 Bismillah Khman Raheem and welcome ladies and gentlemen back to the corporate governance course. We are moving forward with the different models, with the different elements, with the different fundamentals and during our previous sessions we have been seeing what tends to constitute corporate governance, how it is looked at through different schools of thought and how it is practiced in different countries as per their own unique models. We were talking about the Japanese model which is based upon the Kretsu philosophy and today we are going to be talking about the German model. Now this German model is itself very unique and when we are talking about the German model it has some unique characteristics and these unique characteristics basically are based on the stakeholder theory of corporate governance. Traditionally they prefer bank financing to equity financing, German banks and corporate shareholders are the key players. The German stock market capitalization is small and Germans conservative investment strategy tends to be dominant. It is ambivalent towards minority shareholders. So when we are talking about the German model then we see that there is an overwhelming participation by the financial sector which primarily are the banks and secondly it is primarily a conservative model. It is not an aggressive model, it does not tend to move forward by making everyone participate and ensuring the highest level production. That is why ladies and gentlemen we see that one of the biggest breakups of a joint venture which took place between a top German company which is Mercedes-Benz with one of the top US companies Chrysler Corporation, their largest automobile company and again the Germans they both got together and it was expected that this joint venture would tend to totally obliterate the rest of the automobile industry. But unfortunately what happens is that when the two got together and the board they had a co-board so when the board of Chrysler got together with the board of Mercedes-Benz unfortunately they could not synergize with each other, they could not synchronize with each other and due to the differences between the different board members and the co-chairmen's this joint venture had to break up and both the companies had to part ways which adversely affected both companies and both companies lost billions of dollars. So sometimes easier said than done I mean such a wonderful board at Chrysler such a wonderful board at Mercedes-Benz they just could not synchronize because of difference of attitude, difference of approach, difference of demeanor, difference of working and difference of comprehension and therefore despite the fact that the best minds got together and it was expected that they would totally revolutionize the automobile industry but unfortunately they had to break up. So ladies and gentlemen when we are seeing its different characteristics and its different elements then we see that the German approach is conservative, it is gradual, it depends upon its banking system, it has fewer shareholders and stakeholders and also it does tend to protect the minority shareholders but again is a little bit inclined towards the larger stakeholders and that again tends to have its unique flavor or texture of the German model. Now if we tend to see a little bit more about the shareholding pattern which exists within the German economy then we see that German corporations hold about 41 percent of the German equity market, 27 percent is held by institutional owners primarily banks and individual and pension funds hold about 7 percent and foreign investors hold only 19 percent. So from this percentage itself the reflection that we get is that there are very few players, it is very much dominated by the corporations and by the banks and there is a very less shareholding which is taken up by the other players both the petty shareholders, the international shareholders and the other shareholders which exist within the economy and dominated by the corporation and by the banks. So this is the unique feature of the German model and that is how it is inclined and then the management supervisory board is two tiered usually in other models we see one board which is basically single tiered but this is a two tiered model the size of this supervisory board is set by law, the voting rights of shareholders is restricted legally to a certain percentage of the corporation's total share and therefore what we see is that sometimes the minority shareholder can suffer in this particular model and therefore that is why we say that it is more inclined towards the larger shareholders and again tends to protect the vested interests of the financial institutions which primarily are the banks. Now moving forward we see that there is a strong federal regulatory framework, there are strong laws, there is the stock corporation law, there is the stock exchange law and there are commercial law. So all of these tend to exist, there are disclosure requirements also and in this also what we see is that a minimum 5% shareholding is required in the share capital which again tends to undermine to a certain extent the smaller shareholders. We see that information is also provided on proposed mergers and restructurings and the shareholder retails are holding more than 25% of the total share. So again what we see ladies and gentlemen in this is that even for disclosure of information you need to have a minimum number of shares, you need to have a minimum stake within the corporation to have access to different levels of information. So ladies and gentlemen what we see is that the shareholder retails holding more than 25% of the total share and based upon this disclosure framework we see that they have different tiers for disclosure of information and based upon your shareholding and based upon the minimum level of shares that you have that would provide you access to different forms of information, different disclosures and also an insight into what the organization is doing and everything is not open to any shareholder which in other models we tend to see which can create its own problems. So the German model basically believes in stability, the German model believes in conservatism, the German model believes that the bigger shareholders should have access to everything while the smaller ones because their stake is so small should not have the opportunity to disrupt any of the operations of that particular corporation and that is the very essence of the German model. There is interaction between different players, there is inclusion of the interests of labor, corporations, banks, shareholders in the corporate governor system and therefore it has a multifaceted role. The system is geared towards the interest of key players and there is some scope for participation by the minority shareholders. So ladies and gentlemen, in conclusion what we see is that the German model is focused towards excellence, the German model believes in stability, the German model is based upon its major shareholders and stakeholders in which the banks play a major role, there is lesser diversity in equity participation and shareholding and most importantly it is a multifaceted role which is played by the banks and by the government and that is the German model. Thank you so much ladies and gentlemen.