Thu, Apr. 22, 2004

Reforming the Corporate Law

ASG - Washington.   The Schröder cabinet announced yesterday that it initiated the legislative process to amend the German corporate law. It approved amendments to corporate financial disclosure obligations.

Two bills, Bilanzrechtsreformgesetz (BilReG) and Bilanzkontrollgesetz (BilKoG), intend to strengthen corporate governance and the protection of investors, improve the transparency of disclosures and to implement some European Union directives.

For instance, the drafts contain conflict rules for services provided by accountants, permit an election to apply the IAS standard instead of the German HGB accounting rules and conceptualize private boards of review for suspicious financial statements of listed companies.

These bills are anticipated to become effective in 2005 after three hearings in the federal diet, Bundestag, and, potentially, the advice and consent of the upper house, the Bundesrat.


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