As a general rule, German law provides for an organizational structure of a German Limited Liability Company (“LLC”) (in German: “Gesellschaft mit beschränkter Haftung – GmbH”) that includes – besides the Shareholders – at least the Managing Directors (“MDs”) as one mandatory governing body. However, the Articles of Association (“AoA”) may provide for further corporate bodies and in particular for an optional Supervisory Board (“oSB”) (in German: “fakultativer Aufsichtsrat”). Moreover, LLCs employing more than 500 employees are usually subject to the German Co-Determination law (in German: “Mitbestimmungsrecht”) and thus, they are required by law to form a mandatory Supervisory Board (“mSB”) (in German: “obligatorischer Aufsichtsrat”) and 1/3 or, as the case may be, half of the mSB members shall be representatives of the employees who are to be appointed and dismissed by the employees according to the specifics set out in the relevant Co-Determination Act.

[...]

Division of Duties: The SB monitors and advises the MDs. The scope of duties and competences is in case of an oSB determined by the AoA or in case of an mSB determined by the relevant German Co-Determination Act and, as the case may be, the AoA.

Composition: In case of an oSB, statutory law does not provide for a minimum number (other than 1) nor for a maximum number of members. In case of an mSB, the SB comprises between 3 and 20 members in accordance with the specifics set out in the relevant Co-Determination Act. As a basic rule, if the SB comprises more than 1 person, 1 of its members may be appointed as its Chairman (“Chairman”). Only a natural person with full legal capacity who is neither under guardianship nor whose property affairs are, in whole or in part, subject to consent requirements pursuant to the German Civil Code (in German: “Bürgerliches Gesetzbuch”) may be a SB member. A person may not be a SB member if such person is (i) already a SB member in 10 commercial enterprises which are obligated by statutory law to form a SB (positions such as Chairman are to be taken into account twice; certain intra-group memberships are not to be taken into account), (ii) an MD, a holder of a special proxy (in German: “Prokurist”) or a general manager (in German: “Generalhandlungsbevollmächtigter”) of the Company or the legal representative of a controlled enterprise of the Company, or (iii) the legal representative of another corporation whose SB includes an MD of the Company. In case of an oSB, the AoA may provide for different provisions.

Appointment/Dismissal Competence: As a general rule, the SB members are elected by way of a Shareholders’ Resolution at the General Meeting (“GM”) (simple majority vote). Moreover, the AoA may provide for different rules and may, e.g. grant specific Shareholders or even third parties the right to appoint SB members, e.g. in cases where the Shareholders’ Resolution cannot be made in time, German law also provides for the mechanism for a judicial appointment of supplementary SB members. The term of office for SB members is (in case of the oSB subject to the AoA) up to approximately 5 years (reappointment is permitted). SB members elected by the Shareholders may be dismissed from office by way of a further Shareholders’ Resolution (majority of not less than 3/4 of the votes cast (the AoA may stipulate another majority and/or additional requirements)). SB members appointed pursuant to the AoA may, subject to the provisions of the AoA, be removed and replaced by the person entitled to the right of appointment at any time. Any SB member may be dismissed from office for good cause by a court.

Alternates: With respect to deputies of members of the SB (in German: “stellvertretende Aufsichtsratsmitglieder”) the statements above apply mutatis mutandis.

For a description of how to change the respective board members, please see the individual steps in the "Step-by-Step"-schedules below. As all information on how to change board members in Germany on the CBM Site by nature is generic (i.e. does not include specific requirements for listed companies, special requirements in statutory documents or as otherwise stipulated in any type of special law), we strongly recommend seeking legal advice with Allen & Overy before actually changing any board members in Germany.