Traditionally, one and two-tier corporate governance systems have evolved from the corporate law of England and Germany, respectively – under the English model, a company is governed by one corporate body that undertakes both the management and monitoring functions (the one-tier board system), while under the German model, two separate bodies operate independently: the board of directors and the supervisory board (the two-tier board system).
Under the two-tier system, the board of directors and the supervisory board exist side by side.
The board of directors conducts the day-to-day management of the company, while the supervisory board conducts supervisory functions.
The board of directors exercises its rights and performs its duties as an independent body. The board exercises its rights and performs its tasks as a body in connection with all management issues of the company, whereas all board members may represent the company personally.
The supervisory board also acts as an independent body and its members may not be instructed in this capacity by shareholders or by the employer. The supervisory board may inspect company documents; request statements and explanations from members of the board of directors or employees; and inspect the state of the company's assets.
