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2015 | OriginalPaper | Buchkapitel

6. Fitness of Members of Supervisory Board

verfasst von : Meinrad Dreher

Erschienen in: Treatises on Solvency II

Verlag: Springer Berlin Heidelberg

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Abstract

This chapter deals with the fitness of members of supervisory boards. Since 2009, German insurance regulatory law has provided internal qualification standards for the supervisory board members of insurance companies. In accordance with Paragraph 7a, sec. 4, clause 1 of the VAG [German Insurance Supervision Act], the members of supervisory boards must be able to fulfill their tasks and supervisory functions in accordance with their level of expertise. This new requirement comports with the previous standards of German corporate law, established by the BGH [German Federal Court of Justice] in its “Hertie”-ruling. As such, this ruling will also serve as a basis to interpret the expertise requirements in German insurance regulatory law. Consequently, each supervisory board member must have a certain minimum level of general competencies, so that specialized expertise and advance knowledge are maintained on the board. Even if the supervisory board members are not “persons with key functions” within the meaning of the framework directive of Solvency II, nevertheless, on its own, the pending transformation of existing guidelines into national law will indirectly affect the qualification requirements of supervisory board members in the insurance industry.

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Vorheriges Kapitel Own Risk and Solvency Assessment

Nächstes Kapitel Definition and Holders of Key Functions

BGBl. [German Federal Law Gazette] 2009 I, p. 2305.

Hereafter, direct insurance and reinsurance undertakings, pension funds, insurance and financial holding companies, and insurance special purpose vehicles – to the extent no distinction is noted – will be denominated “supervised undertakings”.

On this point in detail see Dreher, ZVersWiss (Supplement 2006), 375 ff.

For the special expertise of financial experts under sec. 100, para. 5 of the AktG [German Stock Corporation Act] for corporations focused on the capital markets, see OLG München [in English: Munich Higher Regional Court], AG (2010), 639 = ZIP (2010), 1082 and Staake, ZIP (2010), 1013 ff.

See, e.g., Hüffer, Kommentar zum AktG [in English: Commentary on the German Stock Corporation Act] (9th ed. 2010) sec. 100, ref. 2 ff.; Wirth, ZGR (2005), 327 (331 f.).

BGHZ [Decisions of the Federal Court of Justice in Civil Matters] (Ger.) (hereafter, BGHZ) 85, 293 ff.; for the similar Austrian view, öOGH [in English: Austrian Supreme Court], AG (2004), 45 (50).

BGHZ 85, 293, 295 f.

See, e.g. Hüffer, n. 5 above, at sec. 116, ref. 2; Rieder/Holzmann, AG (2010), 570 (573); Drygala, in: Schmidt/Lutter, eds., Kommentar zum AktG [in English: Commentary on the German Stock Corporation Act] (2008), sec. 116, ref. 7; Habersack, in: Münchener Kommentar zum Aktiengesetz [in English: Munich Commentary on the German Stock Corporation Act], v. 2 (3rd ed. 2008) sec. 116, ref. 24; Lutter/Krieger, Rechte und Pflichten des Aufsichtsrats [in English: Rights and Obligations of the Supervisory Board] (5th ed. 2008) ref. 26; Hoffmann-Becking, in: Münchener Handbuch des Gesellschaftsrechts [in English: Munich Manual of Company Law] v. 4, Aktiengesellschaft [in English: The Corporation] (3rd ed. 2007) sec. 30, ref. 2a, sec. 33, ref. 61; Hopt/Roth, in: Hopt/Wiedemann, eds., Kommentar zum AktG [in English: Commentary on the German Stock Corporation Act] v. 4 (4th ed. 2006) sec. 100, ref. 29 f.; prior comprehensive discussion, Dreher, “Die Qualifikation der Aufsichtsratsmitglieder” [in English: The Qualification of Supervisory Board Members], in: FS [Publication in Honor of] Boujong (1996) 71, (75 ff.); Schwark, “Zum Haftungsmaßstab der Aufsichtsratsmitglieder einer AG” [in English: On the Standard of Liability for Supervisory Board Members of a Corporation], in: FS [Publication in Honor of] Werner (1984), 841 (847 f.); lesser requirements are considered sufficient, e.g., by Möllers, ZIP (1995), 1725 (1733 f.); and going beyond the requirements under Hertie, Semler, in: Münchener Kommentar zum Aktiengesetz [in English: Munich Commentary on the German Stock Corporation Act] (2nd ed. 2004) sec. 100, ref. 76 ff.; id., “Anforderungen an die Befähigung eines Aufsichtsratsmitglieds” [in English: Requisite Capabilities of a Supervisory Board Member] in: FS [Publication in Honor of] K. Schmidt (2009), 1489 ff.

