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1 February, 2013
Australia's corporate watchdog - ASIC (the Australian Securities Investments Commission) is loved and hated by companies and consumers alike but it is so unique and its powers so manifest Deakin University's corporate governance expert, Professor Jean du Plessis, wants Germany and the world to know about it.
He also wants Australian companies and scholars to consider whether the two-tier board system used by German companies could work here. Particularly its controversial aspect where German employees have a presence on the supervisory boards.
“The two-tier board system really is an exceptional practice and I would like Australia and other countries to take a closer look at it,” he said.
And he is now in a position to encourage this, thanks to the prestigious Anneliese Maier Research Award he received from the German Alexander von Humboldt Foundation which will allow him to ‘cross pollinate’ German corporate governance approaches with others around the world.
The Anneliese Maier Research Award, worth EUR250,000 over five years, is given to recipients in the social sciences to contribute to the internationalisation of their discipline.
Although the award is made by the Alexander von Humboldt Foundation, it is funded by the German Federal Ministry of Education and Research. In 2013 only seven other scholars received the award.
In Professor du Plessis’ case the emphasis will be on internationalising German corporate law and corporate governance.
“I was absolutely thrilled when the foundation notified me about the award and I am very excited by the whole thing,” Professor du Plessis said.
“It is a very unique award, first you have to be nominated for it, its not something you can apply for, it is international so anyone in the world in the social sciences disciplines can be nominated for it, and only a small number of nominations are funded.
“In 2011, for instance, 90 people were nominated, eight people received an award and only one of those was a lawyer.”
Professor du Plessis grew up in Namibia and South Africa and despite the French origins of his name, he laughingly admits he does not speak French at all, but is fluent in Afrikaans, English and German, an advantage which allows him to communicate the results of his research efforts to a wide audience.
Professor du Plessis said his interest in German corporate law was sparked after a visit by Professor Bernard Großfeld (University of Muenster) to South Africa in 1993.
“Professor Großfeld spoke on Codetermination and the two-tier board system in Germany and I was keen to see if such a system could work in South Africa as South Africa had just had its first free democratic election and I thought it might be an interesting way for South Africa to go,” Professor du Plessis explained.
With the help of several separate Alexander von Humboldt Scholarships Professor du Plessis has since travelled back and forth to Germany looking at different aspects of German corporate governance.
Professor du Plessis’ book, German Corporate Governance in International and European Context, co-authored by five German Professors, Bernard Großfeld, Claus Luttermann, Ingo Saenger, Otto Sandrock and Matthias Casper, provides one of the most comprehensive and in-depth discussions in English of the German corporate law and corporate governance system.
Professor du Plessis plans to use the award to focus on developing the international potential of six areas of German corporate governance including, legal actions against directors for a breach of their legal duties, Codetermination (the right of workers to participate in the management of the companies they work for), Board Diversity (with an emphasis on gender diversity), the role of the primary Corporate Regulator to bring action against directors for breaches of duty as well as taking legal action to get them disqualified to act as directors and improving business rescue legislation.
Professor du Plessis said that even though ASIC was quite young having been set up in the late 1980s as the Australian Securities Commission (ASC), it had powers no other regulators had making it unique in the world.
“It has got more power and interferes with more internal workings of companies than anywhere else in the world, including the Securities Exchange Commission (SEC) in America,” he said.
“Our corporate regulatory framework is an example for the rest of the world.”
Professor du Plessis said what set ASIC apart from other countries’ regulators was the fact that it was prepared to act and use its powers, also to enforce directors’ duties.
“Other countries’ regulators might have the powers but they don’t use them,” he said.
Professor du Plessis said similarly Australian companies may be able to learn something by considering Germany’s two-tier board system as part of their corporate governance process.
“What is fascinating, is that it is a radical idea, particularly here, but if you open your mind to different models of corporate governance that are practiced around the world and take some aspects into you own corporate governance model who knows what can be achieved,” he said.
“There is an argument that one of the reasons why German companies recovered so quickly from the Global Financial Crisis, and coped better with the continuing European Financial Crisis, was because of the input of their employees at all levels, from shop-floor level, through works councils, safety committees, productivity committees, job classification committees and ultimately filling up to 50 per cent of the spots on supervisory boards in large public companies.”
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