Supervision Remains Mandatory

The obligation of the executive board of a stock corporation to regularly report to the supervisory board continues to apply even if the company is not conducting any business activities. This was clarified by the Federal Court of Justice (Bundesgerichtshof, BGH) in a ruling dated October 14, 2025 (II ZR 78/24). At the same time, the court emphasized the responsibility of the supervisory board to demand and review these reports.

The ruling was based on a claim for damages against the former chairman of the supervisory board of a stock corporation. The company had been inactive for a prolonged period but later engaged in real estate transactions that violated its articles of association. According to the BGH, the supervisory board must intervene in such a case. The court rejected the argument that the supervisory board was unable to act because it was not informed about the business dealings.

Instead, the court clarified which duties for the executive board and supervisory board remain in force during temporary cessation of business activities:

• Continuing Supervisory Duty: According to § 111 para. 1 of the German Stock Corporation Act (AktG), the supervisory board is obligated to continuously monitor the executive board, even if the company is not conducting any business.
• Subject of Executive Board Reports: The reporting on business developments and the company’s situation pursuant to § 90 para. 1 sentence 1 no. 3 AktG also includes information about whether business operations have been suspended, resumed, or are planned to be expanded into new areas.
• Reporting Frequency: Reports must be submitted at least quarterly (§ 90 para. 2 no. 3 AktG). This minimum frequency is mandatory by law and cannot be waived or restricted, even if there is little or nothing substantive to report.
• The Executive Board’s Duty to Report: The obligation to provide reports and information lies primarily with the executive board. However, the supervisory board cannot invoke the absence or insufficiency of reports as a defense.
• Supervisory Board’s Duty to Request Information: Should reports appear unclear, incomplete, or be missing altogether, the supervisory board must actively ensure it receives the information necessary for its supervisory function. This duty applies not only to the board as a whole but to each individual supervisory board member.
• No Different Rules Due to Inability to Pass Resolutions: If the supervisory board is unable to pass resolutions (in the present case because two out of three members had resigned), this does not release the remaining members from their statutory duties.
• No Limitation to Informal Information: Relying solely on informal or incidental verbal information from the executive board is insufficient for proper supervision.

The BGH further reiterated the rules regarding the liability of supervisory board members. Accordingly, accused supervisory board members must themselves show and prove that they did not breach their duties or that they bear no fault (intent or negligence) for such breach.

In the specific case, the BGH doubted that the defendant had acted without fault. Consequently, the judgment of the lower court was overturned, and the case remanded for further consideration.

The full judgment can be found here in german.