See Dreher, n. 8 above, at 71, (76 f.); recently, e.g., Hüffer, n. 5 above, at sec. 116, ref. 3.

In the case of mutual insurance associations, this result is explicit in the reference to sec. 100 of the AktG [German Stock Corporation Act] in sec. 35, para. 3 of the VAG [German Insurance Supervision Act].

German Corporate Governance Code, in the version of 26 May 2010; the current version may be found at www.bmj.bund.de; on the most recent amendments, see Ringleb/Kremer/Lutter/v.Werder, NZG (2010), 1161 ff.

On this type of “private” legislation and the objectives of corporate governance, see Rittner/Dreher, Europäisches und deutsches Wirtschaftsrecht [in English: European and German Economic Law] (3rd ed. 2008) sec. 7, ref. 58 and sec. 9, ref. 75 ff.

Likewise also Ringleb/Kremer/Lutter/v.Werder, NZG (2010), 1161 (1165); on the previous version of the Code provision, comparable as to the minimum qualification requirements, see Kremer, in: Ringleb/Kremer/Lutter/v.Werder, eds., Deutscher Corporate Governance Kodex [in English: German Corporate Governance Code] (4th ed. 2010), ref. 1015 ff.; see in this connection also the press release of the German Government Commission Deutscher Corporate Governance Kodex [German Corporate Governance Code], 10 Feb. 2010, to be found at http://www.corporate-governance-code.de/ger/download/Qualifizierung_von_Aufsichtsraeten_10_02_2010.pdf.

In the meanwhile, the issue of the required qualification for members of supervisory and monitoring bodies and the resulting need for rules has also been recognized at the European level. On this point, see European Commission, ed., Green Paper: Corporate governance in financial institutions and remuneration policies, COM(2010) 284/3 at 3.3, first bullet point. On the issue of the qualification of the supervisory board as a whole, see 6.4.2, below.

Accord, Statement of Reasons to the Government’s Draft of the Gesetz zur Stärkung der Finanzmarkt- und der Versicherungsaufsicht [Act To Strengthen the Financial Market and Insurance Supervision] of 27 April 2009, BT-Drucks. [Document of the German Bundestag] 16/12783, pp. 8, 18; critical on this point, Dreher, ZGR (2010), 496 (510 f.).

This amendment harks back to the Recommended Resolution and the Report of the Finance Commission of 01 July 2009, BT-Drucks. [Document of the German Bundestag] 16/13684, p. 43, referring at p. 41 to the Statement of Reasons for the parallel provision, sec. 36, para. 3 of the KWG [German Credit Services Act]; on the course of the legislative process, see Dreher, ZGR (2010), 496 (509 ff.); Bürkle, VersR (2010), 1005 f.

Recommended Resolution and the Report of the Finance Commission, n. 16 above, at 43.

Recommended Resolution and the Report of the Finance Commission, n. 16 above, at 43, referring at p. 41 to sec. 36, para. 3 of the KWG [German Credit Services Act].

See Dreher, ZGR (2010), 496 (511); Hasse, VersR (2010), 18 (23); on the parallel provision of sec. 36, para. 3 of the KWG [German Credit Services Act] likewise Hingst/Himmelreich/Krawinkel, WM (2009), 2016 (2019); arguably with another view, Berger, VersR (2010), 422 (423 f.), without, however, identifying any substantive concrete differences.

Recommended Resolution and the Report of the Finance Commission, n. 16 above, at 43, 41; on the undertaking-oriented criterion of expertise, see in detail Bürkle, VersR (2010), 1005 (1007 ff).

See 6.4.2, below.

Thus Dreher, ZGR (2010), 496 (512 f.).

A corresponding provision appears in the Green Paper of the European Union on corporate governance in financial institutions. See European Commission, ed., Green Paper: Corporate governance in financial institutions and remuneration policies, n. 14 above at 6.3.3, second bullet point.

On the mandatory narrow construction of intervention powers, especially of the general clause of the VAG [German Insurance Supervision Act], see Rittner/Dreher, Europäisches und deutsches Wirtschaftsrecht [in English: European and German Economic Law] (3rd ed. 2008), sec. 31, refs. 25 ff., 93 ff.; going too far is Hasse, VersR (2010), 18 (23), who, under former law before sec. 7a, para. 4 of the VAG [German Insurance Supervision Act] took effect, considered assertion of the company law minimum qualification requirement for supervisory board members feasible on the basis of sec. 81 of the VAG [German Insurance Supervision Act].

