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The German Aktiengesellschaft is a joint-stock company listed on the Frankfurt Stock Exchange, with a two-tier management structure and employee representation on the board of directors. It is one of two main forms of organization in Germany, with the other being the more common GmbH.
The German term “Aktiengesellschaft” is more accurately translated into English as “a joint-stock company”. Aktiengesellschaften, the plural form, is similar in structure and corporate governance to corporations headquartered in other countries that have shares available to the investing public through regulated stock exchanges. In Germany, for example, Aktiengesellschaften shares are commonly listed on the Frankfurt Stock Exchange. As with most publicly traded companies in the industrialized world, an Aktiengesellschaft, designated by the acronym “AG” after the company name, is a highly regulated entity.
An Aktiengesellschaft is one of the two main forms of organization that prevail in Germany, Austria, Switzerland and, to a lesser extent, Belgium. The second organizational form, which is actually more common in Germany than the Aktiengesellschaft, is known as the Gesellschaft mit beschrankter Haftung (GmbH), which translates to “company with limited liability.” In fact, GmbH comprises about 95 percent of German companies in part because the GmbH structure is more easily created than the Aktiengesellschaft, which requires a certain minimum amount of start-up capital, requires the publication of annual financial statements, and requires a two-tier corporate governance. structure that resembles that of typical corporations in other countries but with a slight variation.
Like many other corporations, an Aktiengesellschaft typically has a two-tier management structure that includes a board of directors, often consisting of industry leaders, academics, scientists, economists, and philanthropists; and a board of directors or executive, composed of the highest level officials of the corporation. The board of directors is charged with setting the overall goals and objectives of the corporation, and the board of directors focuses on creating strategies to meet those goals and the day-to-day operations of the company. Unlike many other types of corporations, however, an Aktiengesellschaft is required to have a board of directors that includes a certain percentage, based on company size and number of employees, of the corporation’s employees at all levels. to ensure that employees are directly involved in the direction of the corporation’s activities. This requirement stems from the fact that until the 20th century, most German companies were family-owned and therefore privately owned, with no involvement of company employees in running these companies. As the concept of the corporation developed in Germany, the country’s economic authorities saw an opportunity to “democratize” the corporate structure by requiring that the Aktiengesellschaften have, as part of its governance structure, representatives of its employees.
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