More with Less? Government Commission on Corporate Governance Proposes Simplification of the German Corporate Governance Code

In August 2026, the Government Commission on the German Corporate Governance Code proposed a draft revised German Corporate Governance Code (the “Code”). As part of a consultation process, the Commission invited comments by early September 2026. The revision is intended to streamline the Code; according to the Commission’s accompanying communication, no new recommendations or suggestions are being introduced. The aim is to avoid any additional burden on the companies affected.

This article summarises the proposed amendments, provides an initial assessment and discusses the extent to which companies may need to take action.

The Code

The Code was adopted in 2002 by a commission established by the Federal Government. In addition to a description of the statutory requirements for the governance of German listed companies, referred to as principles, it contains recommendations and suggestions for good and responsible governance. The Management Board and the Supervisory Board must declare annually whether they comply with the Code’s recommendations. To the extent they do not follow them, they must state why they do not do so. This so-called Declaration of Compliance must be published on the company’s website. Deviations from suggestions need neither be disclosed nor explained.

The obligation to issue a Declaration of Compliance applies to companies whose shares are admitted to trading on an organised market (such as the regulated market of a German stock exchange), as well as to companies that have issued securities other than shares for trading on an organised market and whose shares are, at their instigation, traded on a multilateral trading system (such as the open market (Freiverkehr) of a German stock exchange). Compliance with certain recommendations of the Code is also a prerequisite for the company’s shares to be included in a DAX selection index.

Since its introduction, the Code has been amended several times. In particular, it was supplemented with more detailed provisions on remuneration rules as well as on aspects of sustainability, corporate responsibility and the consideration of social and environmental factors. Changes to statutory requirements have also resulted in recommendations and suggestions of the Code being superseded by new statutory provisions.

The Proposed Amendments

The revision of the Code is intended to achieve a clearer and more principles-based structure. Accordingly, unlike in previous amendments, the focus is on deletions and simplifications. Of the 66 recommendations and suggestions in the Code, 13 are to be deleted in whole or in part, five are to be simplified or consolidated, and two recommendations are to be converted into suggestions. Recommendations that have become statutory obligations are being deleted. Overly rigid requirements are to be dispensed with, without diluting the standards of good corporate governance. The key proposed amendments are outlined below:

The suggestion that the Management Board should convene an Extraordinary General Meeting in the event of a takeover offer, at which the shareholders would discuss the takeover offer and, if applicable, resolve on corporate actions, has been deleted. The suggestion – which was intended only for target companies – has proven generally impractical given the tight time constraints of the German Securities Acquisition and Takeover Act (WpÜG). The practical relevance of such “Defensive General Meetings” has therefore remained limited.
The previously recommended stipulation of an age limit for Management Board and Supervisory Board members has been downgraded to a suggestion. An age limit for Management Board members is no longer common international practice; for Supervisory Board members, an age limit represents only one of several instruments to achieve an appropriate board composition.
With regard to the composition of the Supervisory Board, the draft dispenses with the specific emphasis on expertise in sustainability matters in the profile of skills and expertise to be developed by the Supervisory Board. Such expertise is already required under European law. Moreover, a selective highlighting of individual areas of expertise does not appear appropriate.
In the future, it will no longer be recommended that the rules of procedure of the Supervisory Board be made accessible on the company’s website. This does, however, entail reduced transparency with respect to approval requirements pursuant to Section 111(4) sentence 2 of the German Stock Corporation Act (AktG) that are set out therein.
The recommendation to establish “professionally qualified” committees of the Supervisory Board is to be dispensed with in the future. In particular, for companies with only three Supervisory Board members, the absence of committees gave rise to a need to provide explanations in the Declaration of Compliance, even though the establishment of committees is clearly not appropriate in such cases.
The specification of the expertise in the field of accounting already required by law under Section 100(5) AktG and the identification of the members of the Audit Committee together with a description of their expertise have been moved to the explanatory memorandum to the Code; no independent significance is attributed to them beyond the statutory requirements already applicable in this respect.
The previously recommended disclosure of the format of Supervisory Board meetings (in-person, video or telephone conference) in the report of the Supervisory Board to the General Meeting on its review of the management of the company is to be dispensed with in the future. Virtual and hybrid meeting formats have become common practice and are considered uncontroversial. The internal organisation of the Supervisory Board is to be liberalised in this regard.
Shorter publication deadlines for annual financial reports (90 days instead of four months) and half-year financial reports (45 days instead of three months) compared to the statutory requirements are no longer to be recommended. While the rules for the DAX selection indices refer to these shorter deadlines, they allow grace periods up to the respective end of the statutory reporting periods.
The requirements for the remuneration system and remuneration structure are being streamlined and more closely aligned with existing statutory requirements.
The timing requirements for determining the performance criteria for the variable remuneration of Management Board members are to be relaxed. It was previously recommended that these be determined in the preceding financial year. However, the company’s planning for the current year is often only finalised at the beginning of a new financial year. Accordingly, it is now to be recommended that performance criteria based thereon be determined during the first quarter on the basis of the adopted plan.
The proportion of the Management Board’s variable remuneration that is to be granted on a share-based basis is being made more flexible. In the future, it will no longer be recommended that, taking into account the tax burden, the variable remuneration be predominantly share-based. Instead, the Code will in the future merely recommend that a substantial portion of the variable Management Board remuneration be granted on a share-based basis; the reference to taxation is being deleted.
The recommendation that remuneration for intra-group Supervisory Board mandates of Management Board members should, as a matter of principle, be offset, and that Supervisory Board mandates at non-group entities be dealt with at the discretion of the Supervisory Board, is being deleted, as this already corresponds to prevailing practice.

