Under company law, the supervisory board is a company organ which is required in the case of registered co-operative societies (eG) and public limited companies (AG); is obligatory in the case of private limited companies (GmbH) only if certain preconditions apply; and is optional in all other cases. Its essential function is to supervise the way in which the business is managed. It represents the company in dealings with the management board and possesses the authority to appoint and remove the members of that board. The size of the supervisory board varies according to the size of the company and, if the company is subject to co-determination , to the form this has to take. The board appoints a chairperson and vice-chairperson from among its members and meets at least once a year. Only natural persons who do not form part of the company management may be members of the supervisory board. They are appointed from among the society members, shareholders or company members at the general meeting, shareholders' meeting or company general meeting and, in companies subject to co-determination, from among the employees (using various methods of election). Of all the employee representatives on the supervisory boards of companies subject to co-determination, some 80 per cent. are members of trade unions affiliated to the German Federation of Trade Unions .

Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.