#kodexwende

Subject: Please stop the KODEX2019!

CorporateGovernance-Reform

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Dear Federal Minister, Dear Dr. Barley,

last autumn, I appealed to you to initiate a dialogue process for corporate governance reform and, in particular, to question the role of the Government Commission formally and materially. One of my arguments was: More and more experts have the impression that the Commission – and with it the German Corporate Governance Code – has moved ever further away from its noble goals.

The outcome of the consultation on the draft new Code has now impressively confirmed this. By the end of the consultation period on 31 January 2019, more than 100 (!) multi-page opinions had been received from a wide range of business and scientific backgrounds.
And you’ll find that Numerous authors have criticized the draft of the government commission clearly, in some cases fundamentally. Dissatisfaction prevails in particular in the companies and among their management and supervisory boards.
And even if the government commission presents it differently: The fact that most of the companies concerned did not take part in the so-called consultation should not be understood as consent to the draft. On the contrary, this is sad proof that companies have turned their backs on the weakened corporate governance discussion in Germany – preferring instead to make non-binding ‘comply-or-explain’ checkmarks. If the Government Commission were genuinely convinced of its position, it would vote and make the new Code dependent on at least a 2/3 majority of the relevant directors/supervisory board members. This would give the whole Code procedure a constitutional component.

Why the BMJV must act
My comrades-in-arms in the Association of Supervisory Boards in Germany and I are convinced that the Federal Ministry of Justice must not ignore this concentrated resistance from industry – especially as there are justified doubts (repressed and hushed up by the incumbents and the corporate governance industry for understandable reasons) about the legitimacy of the government commission.
Because some representatives of the camp of the government commission have questioned our “relevance” instead of reacting with objective arguments, I would like to mention briefly here: VARD is the sole German representative at the European Confederation of Directors’ Institutes (ecoDa) in Brussels and at the Global Network of Directors Institutes (GNDI), both of which are European and international organisations dedicated to corporate governance. Let me be clear: we also want a code and we are not against a code commission – but both should be worthy of the name.
We therefore call on you – referring to our opinion during the consultation, attached here – to get involved in the reform process and to

– … to refrain from publishing the “reformed” GCGC, which will soon be submitted to you, within the framework of your duty to monitor legality. The fundamental criticism shows that we need a fundamentally new approach – individual changes to the draft are far from sufficient.

– … to delete the word ‘government’, to give the Code Commission a new mandate and to oblige it to make the creation of a ‘self-obligatory’ code dependent on the predominant approval of the supervisory boards and management boards of listed companies. Only in this way will the Code become a “core element of the self-regulation of the German economy”, as it was originally intended and is also propagated by you.

– to oblige the Code Commission to moderate the discussion and development process for a new Code in an unbiased manner and to carry it out transparently, dialogically and without time pressure from start to finish.

The Code in its planned form is half-hearted, unsuccessful (this is shown in particular by the attempt to implement the ‘apply-and-explain’ principle, which is now widespread internationally) and still patronising – there is no ‘one-size-fits-all’ solution for around 700 listed companies in the area of corporate governance either. And no one needs any specific rules for the remuneration of the Board of Management in a code either.
We are convinced that the actions of the so-called ‘Government Commission’ and the code for which it is responsible restrict the fundamental rights of companies and their bodies without justification and are more than questionable from the point of view of the rule of law.

We therefore ask you: Do not allow the Code to be published and instead initiate a public discussion in which you show the courage to put the ‘tried and tested’ (but illegal) to the test. We need a code that is worthy of the name and that helps companies instead of patronising them.

Should you not be able to come to terms with this step, please provide us with a briefing on how we – together with the companies concerned and their executive bodies – can have our position and our concern examined in court. It is unacceptable that the Government Commission should act in a legal vacuum and that the responsible BMJV should not be able to examine its actions.

Yours sincerely Peter
H. Dehnen

This post is also available in deGerman