Practical Implications

From a practical perspective, the question arises as to whether and how an amendment to the Code affects existing or future Declarations of Compliance pursuant to Section 161 AktG, and in particular whether an existing declaration needs to be updated in light of the amendments.

The Declaration of Compliance, which must be issued annually, comprises a retrospective part and a forward-looking part: the retrospective part must state whether the recommendations of the Code have been complied with since the most recent full Declaration of Compliance was issued; the forward-looking part declares whether the recommendations will be complied with in the future. The retrospective part covers the period since the last full Declaration of Compliance was issued, while the forward-looking part extends until the next declaration is issued.

For the forward-looking part, the version of the Code in force at the time the declaration is issued is determinative. For the retrospective part, by contrast, the prevailing view in the event of a mid-year amendment to the Code is that the “old” version is determinative, i. e. the version to which the most recent regular Declaration of Compliance referred. Otherwise, the retrospective declaration would have a different reference point than the previous regular declaration, thereby defeating the purpose of the critical self-assessment. Moreover, a false signal would be sent to the capital market if deviations had to be declared for a period in which the corresponding recommendations were not yet regarded as “best practice”. In practice, however, an additional statement on the Code recommendations current at the time of the declaration is frequently included in the declaration.

According to the prevailing view in legal literature and the case law of the Federal Court of Justice (Bundesgerichtshof), an obligation to issue an extraordinary update during the year of an existing Declaration of Compliance should only arise where the declaration was incorrect from the outset or has become incorrect due to a change in the originally declared intentions happening in the course of the current year.

Where the German Corporate Governance Code is amended between two regular declarations, no obligation to update arises by contrast. The determinative reference point for the forward-looking part is the version of the Code in force at the time the declaration is issued; a subsequent amendment does not render the previously issued declaration incorrect. An obligation to update solely on the basis of the Code amendment would, moreover, undermine the statutory declaration cycle under Section 161(1) sentence 1 AktG. Companies that comply with the current Code are not required to amend their Declaration of Compliance solely on account of the revised version before the next regular declaration is due; in individual cases, however, the revised Code may open up additional flexibility.

Summary and Assessment

The revision of the Code proposed by the Government Commission is to be welcomed in principle. The planned streamlining eliminates overlaps with statutory law already in force; moreover, greater flexibility is introduced in a number of areas. The selective emphasis on particular aspects of corporate governance, such as sustainability, is being scaled back in the interest of greater balance and objectivity.

The amendment to the Code does not, however, give rise to an obligation to update the current Declaration of Compliance. Companies that comply with the existing Code are not required to amend their Declaration of Compliance solely on account of the revised version; in individual cases, however, the revised version may open up additional flexibility.

Only in the context of the next regular declaration will the new Code apply to the forward-looking part of the declaration. For the retrospective part, reference must continue to be made to the “old” version. In practice, however, an additional statement on the Code recommendations current at the time of the declaration is frequently included in the declaration.