With the advi­sory board — also known as the board of direc­tors or share­hol­ders’ commit­tee — a body can be set up “between” the share­hol­ders’ meeting and the port­fo­lio company’s manage­ment. On the one hand, this results in an acce­le­ra­tion of decis­i­ons at share­hol­der level. On the other hand, the Advi­sory Board members are more inten­si­vely invol­ved in the acti­vi­ties at the level of the port­fo­lio company and ther­e­fore concen­trate to a parti­cu­lar extent on their tasks, which increa­ses the quality of their acti­vi­ties. Further­more, in the event of diffe­ren­ces between the manage­ment and the share­hol­ders, there is an addi­tio­nal escala­tion level to bring about arbitration.

In addi­tion to assum­ing control and moni­to­ring tasks and the possi­bi­lity of trans­fer­ring manage­ment func­tions, the advi­sory board also regu­larly has an exten­sive advi­sory and spar­ring func­tion in private equity prac­tice. In addi­tion, an advi­sory board can provide valuable input in the deve­lo­p­ment and prepa­ra­tion of stra­te­gic busi­ness planning.

How the advi­sory board should be legally ancho­red depends first and fore­most on the rights and duties to be assi­gned to it. As a rule of thumb, it is advi­sa­ble to include more detailed provi­si­ons in the company’s artic­les of asso­cia­tion the more inten­si­vely the “normal” orga­niza­tio­nal consti­tu­tion of the GmbH is inter­fe­red with.

Thus, an advi­sory board that is to have exclu­si­vely advi­sory func­tions can even be set up without even having to be ancho­red in the artic­les of asso­cia­tion, the so-called advi­sory board under the law of obli­ga­ti­ons. In this case, a corre­spon­ding share­hol­der reso­lu­tion and the agree­ments with the desi­gna­ted advi­sory board members are suffi­ci­ent. If, howe­ver, the advi­sory board is to be gran­ted powers that go beyond merely advi­sing the manage­ment, the artic­les of asso­cia­tion must contain an opening clause autho­ri­zing the share­hol­ders’ meeting to imple­ment such an advi­sory board by reso­lu­tion. In the case of more far-reaching encroach­ments on the rights of the manage­ment and the trans­fer of tasks that are actually the respon­si­bi­lity of the share­hol­ders’ meeting, it is advi­sa­ble to regu­late this expli­citly in the artic­les of association.

The conceiva­ble powers of the advi­sory board also depend on the speci­fic func­tions it is to perform. A rough distinc­tion can be made as to whether the advi­sory board is inten­ded to advise the manage­ment, to control and moni­tor it, or even to parti­ally manage the company.
An advi­sory board which, accor­ding to the inten­tion of the finan­cial inves­tor, is to act exclu­si­vely in an advi­sory capa­city should, in parti­cu­lar, be endo­wed with suffi­ci­ent infor­ma­tion rights in order to be able to perform its advi­sory duties in a reasonable manner. Even if there is a gene­ral duty of the mana­ging direc­tors to provide the advi­sory board with all infor­ma­tion essen­tial for its acti­vi­ties, it would make sense to provide for an expli­cit duty of the manage­ment to report to and consult with the advi­sory board in certain situa­tions. In addi­tion, it is gene­rally recom­men­ded to set up a regu­lar report­ing system. On the other hand, the right to infor­ma­tion is accom­pa­nied by the duty of the members of the Advi­sory Board to treat the infor­ma­tion recei­ved confidentially.

An advi­sory board that is also to perform control and moni­to­ring tasks may be vested with a variety of addi­tio­nal rights. for exam­ple, the possi­bi­lity of issuing instruc­tions to the mana­ging direc­tors or also issuing person­nel powers to the mana­ging directors.