Name : Davy Rizqi Akbar - 1806213030

Farid Fajar - 1906389151

1. The detail difference between One Tier Board and Two Tier Board System

One Tier Board System Two Tier Board System

All authority to carry out the functions of a There are two boards that run the
company or organization is exercised by company, namely the executive board
one board or board which is commonly and the supervisor board.
referred to as the board of directors.

The majority of board members are The supervisory board consists of

executive directors. In this structure there independent non-executive directors and
are non-executive directors on the board non-independent (connected)
but the number is in the minority. non-executive directors

All non-executive directors are members The executive board consists of all
of the board and are similar to the managing directors such as. CEO, CFO,
non-profit organizational structure. COO, CIO which includes C-level
management.

2. Countries that applied one tier board system​ : The first system is widely applied by
companies or organizations in Anglo-Saxon countries, including the United States,
United Kingdom, and Australia.

Countries that applied two tier board system​ : The second system is widely applied in
mainland European countries, especially Germany, France, and the Netherlands.
Indonesia is included because of the former Dutch colony.

The implementation of the​ one tier board​ system in United States refers to the
Sarbaney Oxley Act, the regulations related to the board in the Sarbanes Oxley Act are
more directed at a new standard of accountability related to internal controls and
corporate financial statements. This regulation requires the establishment of an internal
auditor who reports directly to the audit board. Internal auditors consist of members of
the board of directors, some independent members, and accounting experts. This is
done to prevent fraud with the laws that govern the Sarbaney Oxley Act and also in the
United States a chairman is appointed as CEO and gives rise to the title Executive
Chairman. There is Board Consensus to required fire the CEO and making the process
more difficult to accomplish before the company incurs substantial damage.

The implementation of the​ two tier board system​ in Germany not really different with
Indonesia. The example is in ThyssenKrupp AG com[any which is the biggest Steel- and
armaments manufacturer in Germany, this company applied German Corporate
 Governance Code introduced in 2002 and complies with all the recommendations of the
updated June 2008 version thereof. Executive Board and Supervisory Board of
ThyssenKrupp AG issued an unqualified Declaration of Conformity in accordance with
Art. 161 AktG on October 1, 2008. This is useful for generating efficient cooperation
between the executive and the supervisory board, respecting the interests of
shareholders and the frankness and transparency in corporate communications. The
target of the German Code of Corporate Governance is to make German corporate
governance regulations transparent to national and international investors, thereby
strengthening confidence in the management of German companies.

3. Advatages and disadvantages between one tier board system and two tier board system
One Tier Board System
Advantages:
● Directors can freely take policies that represent the interests of shareholders
● The form is flexible because in the one tier boar system the functions of
supervisors and executors are not separated. Both functions are performed by
the same board
● In terms of cost, a one tier board system has relatively lower costs because the
supervisory function is carried out by the same board
● The flow of information on company data runs efficiently because directors do not
need to provide information reports to the supervisory board or commissioners
Disadvantages
● A very strong CEO position causes the company to rely heavily on CEO policies.
This strong position sometimes makes the CEO to make less objective policies
● The executive and supervisory functions performed by the same board of
directors lead to a high risk of abuse of authority by the board of directors
Two Tier Board System
Advantages
● The CEO position is balanced because the supervisory function is carried out by
the board of directors
● CEOs are more objective in making decisions because in making decisions they
need to listen to input from the board of directors
● No personal connection allows voice monitoring and counseling
Disadvantages
● Higher board function costs. From a cost perspective, two board systems have
higher costs due to the separation of the executive and supervisory functions
● Poor information flow and non-executive access to corporate data. Sometimes,
the flow of information is asymmetrical between directors and commissioners due
to concerns of interest
● Two tier board systems have board dominance by the majority shareholder
References :

Prasetya, H. (2018, February 28). Pendekatan "One-Tier Board SYSTEM" dalam Tata Kelola
LPS. Retrieved February 25, 2021, from
https://www.kompasiana.com/hariprasetya/5a95e4405e13732a05400622/pendekatan-one-tier-b
oard-system-dalam-tata-kelola-lps

Eck, Susanne (2009). Which system is BETTER? One-tier OR two-tier-board system? Where is
the COMI of THYSSENKRUPP AG. Retrieved February 25, 2021, from
https://www.grin.com/document/141906

Crowther, D. and Aras, G (January 2010). A Handbook of Corporate Governance and Social
Responsibility. Retrieved February 26, 2021, from
https://www.researchgate.net/publication/228198539_A_Handbook_of_Corporate_Governance
_and_Social_Responsibility