The Law on Control and Transparency in Business (German: Gesetz zur Kontrolle und Transparenz im Unternehmensbereich) (abbr. KonTraG) is a comprehensive law passed by the German Bundestag on 5 March 1998. It entered into force on 1 May 1998, although some provisions were adopted at later dates. It set new standards of corporate governance for German publicly listed companies. It is similar to the U.S. Sarbanes-Oxley Act of 2002.
Aims and content
The aim of the KonTraG is to improve corporate governance in German companies. Several provisions of commercial and company law have been amended by this Act. The KonTraG specifies and expands mainly the provisions of the German Commercial Code and the Stock Corporation Act. KonTraG has extended the liability of the management boards, supervisory boards and auditors in companies. The core of the KonTraG is a regulation that forces corporate management to implement and operate a company-wide early risk identification system, as well as to publish statements on risks and the company's risk structure in the management report of the company financial statements.
Section 91(2) of the Law stipulates that the executive board is required to "take appropriate measures, in particular to set up a monitoring system so that developments that jeopardize the continued existence of the company are quickly recognized." Such "existence-threatening developments" usually result from the combined effects of individual risks, which obliges companies to carry out regular risk analysis and risk aggregation. Auditors are also required to review compliance with the new requirements by listed companies, in particular with regard to the existence and operation of a risk management system and the related internal audit activities, and to make them part of the audit report. The basis is the IDW test standard 340 (IDW PS 340).
Additionally, the law requires the supervisory board to appoint the auditors, to receive the audit reports, and to include the auditors in the board's balance sheet meeting. All members of the supervisory board or the audit committee must be provided with the audit reports.
KonTraG does not exclusively concern public limited companies, but also covers the limited partnership on shares (KGaA) and many limited liability companies (GmbH), in particular if there is a codetermined or optional supervisory board. In contrast, the so-called small AG's are largely exempted from compliance with the KonTraG provisions.
The establishment and operation of a company-wide risk management system - such as Management Risk Controlling (MRC) - are critically scrutinized and examined by the banks per Basel II. For companies that work on the basis of projects (construction companies, large architectural firms, IT system houses), risk management is therefore also part of the project management tasks.
Furthermore, for the first time, the granting of subscription rights to employees and members of the management board from a contingent capital increase pursuant to Section 192 AktG was placed on a legal footing.
A board of directors is an executive committee that jointly supervise the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit organization, or a government agency.
A societas Europaea is a public company registered in accordance with the corporate law of the European Union (EU), introduced in 2004 with the Council Regulation on the Statute for a European Company. Such a company may more easily transfer to or merge with companies in other member states.
The Sarbanes–Oxley Act of 2002 is a United States federal law that mandates certain practices in financial record keeping and reporting for corporations.
An audit is an "independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form when such an examination is conducted with a view to express an opinion thereon.” Auditing also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditors consider the propositions before them, obtain evidence, and evaluate the propositions in their auditing report.
Corporate governance is defined, described or delineated in diverse ways, depending on the writer's' purpose. Writers focussed on a disciplinary interest or context often adopt narrow definitions that appear purpose-specific. Writers concerned with regulatory policy in relation to corporate governance practices often use broader structural descriptions. A broad (meta) definition that encompasses many adopted definitions is '“Corporate governance” describes the processes, structures, and mechanisms that influence the control and direction of corporations'.
Aktiengesellschaft is a German word for a corporation limited by share ownership whose shares may be traded on a stock market. The term is used in Germany, Austria, Switzerland, and South Tyrol for companies incorporated there. It is also used in Luxembourg, although the equivalent French language term société anonyme is more common. In the United Kingdom, the equivalent term is "PLC" and in the United States while the terms "incorporated" or "corporation" are typically used, technically the more precise equivalent term is "joint-stock company".
Corporate law is the body of law governing the rights, relations, and conduct of persons, companies, organizations and businesses. The term refers to the legal practice of law relating to corporations, or to the theory of corporations. Corporate law often describes the law relating to matters which derive directly from the life-cycle of a corporation. It thus encompasses the formation, funding, governance, and death of a corporation.
In corporate governance, codetermination is a practice where workers of an enterprise have the right to vote for representatives on the board of directors in a company. It also refers to staff having binding rights in work councils on issues in their workplace. The first laws requiring worker voting rights include the Oxford University Act 1854 and the Port of London Act 1908 in the United Kingdom, the Act on Manufacturing Companies of 1919 in Massachusetts in the United States, and the Supervisory Board Act 1922 in Germany, which codified collective agreement from 1918.
