Aktiengesellschaft

Aktiengesellschaft (German pronunciation: [ˈʔakt͡si̯ənɡəˌzɛlʃaft]; abbreviated AG pronounced [ʔaːˈgeː]) is a German word for a corporation limited by share ownership (i.e. is owned by its shareholders) and may be traded on a stock market. The term is used in Germany, Austria, Switzerland, South Tyrol and for companies incorporated in the German-speaking region of Belgium. It is also used in Luxembourg (French pronunciation: [aktjɛ̃ˈʒøzɛl.ʃaf]), though the French-language equivalent, Société Anonyme, is more common.

Meaning of the word

The German word Aktiengesellschaft is a compound noun made up of two elements: Aktien meaning shares, and Gesellschaft in this context meaning corporation. An approximate English transliteration can therefore be dictated as "sharecorporation". In German the use of the term Aktie for share is restricted to Aktiengesellschaften. Shares in other types of German companies are called Anteile rather than Aktien.

Legal basis

In Germany and Austria, the legal basis of the AG is the German Aktiengesetz (abbr. AktG) or the Austrian Aktiengesetz (abbr. AktG). The German commercial law (§ 19 Handelsgesetzbuch) requires all corporations to specify their legal form in their name which tells the public their limitation of liability, all German (required by § 4 Aktiengesetz) and Austrian stock corporations include Aktiengesellschaft or AG as part of their name, frequently as a suffix.

In Switzerland, the Company Limited by Shares (or Aktiengesellschaft in German, société anonyme in French, società anonima in Italian, societad anonima in Romansh) is defined in Title Twenty-Six of the Code of Obligations. Article 950 specifies that the business name must indicate the legal form.

Structure

German AGs have a "two-tiered board" structure, consisting of a supervisory board (Aufsichtsrat) and a management board (Vorstand). The supervisory board is generally controlled by shareholders, although employees may have seats, depending on the size of the company. The management board directly runs the company, but its members may be removed by the supervisory board, which also determines the management board's compensation. Some German AGs have management boards which determine their own remuneration, but that situation is now relatively uncommon.

The general meeting is the supreme governing body of a Swiss company limited by shares. It elects the board of directors (Verwaltungsrat in German) and the external auditors. The board of directors may appoint and dismiss persons entrusted with managing and representing the company.

Similar forms

Several countries have similar forms of company:

• Denmark Aktieselskab (A/S)
• Norway Aksjeselskap (AS)
• Sweden Aktiebolag (AB)
• Finland Osakeyhtiö (Oy)
• Turkey Anonim Şirket (A.Ş.)
• Bolivia, Costa Rica, Peru, Spain and other Spanish speaking countries Sociedad Anónima (S.A.)
• Portugal Sociedade Anónima (S.A.)
• Brazil Sociedade Anônima (S.A. or S/A or SA)
• Bulgaria Акционерно дружество (Akcionerno druzhestvo), derived directly from the German AG
• Russia Публичное акционерное общество (Publichnoe akcionernoe obschestvo) (ПАО)
• Belgium, Netherlands Naamloze Vennootschap (N.V.)
• France Société Anonyme (S.A.)
• Poland spółka akcyjna (S.A.)
• Italy Società per Azioni (SpA)

Further reading

• Fohlin, Caroline (November 2005). "Chapter 4: The History of Corporate Ownership and Control in Germany". In Morck, Randall K. (ed.). A History of Corporate Governance around the World: Family Business Groups to Professional Managers (PDF). University of Chicago Press. pp. 223–282. ISBN 0-226-53680-7.
• Franks, Julian; Colin Mayer (2001). "Ownership and Control of German Corporations". The Review of Financial Studies. 14 (4). Oxford University Press: 943–977. doi:10.1093/rfs/14.4.943. JSTOR 2696732.