An overview of the supervisory intervention powers is provided, e.g., by Berger, VersR (2010), 422 (425 ff.); in addition, the Jahressteuergesetz [Annual Tax Act] of 08 Dec. 2010, BGBl. [German Federal Law Gazette] I, 1768, expanded the power to adopt regulations as found in sec. 5, para. 6, of the VAG [German Insurance Supervision Act], so that henceforward statements relating to evaluating the qualification of supervisory board members are subject to the duties of notice set forth in sec. 5, para. 5, no. 9 and sec. 13d, no. 12 of the VAG [German Insurance Supervision Act].

Sec. 121c applies also to insurance special purpose vehicles pursuant to sec. 121g, para. 2 of the VAG [German Insurance Supervision Act].

See Dreher, ZGR (2010), 496 (513).

Sec. 35, para. 3 of the VAG [German Insurance Supervision Act] makes the essential parts of this power to revoke applicable to mutual insurance associations.

Berger, VersR (2010), 422 (427) apparently overlooks the fact that the filing power of the supervisory board under sec. 103, para. 3, sent. 1 of the AktG [German Stock Corporation Act] concerns the filing of applications in judicial proceedings for recall and thus arrives at flawed conclusions in reference to the systematic interpretation of sec. 87, para. 8, sent. 3 of the VAG [German Insurance Supervision Act] and sec. 121c, para. 6, sent. 3 of the VAG [German Insurance Supervision Act] (the latter provision at Berger also cited as sec. 121c, para. 6, sent. 4 of the VAG [German Insurance Supervision Act]); similarly, Bähr, VW (2009), 1401 (1404).

Merkblatt zur Kontrolle von Mitgliedern von Verwaltungs- und Aufsichtsorganen gemäß KWG und VAG [Guidance Notice on Vetting Members of Administrative and Supervisory Bodies in accordance with the German Credit Services Act and the German Insurance Supervision Act] of 22 Feb. 2010, downloadable at http://www.bafin.de/cln_179/nn_721290/SharedDocs/Veroeffentlichungen/DE/Service/Merkblaetter/mb__100222__Verwaltungs__und__Aufsichtsorgane.html?__nnn=true.

On the potential impact see Bürkle, VersR (2010), 1005 (1010).

Bulletin, n. 30 above, at 1 f.

The BaFin [Federal Financial Supervisory Authority] specifically mentions mayors and regional administrators. See Bulletin, n. 30, above, at p. 3.

Long the prevailing view for company law, see BGHZ 85, 293, 295 f. and e.g., Hüffer, n. 5 above, at sec. 116, ref. 2 with further references.

Thus also, e.g., the answer of the German Federal Government to a parliamentary question on the topic: “Wahrnehmung der Aufsichts- und Kontrollfunktion des Staats als Anteilseigner” [in English: Exercise of the Supervisory and Monitoring Function of the State as Shareholder], BT-Drucks. [Document of the German Bundestag] 16/11536, 29 Dec. 2008, p. 3.

Without regard to supervision law, this follows from company law principles; see of many examples, Habersack, in: Münchener Kommentar zum Aktiengesetz [in English: Munich Commentary on the German Stock Corporation Act], n. 8 above, at sec. 100, ref. 11 and sec. 116, ref. 22.

See Hommelhoff, ZGR (1983), 551 (574 f); Dreher, n. 8 above, at 71, (76); Semler, “Anforderungen an die Befähigung eines Aufsichtsratsmitglieds” [in English: Requisite Capabilities of a Supervisory Board Member] in: FS [Publication in Honor of] K. Schmidt (2009), 1489 (1499); see also Habersack, in: Münchener Kommentar zum Aktiengesetz [in English: Munich Commentary on the German Stock Corporation Act], n. 8 above, at sec. 116, ref. 24; with particular reference to the insurance industry, likewise Hasse, VersR (2010), 18 (24); for yet a different view, BGHZ 85, 293, 295 f.; and still, Raiser/Veil, Kapitalgesellschaften [in English: The Law of Corporations] (5th ed. 2010), sec. 15, ref. 114.

Bulletin, n. 30 above, at 3 f., providing a six-month grace period to reach qualification and, in fact, allowing an extension when “existential requirements of the chief activity” in “seasonal occupations” call for it; Bürkle, VersR (2010), 1005 (1007) calls this period “clearly too long”, thus paraphrasing a fundamentally incorrect posture with a vague and concessive formulation.

In addition, the bulletin, n. 30 above, is internally inconsistent: On p. 3 f., post-hoc qualification by continuing education is viewed as sufficient. At the same time, however, on p. 6, point III, members of the supervisory and administrative bodies are unconditionally required to be able to “fulfill their obligations at all times”.

Directive 2009/138/EC of the European Parliament and of the Council of 25 Nov. 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), OJEU L 335, 17 Dec. 2009, 1 ff.

