Organs of a Stock Corporation

A Stock Corporation is a legal entity whose partners (shareholders) make contributions to the share capital, divided into shares, without being personally liable for the company's obligations.

As such, the Stock Corporation has legal capacity, i.e. it is itself the bearer of rights and obligations. In order to be able to act, it requires natural persons to act on its behalf. Therefore, a Stock Corporation needs organs that form the will of the company and act on its behalf. Without such organs, the Stock Corporation would be incapable of acting.

The organs of a Stock Corporation are

In addition, a Stock Corporation must always appoint an auditor.

General Meeting

The General Meeting of a Stock Corporation consists of the entirety of all shareholders. The General Meeting serves to jointly form the will of all shareholders in company matters. It is convened annually by the Executive Board.

Certain decisions are to be made exclusively by the General Meeting. These include, among others, adopting the annual financial statements, appropriating the balance sheet profit, electing the supervisory board members, relieving of the member of the Executive and the Supervisory Board, effecting any amendment to the Articles of association, any capital measures as well as a converting or dissolving the Stock Corporation.

In contrast to the General Meeting of a Limited Liability Company, the General Meeting of a Stock Corporation has no right to issue instructions to the Executive Board. Nor can the General Meeting issue instructions to the Supervisory Board.

Executive Board

The Executive Board represents the stock corporation judicially and extra judicially in external relations and manages the company's business internally. Only natural persons may be appointed as members of the Executive Board. Members of the Executive Board cannot be members of the Supervisory Board. The Executive Board may consist of one or more members.

The power of representation of the Executive Board in external relations cannot be limited, neither by the Articles of association nor by a shareholders' resolution.

If the Executive Board consists of several persons, all members of the Executive Board shall in principle jointly represent the company externally. The Executive Board may, however, authorise individual Executive Board members to perform certain transactions.

The position under company law of an Executive Board member in the organ Executive Board must be distinguished from the employment relationship of the Executive Board member with the Stock Corporation. This becomes particularly clear if, for example, the Executive Board member is dismissed by Supervisory Board resolution, but his/her employment relationship continues - until the company takes appropriate steps.

The Executive Board shall report to the Supervisory Board on an ongoing basis. Furthermore, the Executive Board must prepare the annual financial statements and convene the General Assembly.

In contrast to the Limited Liability Company (GmbH), the Executive Board of a Stock Corporation is not subject to any instructions, neither from the General Assembly nor from the Supervisory Board.

Supervisory Board

Every Stock Corporation, regardless of its size, must have a Supervisory Board consisting of at least three persons. It is elected by the general meeting.

The Supervisory Board is responsible for appointing and dismissing the Executive Board, supervising its management and advising it. The Supervisory Board itself has no management authority whatsoever, as the management and its supervision are strictly separated from each other.

For some management tasks, however, the Executive Board must obtain the approval of the Supervisory Board. Such tasks are determined either by law (e.g. acquisition and sale of participations or real estate or establishment and closure of branches) or, if need be, additionally by the Articles of association of the Stock Corporation.

Legal basis

Sections 70 and following, 95, 102 and following  of the Aktiengesetz (AktG)

Translated by the Federal Ministry of Justice
Last update: 1 January 2022

Responsible for the content: Federal Ministry of Justice