Control and Transparency in Corporate Affairs Law of 1998
OECD Guidelines for Multinational Enterprises of 2000
German Corporate Governance Code of 2002
Federal Guideline on Corruption Prevention in Federal Administration of 2004
Freedom of Information Act of 2006
Corruption Register
The German Control and Transparency in Corporate Affairs Law of 1998 (KonTraG) makes it irrelevant whether a company’s section or decision makers had previous knowledge of damaging affairs. Even the possibility to take notice can lead to liability in the case of damages.
In addition, decision makers, as the principle liable figures, are required by law to provide reliable external experts or proceedings that enable an effective risk control in the event that these are not internally possible (i.e. lack of resources) or sufficient.
Management is responsible for safeguarding against risks and the board of directors for the quality inspection of the risk management system.
Even a frivolous or negligent breach of management responsibilities can lead to criminal and / or civil liability.
Amongst others, KonTraG expanded Article 91 of the Stock Corporation Act (AktG) with the following: “The board of directors is responsible for setting sufficient standards, in particular the installment of a monitoring system enabling the early disclosure of developments that could endanger a company’s future”.
The Organisation for Economic Co-operation and Development (OECD) intends to implement ethically responsible management practices worldwide with the help of its Guidelines for Multinational Enterprises of 2000. In addition to a commitment to human rights and the adherence to national laws, standards for fighting corruption are included. Amongst others the implementation of a management control system is postulated, which works against bribery and corruption. The breach of these guidelines does not result in sanctions.
The German Corporate Governance Code of 2002 aims at making Germany’s corporate governance rules transparent for both national and international investors, thus strengthening confidence in the management of German corporations. The Code categorizes the factors of good management in three qualitative groups: legal situations, recommendations, which are characterized by „shall“, and suggestions, which are characterized by the terms “should” or “can”.
Through the declaration of conformity pursuant to Article 161 of the Stock Corporation Act (AktG) as amended by the Transparency and Disclosure Law, the Code has a legal basis. In their annual reports, listed companies have to indicate to what extend they abide by these guidelines. In its current version, the Code contains 82 recommendations and 19 suggestions.
A proposal for the Code that would require companies to introduce a whistleblowing system is currently being discussed.
Link to the website of the Government Commission of the German Corporate Governance Code
The Federal Guideline on Corruption Prevention in Federal Administration of 2004 is an instrument aimed at promoting integrity and fighting corruption. It contains a code of conduct intended to help civil servants identify where the line between permissible and impermissible behaviour lies.
The Freedom of Information Law of 2006 (IFG) introduces a general right to access information from all public administrations in the federal government.
The IFG gives every citizen the right to look at administrative files and request copies. Personal involvement or grounds for the request are not required. In the event that an agency does not wish to release information, because of data protection or protection of corporate secrets, this requires an explanation.
The IFG is in effect in thirteen federal states.
A Corruption Register has been maintained by Berlin and North Rhine-Westphalia only. Companies convicted for corruption are listed in a register to be barred from being granted public commissions for a certain time.
A federal initiative was adopted by the Lower House of Parliament in the form of Article 126a of the Law Against Restraints in Competition but blocked by the Federal Counsel on April 26th, 2002 on the grounds of definition deficiency.