Thus Schaaf, Risikomanagement und Compliance in Versicherungsunternehmen – aufsichtsrechtliche Anforderungen und Organverantwortung, [in English: Risk Management and Compliance in Insurance Undertakings – Supervisory Requirements and Institutional Responsibility], (2010), 242 f.; contra, Hasse, “Informations- und Offenlegungspflichten der Versicherungsunternehmen nach Solvency II” [in English: Information and Disclosure Obligations for Insurance Undertakings under Solvency II] in: Dreher/Wandt, eds., Solvency II in der Rechtsanwendung, [in English: Solvency II in Application of the Law] 61 (80 ff.).

See CEIOPS, ed., Issue Paper “Risk Management and Other Corporate Issues” of 17 July 2007 at pnt. 2.2 (“fit and proper”); CEIOPS, ed., Issue Paper “Implementing Measures on System of Governance” of 03 Nov. 2008 at pnt. 5.; both papers are downloadable at www.ceiops.eu.

See BaFin [Federal Financial Supervisory Authority], Issuer Guideline, IV.2.2.4. (p. 57) and IV.2.2.11. (p. 62).

Sec. 15, para. 1, sent. 6, no. 2 InhKontrollV [Holder Control Regulation].

See 6.3.2.1, above.

See for more detail on this term in the context of the Block Exemption Regulation in the insurance industry Dreher/Baubkus, VersR (2010), 1389 ff.

See 6.3.2.2, above.

On this point, CEIOPS specifically mentions “all persons who effectively run the undertaking”. See references in n. 42, above.

On this point, CEIOPS states: “The other ‘key functions’ are those considered important and critical in the system of governance and include risk management, compliance, internal audit and actuarial functions. Additional key functions may be relevant.”; see references at n. 42 above.

See Dreher/Schaaf, VersR (2009), 1151 (1164).

The reference to art. 250 in art. 248, para. 1 (d) of the Solvency II Framework Directive is an editorial error. The correct reference is to art. 246.

For a comprehensive discussion, see Bürkle, in: Bürkle, ed., Compliance in Versicherungsunternehmen [in English: Insurance Undertakings’ Compliance] (2009), 1 ff.

For the broad view on the oversight duties of the supervisory board, see, e.g. Semler, Leitung und Überwachung der Aktiengesellschaft [in English: Managing and Monitoring the Corporation] (2nd ed. 1996), 53 ff.

See 6.3.2 and 6.3.1.2, above.

For a detailed treatment of supervisory board monitoring of the legality of management activities and the requisite legal knowledge for supervisory board members, see Bürkle, VersR (2010), 1005 (1008) f.

See 6.2, above.

Under sec. 36 of the VAG [German Insurance Supervision Act], the provision applies also to mutual insurance associations.

Thus specifically for “mutual insurers”, OECD (Draft Revised), OECD Guidelines on Insurer Governance, (2010) 33.

In the “non-technical sense” and not related to the SE [Societas Europaea].

Thus BGHZ 85, 293, 296; on this subject from the company law point of view, Habersack, in: Münchener Kommentar zum Aktiengesetz [in English: Munich Commentary on the German Stock Corporation Act], n. 8 above, at sec. 116, ref. 24 ff.; Hopt/Roth, in: Hopt/Wiedemann eds., n. 8 above, at sec. 116, ref. 44; see, e.g., also Feddersen, AG (2000), 385 (393 f.); Frühauf, ZGR (1998), 407 (414 ff.); Möllers, ZIP (1995), 1725 (1732 ff.); Seibert, ZBB (1994), 349 (352); Scheffler, ZGR (1993), 63 (71).

See on this point, e.g., Ringleb/Kremer/Lutter/v. Werder, NZG (2010), 1161 (1164 f.).

See 6.3.2, above.

See OECD, n. 58 above, at 6 and 32.

For detail on the requirements for oversight of risk management by the supervisory board of an insurance undertaking, see Schaaf, ZVersWiss (2009), 613 ff.

Company law in fact provides for appointment of supervisory board members with particular expertise for certain supervisory tasks. See sec. 100, para. 5 of the AktG [German Stock Corporation Act]; for a current case on this point, see OLG München [in English: Munich Higher Regional Court], AG (2010), 639 f.; Staake, ZIP (2010), 1013 ff.

Titel: Fitness of Members of Supervisory Board
verfasst von: Meinrad Dreher
Verlag: Springer Berlin Heidelberg
Buch: Treatises on Solvency II
Print ISBN: 978-3-662-46289-8

Electronic ISBN: 978-3-662-46290-4

Copyright-Jahr: 2015
DOI: https://doi.org/10.1007/978-3-662-46290-4_6