Board of Directors

The Management Board is a central body in stock corporations and other corporate forms. In this article, we will take an in-depth look at the role, duties, composition and challenges of the board.

Introduction

The Executive Board is the management and executive body of a stock corporation (AG) and is responsible for managing the Company in the interests of the shareholders, the employees and the public. In Germany, the role of the Management Board is governed by the German Stock Corporation Act (AktG). Other types of companies, such as foundations, may also have boards of directors.

Tasks and duties of the Board of Directors

Company management

The Executive Board is responsible for the strategic direction and operational management of the Company. It makes decisions on investments, personnel, financing and other essential aspects of the company.

Representation

The Management Board represents the Company externally. He is the face of the company and appears in negotiations with business partners, authorities and the public.

Reporting and accountability

The Executive Board is required to report regularly on the development of business and to account to the Supervisory Board and the shareholders.

Due diligence

The members of the Board of Management are obliged to perform their duties with the due care and diligence of a prudent and conscientious business manager. They must act in the best interests of society.

Composition of the Management Board

As a rule, the Board of Management consists of several members. The exact number and allocation of responsibilities are governed by the Company’s Articles of Association. There is often a chief executive officer (CEO) and other board members for specific areas such as finance (CFO) or human resources (CHRO).

Appointment and dismissal

The members of the Executive Board are appointed by the Supervisory Board. The term of office is limited by law to a maximum of five years; reappointments are possible. The Supervisory Board may also dismiss members of the Board of Management prematurely, for example in the event of breaches of duty.

Liability of the Management Board

Board members may be held personally liable if they violate their duties. This may lead to claims for damages by the Company or third parties.

Challenges and criticism

The Board of Management is often caught between different interests. Shareholders expect high returns, employees secure jobs and good working conditions, and the public expects responsible corporate behavior. Balancing these interests is often a challenge.

Conclusion

The Management Board plays a central role in the management and representation of stock corporations and other forms of business. He bears a high responsibility and must fulfill numerous duties. The members of the Executive Board must always act in the interests of the Company and exercise the due care of a prudent business manager. The role of the Board is complex and requires a high level of expertise, experience and integrity.