Author: ROTH, MARKUS

Source: Journal of Corporate Law Studies, Volume 8, Number 2, October 2008 , pp. 337-372(36)

Publisher: Hart Publishing

Abstract:

The role of outside directors is one of the key features in the transatlantic corporate governance debate. As their importance rises, their liability is also attracting attention. Since there are only a few cases internationally in which outside directors of listed companies have been held liable for violating company law duties, and oversight liability is considered to be dynamic, it is fruitful to consider German cases as well. In Germany, with its two-tier board system, where management and oversight are the responsibilities of, respectively, a management board and a supervisory board, supervisory boards are common for non-listed as well as listed companies. Supervisory directors have been held liable in an increasing number of cases in the last 10 years. In Germany, as in the US, courts distinguish between the decision-making and the monitoring contexts. Supervisory directors are engaged in decision-making, and in this respect are protected by a newly introduced business judgment rule. In the monitoring context, the German Federal Supreme Court traditionally denies business discretion, while in the US good faith serves as a general standard of review. It is argued that, as in the US, the stricter standard applies only when a red flag is present. Concerning the lack of out-of-pocket liability in general, the provisions of the German Corporate Governance Code concerning a suitable deductible could usefully be taken into account in the transatlantic discussion.

Document Type: Research article

Publication date: 2008-10-01

More about this publication?

• The Journal of Corporate Law Studies provides a forum for scholarship on corporate, securities and financial law broadly construed. Thus the Journal publishes articles on subjects as diverse as insolvency and the commercial conflict of laws, in addition to mainstream topics such as directors' duties and financial regulation. The Journal also embraces interdisciplinary work and work in cognate fields.Articles published in the Journal are subject to rigorous peer review. Shorter articles and notes are refereed where appropriate.
  The Journal is published twice a year in June and October.
  The journal will be of interest to academics and practitioners specialising in any of the subjects covered, and also to those with an interest in the strategic direction of the law and the influences which affect it - thus regulators, law and policy-makers, and the judiciary.
• Editorial Board
• Information for Authors
• Subscribe to this Title
• Information for Advertisers
• Contents
• Sample Paper
• Email alerts (Hart books and journals)
• ingentaconnect is not responsible for the content or availability of external websites

Related content

• In this: publication
• By this: publisher
• In this Subject: Business ,  Finance ,  Law
• By this author: ROTH, MARKUS

Website © Publishing Technology. Article copyright remains with the publisher, society or author(s) as specified within the article.

• Terms and conditions
• Privacy policy
• Information for advertisers