Corporate governance: directors' duties, financial reporting and liability – remarks from a German perspective

Abstract

Introduction The impossible is happening in Germany these days. The management board of Siemens, the jewel in the crown of the German economy, is preparing compensation claims against former management and supervisory board members of the company and thereby supplementing the criminal law investigations which the Munich public prosecutor has instigated against these former executives. That is very embarrassing for those involved! These events are shocking for two reasons: firstly, because management board or supervisory board members have so far hardly ever been made liable in Germany (The sarcastic comment of the former chairman of Deutsche Bank, Hermann Josef Abs comes to mind: ‘It is easier to catch a pig by its slippery tail than to make a supervisory board liable.’); and secondly, these proceedings involve Siemens, an icon of the German economy. The former chairman of the supervisory board Heinrich von Pierer was, up to a few days ago, chairman of the Innovation Council, which advises Federal Chancellor Merkel on research strategies of economic significance. From the point of view of company law, we can here discern the effects of corporate governance and the way it has continued to work better in Germany. And the events at Siemens will certainly significantly increase the already wide acceptance of corporate governance and its mechanisms. In my view, there will soon be a breakthrough in Germany (including a psychological breakthrough) and the regulatory discipline of corporate governance will meet with general approval.