Law on control and transparency in the corporate sector
|Title:||Law on control and transparency in the corporate sector|
|Scope:||Federal Republic of Germany|
|Legal matter:||Commercial law , company law|
|References :||4121-1 / 2 a. F.|
|Issued on:||April 27, 1998
( BGBl. I p. 786 )
|Entry into force on:||May 1, 1998|
|GESTA :||C170 a. F.|
|Please note the note on the applicable legal version.|
The law on control and transparency in the corporate sector ( KonTraG ) is a comprehensive article law that was passed on March 5, 1998 by the German Bundestag . It came into force on May 1, 1998, although some provisions came into effect later.
Goal and content
The aim of the KonTraG is to improve corporate governance in German companies . Therefore, with this article law, a number of provisions from commercial and company law have been changed. The KonTraG mainly specifies and expands the provisions of the Commercial Code and the Stock Corporation Act . With the KonTraG, the liability of the management board , supervisory board and auditors in companies has been expanded. The core of the KonTraG is a regulation that forces company management to introduce and operate a company-wide early warning system for risks (risk early warning system), as well as to publish statements on risks and the risk structure of the company in the management report of the company's annual financial statements .
Literally, the law prescribes a regulation in Section 91 (2) AktG, according to which the management board is obliged to “take suitable measures, in particular to set up a monitoring system, so that developments threatening the continued existence of the company are recognized early”. Such "developments that endanger the continued existence of the company" usually result from combined effects of individual risks, which obliges companies to regularly carry out a risk analysis and risk aggregation . Auditors are also obliged to check compliance with the new regulations at listed companies, in particular with regard to the existence and operation of a risk management system and the associated measures in the area of internal auditing , and to make them part of the audit report. The basis is the IDW test standard 340 ( IDW PS 340 ).
In addition, the law means that the mandate to the auditor will in future be given by the supervisory board. This also receives the audit report. The auditor's participation in the balance sheet meeting of the Supervisory Board is mandatory. The auditor's reports must be handed over to all members of the supervisory board or the accounting committee.
Contrary to popular belief, the KonTraG does not exclusively concern stock corporations . Also the partnership limited by shares (KGaA) and many companies with limited liability (GmbH), especially if there is a co-determined or facultative supervisory board, are covered by the regulations (broadcast effect). In contrast, the so-called small AG is largely exempt from complying with the regulations newly introduced by the KonTraG.
In the course of the rating , to which the banks are obliged by Basel II , the establishment and operation of a company-wide risk management system - such as Management Risk Controlling (MRC) - are critically examined and checked by the banks. In companies that work a lot on the basis of projects (construction companies, large architectural offices, IT system houses, etc.), risk management is therefore also one of the tasks of project management .
Furthermore, for the first time, the granting of subscription rights to employees and members of the management from a conditional capital increase according to Section 192 AktG was placed on a legal basis.
- Stefan Rössler: The audit committee as a monitoring instrument for the supervisory board. A contribution to the improvement of corporate governance against the background of the law on control and transparency in the corporate sector (KonTraG) (= publications on auditing, taxation and controlling . Volume 5 ). Verlag Moderne Industrie, Landsberg (Lech) 2001, ISBN 3-478-39943-2 (also: University of Hamburg, dissertation, 2001).
- Text of the KonTraG in the Federal Law Gazette