An audit committee is a committee of an organisation's board of directors which is responsible for oversight of the financial reporting process, selection of the independent auditor, and receipt of audit results both internal and external.
A supervisory board or supervisory committee is a nominating committee chosen by the stockholders of a company to promote their interests through the governance of the company and to hire and supervise the board of directors and CEO.
Internal auditing is an independent, objective assurance and consulting activity designed to add value to and improve an organization's operations. It may help an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Internal auditing might achieve this goal by providing insight and recommendations based on analyses and assessments of data and business processes. With commitment to integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice. Professionals called internal auditors are employed by organizations to perform the internal auditing activity.
Internal control, as defined by accounting and auditing, is a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. A broad concept, internal control involves everything that controls risks to an organization.
The National Association of Corporate Directors (NACD) is an independent, not-for-profit, section 501(c)(3) founded in 1977 and headquartered in Arlington, Virginia. NACD's membership includes the entire boards of 1,700+ corporations as well as several thousand individual members, for a total of more than 23,000 members. Membership is open to individuals serving on boards of public, private, and nonprofit organizations from both the United States and overseas. The organization is registered with the National Association of State Boards of Accountancy as a sponsor of continuing professional education on the National Registry of CPE Sponsors.
The UK Corporate Governance code, formerly known as the Combined Code is a part of UK company law with a set of principles of good corporate governance aimed at companies listed on the London Stock Exchange. It is overseen by the Financial Reporting Council and its importance derives from the Financial Conduct Authority's Listing Rules. The Listing Rules themselves are given statutory authority under the Financial Services and Markets Act 2000 and require that public listed companies disclose how they have complied with the code, and explain where they have not applied the code – in what the code refers to as 'comply or explain'. Private companies are also encouraged to conform; however there is no requirement for disclosure of compliance in private company accounts. The Code adopts a principles-based approach in the sense that it provides general guidelines of best practice. This contrasts with a rules-based approach which rigidly defines exact provisions that must be adhered to. In 2017, it was announced that the Financial Reporting Council would amend the Code to require companies to "comply or explain" with a requirement to have elected employee representatives on company boards.
German company law (Gesellschaftsrecht) is an influential legal regime for companies in Germany. The primary form of company is the public company or Aktiengesellschaft (AG). A private company with limited liability is known as a Gesellschaft mit beschränkter Haftung (GmbH). A partnership is called a Kommanditgesellschaft (KG).
The chief audit executive (CAE), director of audit, director of internal audit, auditor general, or controller general is a high-level independent corporate executive with overall responsibility for internal audit.
The chief governance officer (CGO) is normally a senior vice executive reporting to the CEO; however, in the not-for-profit sector, when an organization uses policy governance, the chair of the board often takes on the role of CGO, who is tasked with directing the people, business processes and systems needed to enable good governance from inside the corporation in support of the board of directors. In some geographies the role is assumed by the chief counsel, in others by a corporate or company secretary.
Corporate law in Vietnam was originally based on the French commercial law system. However, since Vietnam's independence in 1945, it has largely been influenced by the ruling Communist Party. Currently, the main sources of corporate law are the Law on Enterprises, the Law on Securities and the Law on Investment.
Ulrich Seibert is a German jurisprudent, he was head of the division for German company law and corporate governance at the Federal Ministry of Justice and Consumer Protection in Berlin until 8. 2020, and is honorary professor for economic law at the faculty of law of the Heinrich-Heine University of Düsseldorf.
The Ghana banking crisis was a severe banking crisis that affected Ghana between August 2017 and January 2020. The Bank of Ghana (BoG) allowed several indigenous banks to be taken over by private companies between August 2017 and January 2019 after Nana Akufo-Addo was elected president in December 2016. Most of the indigenous banks had been at the risk of defaulting on their loans, as they had been affected by the economic fallout of the Great Recession, which caused the events leading up to the Arab Spring that occurred in North Africa beginning in 2010. The crisis is the most severe economic crisis to affect Ghana since it became an independent country in 1960. The COVID-19 pandemic arrived in Ghana towards the end of the banking crisis in 2020, dealing further damage to the country's economy.
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