Dual board

Dual board structure, common in Germany and also used in other European and Asian countries, is a structure of corporate governance in which shareholders (and often workers) elect members of a Supervisory board, which then appoints and supervises a Management board.

There are two separate boards, one executive board for the day-to-day business and one supervisory board for control purposes (elected by the shareholders). In these countries, the CEO presides over the executive board and the chairman presides over the supervisory board, and these two roles will always be held by different people. This ensures a distinction between management by the executive board and governance by the supervisory board. This allows for clear lines of authority. The aim is to prevent a conflict of interest and too much power being concentrated in the hands of one person. There is a strong parallel here with the structure of government, which tends to separate the political cabinet from the management civil service.

In the United States, the board of directors (elected by the shareholders) is often equivalent to the supervisory board, while the mangement/executive board may often be known as the executive committee or executive council, composed of the division/subsidiary heads and C-level officers that report directly to the CEO.

See also

European Company Statute