The Executive Board (“EB”) is part of an organizational structure which includes – besides the General Meeting (“GM”) – 2 governing bodies in a German Stock Corporation (in German: “Aktiengesellschaft - AG”), i.e. the EB and the Supervisory Board (“SB”).

Division of Duties: The EB manages the Company under its own responsibility. As a rule, the EB is not bound by any orders of the SB, the GM nor (other than through a domination agreement (in German: “Beherrschungsvertrag”)) individual Shareholders. However, the Articles of Association (“AoA”) or the SB shall require that specific types of transactions be entered into only with the SB’s prior consent. [...] The EB members assume joint responsibility for every action by the EB (or by any of its members). Even though it is common that EB members allocate the duties for certain areas among individual members by way of a schedule of responsibilities (in German: “Geschäftsverteilungsplan”), important issues need a decision by the full EB. In addition, every EB member has to satisfy itself that the other EB member are working as they should, i.e. exercising supervision. The EB has unlimited capacity to represent the Company in and out of court. If the EB comprises more than one person, the EB members shall represent the Company jointly (unless the AoA provide otherwise). Moreover, the articles or the SB (if authorized to do so by the AoA) may provide that particular EB members may represent the Company by acting solely or – provided that the EB comprises more than 1 person – jointly with another EB member or with a holder of a special proxy (in German: “Prokurist”).

Composition: As a basic rule, the EB may comprise 1 or more persons. However, if (i) the Company has a share capital of more than EUR 3,000,000, the EB shall – subject to a different provision in the AoA – comprise not fewer than 2 persons, and (ii) the Company is subject to the German Co-Determination Act 1976 (in German: “Mitbestimmungsgesetz”) or the German Montan Co-Determination Act (in German: “Montanmitbestimmungsgesetz”), 1 member of the EB is required to be the labor director (in German: “Arbeitsdirektor”) and thus, the EB comprises at least 2 members. If the EB comprises at least 2 members, the SB may appoint a Chairman of the EB and, provided that there are at least 3 EB members, the AoA may grant such Chairman a casting vote. Only a natural person with full legal capacity may be an EB member. A person may not be an EB member if such person (i) is under guardianship and its property affairs are in whole or in part subject to consent requirements pursuant to the German Civil Code (in German: “Bürgerliches Gesetzbuch”), (ii) is prohibited by judicial decision or an enforceable administrative order from engaging in a profession, branch of a profession, trade or branch of a trade if the Company’s purpose encompasses in whole or in part such prohibited activity or (iii) has been convicted of certain intentional criminal offenses (including, but not limited to, delayed filing of insolvency or certain fraudulent offenses) within a period of basically the last 5 years. Moreover, in general, SB members may not be EB members.

Appointment/Dismissal Competence: The EB members are appointed by the SB for a duration of a maximum of 5 years (reappointment is permitted). The SB may revoke the appointment for good cause (including but not limited to a gross breach of duties or inability to manage the Company properly). As a general rule, the employment contract remains unaffected from the revocation of the appointment. As a general rule, the SB’s resolution on an appointment or a revocation requires a simple majority vote but other requirements may arise from German Co-Determination Law (in German: “Mitbestimmungsrecht”).

Alternates: N/A.

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.