Editing Dual board

[[File:Dual Board Diagramm.jpg|thumb|right|Visual representation of a Dual Board system]]
A '''Dual Board''' or '''Two Tier''' system is a [[corporate structure]] system that consists of two bodies i.e. the [[Committee|Council of Delegate]]s to govern the [[Boards of directors|Board of Director]]s and the [[Boards of directors|Board of Director]]s to manage a corporation. The roles and relationships between the two bodies vary across countries. The structure is composed of two bodies, one focused on management and the other on governance.<ref>{{cite journal |last1=Yeh |first1=Chien Mu |last2=Taylor |first2=Tracy |last3=Hoye |first3=Russell |title=Board roles in organisations with a dual board system: Empirical evidence from Taiwanese nonprofit sport organisations |journal=Sport Management Review |date=1 April 2009 |volume=12 |issue=2 |pages=91–100 |doi=10.1016/j.smr.2008.12.001|hdl=10453/10243 |hdl-access=free }}</ref>

In Germany, the '''Dual Board''' system is prescribed for corporations that are listed on the stock market (e.g., [[Lufthansa]], and [[Adidas]]). It is argued that this approach better serves the objectives of a social market system.<ref name="Corporate governance">{{cite web|last1=Government Commission|title=German corporate governance code|url=http://www.dcgk.de//files/dcgk/usercontent/en/download/code/E-CorpGov_2014.pdf|accessdate=26 November 2014|archive-url=https://web.archive.org/web/20150528064128/http://www.dcgk.de/files/dcgk/usercontent/en/download/code/E-CorpGov_2014.pdf|archive-date=28 May 2015|url-status=dead}}</ref>

Using a two tier system might also result in "more monitoring" and "less aggressive performance targets". It might also be "less efficient" from a financial market perspective.<ref name="Corporate board structure">{{cite web|last1=Carrasco|first1=Vinicius|title=Corporate Board Structure, Managerial Self-Dealing, and Common Agency|url=https://web.stanford.edu/group/siepr/cgi-bin/siepr/?q=system/files/shared/pubs/papers/pdf/04-15.pdf|accessdate=26 October 2014}}</ref> It has been suggested that financial efficiency may be impeded by reduced communication, and the higher costs of running a Dual Board.<ref name="A Handbook of Corporate">{{cite web|last1=Aras, Crowther|first1=Güler, David|title=A Handbook of Corporate Governance and Social Responsibility|url=http://www.ashgate.com/pdf/SamplePages/Handbook_Corporate_Governance_Social_Responsibility_Ch10.pdf|accessdate=26 October 2014}}</ref>

==History==
The two tier system was first adopted in German companies in the 19th century, and it became compulsory after the [[Second World War]].<ref name="Proctor, Miles 2002">Proctor, Miles (2002). Corporate Governance. Cavendish publishing. {{ISBN|1859416519}}</ref><ref>WÜRDINGER, H. and PENNIGTON, R., R., German company law, London, Oyez publishing, 1975, 37-38
Xiii + 249.
</ref> Other countries that adopted a two tier approach include [[Finland]], [[China]], and the [[Netherlands]]. The Singapore Manufacturing Federation recently introduced a ''governance body'' as well.<ref name="1/2 tier govt systems">{{cite web|last1=Cheng|first1=Willie|title=One and Two-tier Governance Systems|url=http://www.btinvest.com.sg/specials/boardroom/one-and-two-tier-governance-systems/|website=BT invest|accessdate=26 October 2014}}</ref> In the European Union, 10 countries require the two-tier approach, 8 countries require the single-tier approach, and 9 countries allow the use of either.<ref name="Eu commission">{{cite web|last1=European Commission|title=Gender Balance in Boards|url=http://ec.europa.eu/justice/gender-equality/files/womenonboards/womenonboards-factsheet-uk_en.pdf|website=European Commission|accessdate=26 October 2014}}</ref>

==Management Body==
The ''Management Body'' meets frequently (often weekly) to deal with operational issues. Some contracting decisions and strategic planning decisions may have to be approved by the ''Governance Body''.<ref name="Corporate governance" /> members of the ''Management Body'' are appointed by the members of the ''Governance Body'' (see below).

