News

Press release
Nr. 9 / 02 Berlin, Februar 26, 2002

Code gets German companies into shape for international financial markets

Clear standards for transparency and confidence in German corporations

Set up by the Federal Minister of Justice Prof. Dr. Herta Däubler-Gmelin, the government commission on corporate governance chaired by Dr. Gerhard Cromme will today hand over the German Corporate Governance Code in Berlin.
The commission – made up of experts from many different areas of German business – drew up the code containing recommendations on standards and disclosure duties for listed companies within six months.

The Justice Minister: "I greatly welcome the introduction of a Corporate Governance Code for German companies. It will boost confidence and at the same time prevent corporate crises such as that recently in the United States. The numerous clear rules for the executive and supervisory boards of exchange-listed corporations will enhance transparency for investors and improve the access of these corporations to the international financial markets.
The code is a prime example of self commitment by business and, as a "soft law", will supplement the so-called comply or explain rule in the German government’s Transparency and Disclosure law (Transparenz- und Publizitätsgesetz) which will enter into effect before the end of this legislative period. Under this rule, any company unwilling to comply with the provisions of the code must issue an express declaration to this effect each year and explain their decision to investors and the public."

The chairman of the government commission, Dr. Gerhard Cromme:
With this code we are providing capital market participants with a catalog for evaluating good corporate governance which will allow especially foreign investors to obtain a clear picture of the corporate governance practiced by German corporations. The code provides a clear and concise summary of the principles of good corporate governance in Germany. By introducing this code our aim is to make Germany more attractive to international and national investors so that the stock markets value German corporations in line with their true worth. The code also presents rules for executive and supervisory boards on the disclosure of conflicts of interest and puts forward proposals on the work of the supervisory board, the establishment of committees, transparency in trading in the company’s stock and share ownership by members of the executive or supervisory board. It further addresses the independence of auditors and disclosure to the supervisory board of their relations with the company. These are just some of the numerous recommendations and suggestions set out in the code. The commission will also observe the development of corporate governance in legislation and practice and will review the code at least once a year for the necessity of adaptation."

Justice Minister Prof. Dr. Däubler-Gmelin and the chairman of the government commission Dr. Cromme jointly emphasize:
"The recent corporate crisis in the United States, which has shaken the confidence of the international financial markets, shows only too clearly that corporate governance is not a one-time thing, it requires the constant efforts of legislators, business and all involved in business life to improve our legal framework and the status of the location of our country".

The government commission "Corporate Governance" presenting its findings today originates from the tasks of the government commission of the same name. The Federal Justice Minister appointed the commission on August 24, 2001. Consisting of top managers and experts from the business world, the code commission started work on September 6 and posted an initial draft code on the internet on December 18, 2001 as a basis for broad public discussion. It has drawn up a code of best practice containing standards and disclosure duties required for good corporate governance. Companies not wishing to comply with this code must publish a clear declaration by the executive and supervisory boards to this effect.

The members of the commission are listed in the appendix (Word, 20,5 KB) to this press release.