We have submitted a response to the German Corporate Governance Code Commission's public consultation on proposed amendments to the Code. Building on points raised during a July 2026 ICGN call with the Commission, our submission argues for shortening the maximum supervisory board election cycle, recommending a three-year limit as an interim step towards annual elections, which we believe better serve director accountability and shareholder rights.
Read our full submission below.
Dear leader of the German Corporate Governance Code Commission,
I am writing on behalf of Sarasin & Partners LLP, a long-term, thematic investment manager based in the UK, with $22.5bn of assets under management as at 30 June 2026. We invest globally on behalf of a range of institutional and individual clients, with particular expertise in the charity sector.
We are grateful to the Commission for its work in drafting the proposed amendments to the German Corporate Governance Code and for launching this public consultation, which we believe serves to encourage best governance practice at German companies.
As a contribution to this consultation, Sarasin & Partners would like to return to the point we raised with the Code Commission during the call with the International Corporate Governance Network (ICGN) with Clara C. Streit, Werner Brandt, and Ariane Reinhart on 13 July 2026, strengthening the Code by including recommendation for shorter length of the supervisory board election cycle.
The German Stock Corporation Act (Aktiengesetz, AktG) provides that supervisory board members may be elected for terms of up to five years. Because the AktG does not present the five-year period as a recommendation, and because it does not restrict shareholder votes on directors to the expiry of a term, the Code is free to offer guidance on what it considers to be best governance practice. German companies are then able to give effect to that guidance in their articles of association.
We continue to believe that annual votes on directors represent best practice, securing both the accountability of directors and the full realisation of shareholder rights. We would therefore encourage the Code to recommend a maximum election period shorter than that permitted by the AktG, of three years, with the ambition of moving progressively towards annual elections as best practice.
We have seen no evidence that annual board elections undermine long-term focus or board stability. Length of tenure is a separate question: it may remain as long as independence status permits, conditional on annual majority shareholder support at the annual general meeting (AGM).
We have considered carefully the arguments put forward on that call by the Code Commission's leadership in support of staggered, multi-year elections of supervisory board members. We respectfully disagree and are presenting our arguments below.
Board succession discipline. You explained that the Chair reviews board composition whenever a director is put to a vote, and that the three-year schedule keeps that review meaningful, whereas annual reconfirmation risks becoming a “rubber stamp”.
Annual ratification does not prevent the nomination committee from running its own multi-year succession review on whatever cadence it chooses; if deliberateness is the concern, the remedy is a mandated periodic review rather than a longer ratification interval. Annual elections in fact oblige the committee to re-propose every director each year, whereas a three-year cycle allows a director to serve without the question being formally revisited. UK and most US boards, where annual elections have been standard for a long time, show no documented deficit in succession planning. Annual votes also give a clearer signal of investor sentiment on individual directors than discharge votes or the approval of the financial statements. Succession discipline therefore argues for shortening the election cycle in the Code, ideally to one year, rather than preserving it.The balance of power within committees under the co-determination rule (which requires that employee representatives make up 50% of the supervisory board at companies with more than 2,000 employees). You noted that annual reconfirmation of shareholder-side directors, set against secure five-year terms for employee-side representatives, would shift continuity, and with it power, towards the employee side.
This conflates annual confirmation with high turnover. Shareholders rarely vote down a sitting director, and there is no basis for expecting materially greater churn than under a three or four-year cycle: annual confirmation adds a layer of accountability rather than replacing the multi-year appointment horizon. Nor does reduced formal security equate to reduced power, since a director's influence rests on legitimacy, which annual reaffirmation by a strong vote strengthens. Precise symmetry of cycles is in any event not a feature of co-determined boards today, where terms and removal thresholds already differ between the two sides. A shorter cycle, ideally one year, would therefore strengthen rather than weaken the shareholder side.
We would welcome the opportunity to discuss these proposals with the Code Commission in greater detail.
Yours sincerely,
Julia Shatikova
Ownership Lead
Sarasin & Partners
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