation to shareholder accountability, using ThyssenKrupp AG as a case study to determine its Centre of Main Interest (COMI).
What are the key themes explored in the preview?
The key themes include the determination of the Centre of Main Interest (COMI) under EU insolvency regulations, a critical comparison of the German and UK board systems, analysis of shareholder accountability within each system, and application of relevant legal frameworks and corporate governance codes.
What is the objective of the essay this preview summarizes?
The essay aims to identify the COMI of ThyssenKrupp AG and critically evaluate which board system (German two-tier or UK unitary) better serves shareholder accountability.
How is the COMI of ThyssenKrupp AG determined?
The preview analyzes the location of ThyssenKrupp AG's COMI based on criteria such as the location of its central administration, regular business operations, and the accessibility of this information to third parties. Despite a significant portion of its turnover being generated outside Germany, the essay argues that its COMI remains in Germany due to its central administrative structure being based there.
What are the key differences between the German two-tier and UK unitary board systems?
The German two-tier system separates management (Management Board) and supervision (Supervisory Board), emphasizing a clear division of responsibilities. The UK unitary system combines these functions within a single board, differentiating between executive and non-executive directors. The German system often includes employee representation on the Supervisory Board, while the UK system relies more heavily on shareholder elections for board composition.
Which board system is argued to be better for shareholder accountability?
The preview presents a comparative analysis of both systems' strengths and weaknesses regarding shareholder accountability, but does not explicitly conclude which system is definitively "better." It highlights the legal mandates and mechanisms for accountability within each system.
What legal frameworks are relevant to this analysis?
The analysis draws upon EU insolvency regulations (relevant to determining COMI) and relevant corporate governance codes from both Germany and the UK.
What specific aspects of shareholder accountability are considered?
The analysis considers the mechanisms by which shareholders can influence and hold the respective boards accountable for their actions and performance, including legal frameworks, board composition, and the separation/combination of management and supervisory functions.
What is the role of ThyssenKrupp AG in this analysis?
ThyssenKrupp AG serves as a case study to illustrate the practical application of concepts related to COMI determination and the comparative analysis of corporate governance structures.
What are the key words associated with this analysis?
Key words include Centre of Main Interest (COMI), EU Insolvency Regulation, ThyssenKrupp AG, Corporate Governance, Two-tier Board System, Unitary Board System, Shareholder Accountability, Management Board, Supervisory Board, Executive Directors, Non-executive Directors, and German Corporate Governance Code.
- Quote paper
- Susanne Eck (Author), 2009, Which system is better? One-tier or two-tier-board system? Where is the COMI of ThyssenKrupp AG, Munich, GRIN Verlag, https://www.grin.com/document/141906
