Corporate governance refers to the various mechanisms and processes through which corporations are controlled and directed.
Companies, or corporations, are generally directed by a director. In cases when one director is not enough to perform all directorial functions, the owners may elect more directors. They form a so called board, which is a corporate body consisting of all the directors. The board is vested with the power to direct and control the company during the period between general meetings.
This is basically the one-tier corporate governance system, in which all powers are held by one single body, called the board.
In the Germanic system, however, not all power is held by the board, but it is divided between two different board.
The first is the boards of directors, which controls the company and provides general direction. There is another board, called supervisory board is responsible for overseeing the operation of the company and approving major business decisions. Both of them are elected by the general meeting.