'''Composition of "Management Body"'''

'''Head of ''Board of Directors'''''

*''Chairperson cum Managing Director cum Chief Executive Officer'' shall be selected and appointed by the ''Council of Delegates''

*''Vice Chairperson cum Deputy  Managing Director cum Co-Chief Executive Officer'' shall be selected and appointed by the ''Council of Delegates''


'''Members of ''Board of Directors'''''

*The number of ''Executive  Director cum Chief [Specialisation] Officer'' shall be decided and appointed by the ''Council of Delegates''

''Note :- Specialisation implies finance, technology, marketing etc.''

==Governance Body==
The ''governance body'' is usually elected by the [[Shareholders]]. Composition varies across jurisdictions; its members are usually independent of the executive but it can include employee representatives in some countries. Generally, the ''governance body'' guides and monitors the ''management body''.

'''Composition of "Governance Body"'''

'''Head of ''Council of Delegates'''''

*''Active Delegate'' shall be elected by the ''equity shareholders'' 
*''Co-Active Delegate'' shall be elected by the ''equity shareholders'' 

'''Members of ''Council of Delegates'''''

*''Executive  Delegates'' shall be elected by the ''equity shareholders'' 
*''Non Executive Delegates'' shall be elected by equity shareholders and nominated by the ''national government'',  ''provincial government'', ''officers union'' of that ''corporate establishment'' and ''employees union'' of that ''corporate establishment''

'''Types of Delegates'''

*''Residential Delegate''
*''Whole time Delegate''
*''Independent Delegate''
*''Alternate Delegate''
*''Women Delegate''
*''Additional Delegate''
*''Nominee Delegate''
*''Small Shareholder Delegate''
*''Shadow Delegate''
*''Casual Vaccancy Delegate''
*''Any other type of "Delegate" to be included''

<ref name="Proctor, Miles 2002" />  The ''governance body'' is involved in long term  strategic planning. Another task that the ''Governance Body'' is in charge of is the selection, dismissal, and designation of the members in the ''Management Body'', to "ensure a long term succession planning".<ref>Mallin.A (2013). Corporate Governance. Oxford University Press. {{ISBN|9780199644667}}</ref>

==Cooperation Between bodies==
The ''Management Body'' has to closely cooperate with the ''Governance Body'' to develop the [[business strategy]], this is done by creating a steady flow of information between the two.<ref name="Corporate governance" /> The information flow would include [[risk management]], [[business development]] and any differences of the development of the business compared to the initial plan.<ref name="Corporate governance" /> Open discussions between members of the boards are also key to the functionality of the business under a Two Tier System, because these must exchange information frequently.

==Country systems==
Countries with two-tier boards include:
*Germany
*Netherlands
*Austria
*Poland
*Indonesia<ref>{{cite web |url=https://www.bloomberg.com/news/articles/2018-10-10/kkr-s-noodle-snafu-shows-indonesia-can-still-be-risky-business |title=KKR's Noodle Snafu Shows Indonesia is Still Risky Business - Bloomberg |website=www.bloomberg.com |access-date=13 January 2022 |archive-url=https://web.archive.org/web/20190805225038/https://www.bloomberg.com/news/articles/2018-10-10/kkr-s-noodle-snafu-shows-indonesia-can-still-be-risky-business |archive-date=5 August 2019 |url-status=dead}}</ref>
*China

Countries where the option of a two-tier board is provided by law include:
*Belgium
*Italy
*France
*Romania

==See also==
* [[European Company Statute]]
* [[Supervisory Board]]
* [[Executive Director]]

==References==
{{Reflist}}

{{DEFAULTSORT:Dual Board}}
[[Category:Board of directors]]