KonTraG

KonTraG, short for Kontroll-und TransparenzGesetz (Control and Transparency Act), is a German law enacted in 1998. Its primary aim was to improve corporate governance and increase transparency in German companies. The law introduced a number of measures designed to strengthen the position of shareholders and enhance the oversight of management boards.

Key aspects of KonTraG included:

• Expanded Liability of Management Boards: The law increased the accountability of management board members for mismanagement and imposed stricter liability rules.

• Strengthened Supervisory Boards: KonTraG clarified the responsibilities and powers of supervisory boards, particularly regarding risk management and internal controls. The law emphasized the supervisory board's role in monitoring the management board.

• Improved Audit Procedures: The act aimed to enhance the quality of audits and strengthen the independence of auditors.

• Enhanced Reporting Requirements: KonTraG increased the requirements for companies to disclose information to shareholders and the public, promoting greater transparency.

The KonTraG was a significant step in reforming corporate governance in Germany and played a crucial role in modernizing the German corporate landscape. It laid the groundwork for subsequent corporate governance codes and regulations in the country.