For international observers and investors, German corporate governance for a long time has been opaque, if not downright mysterious.
To a large extent, this is due to two peculiarities of the German system. The first one is the country’s two-tier system of corporate management, where a supervisory board of external directors oversees a management board, including the chief executive.
The second uniquely German feature is the country’s mandatory system of co-determination, where up to half of supervisory board members are elected by employees rather than shareholders. Add an enormous volume of codified corporate law, which is constantly modified by court judgment, and the result is a German governance system that lacks the pragmatism and dynamism of English-style case law.