GERMANY Law and Practice Contributed by: Christoph Nolden, Nicolas Ott, Stefan Mendelin and Thomas Glaser, SZA Schilling, Zutt & Anschütz
Accordingly, an alternative to transferring shares to a nominee or trustee could be the appointment of a so-called proxy adviser to act as a representative. Regarding such proxy advisers, the recent Act Imple- menting the Shareholder Rights Directive II ( Gesetz zur Umsetzung der zweiten Aktionärsrechterichtlinie , or ARUG II) established information and transpar- ency obligations for proxy advisers in stock corpora- tions, addressing their growing influence in general meetings. By way of example, proxy advisers have to submit annual declarations on compliance with a certain code of conduct and on how they prevent and manage potential conflicts of interest. In addition to this, they must inform their clients of any conflicts of In stock corporations, resolutions must generally be passed in a general meeting. In principle, there are no resolutions without holding a general meeting. How- ever, in limited liability companies, it is not unusual for written resolutions to be passed without holding a meeting. In this regard, three different ways of doing so can be distinguished – namely, either: • the shareholders agree (in text form) to the pro- posed resolution; or • the shareholders agree (in text form) to at least a written voting procedure; or • the articles of association provide for the possibil- ity of taking resolutions outside a shareholders’ meeting. interest without undue delay. 2.14 Written Resolutions 3. Share Issues, Share Transfers and Disclosure of Shareholders’ Interests 3.1 Share Issues When issuing new shares, the existing shareholders have a subscription right ( Bezugsrecht ). Subscription rights provide that a shareholder can acquire a num- ber of new shares, so that they keep their participation rate even after the capital increase. This applies both to stock corporations and to limited liability compa- nies. In principle, subscription rights can be sold and trans- ferred to third parties (provided no transfer restrictions
exist). However, subscription rights can be excluded by resolution of the general meeting with a quali- fied majority. Under the revised Stock Corporation Act, companies can now exclude shareholder sub- scription rights in cash capital increases up to 20% of share capital, up from 10%. This change enables listed companies to conduct faster equity financings, especially in volatile markets. However, shareholder approval remains mandatory for adopting authorised capital and protections under the Kali+Salz doctrine (requiring proportionality and company interest) still apply. 3.2 Share Transfers Regarding the transfer or pledge of shares, the provi- sions for limited liability companies are stricter than those for stock corporations. A disposal of shares in a limited liability company requires notarisation. Such requirement primarily intends to prevent speculative trading and to facilitate proof. Moreover, the disposal of shares can be further restricted by the articles of association. By way of example, it is not unusual for the disposal of shares to be subject to approval by the shareholders’ meeting or by the company ( Vinkuli- erung ). Such transfer restriction protects co-share- holders or the company from undesirable changes. This can be of particular interest in family-owned com- panies. In addition, pre-emptive rights ( Vorkaufsrech- te ) can be established in the articles of association. For stock corporations, bearer shares ( Inhaberaktien ) or registered shares ( Namensaktien ) may be issued, each as ordinary shares and ‒ in certain volumes ‒ pre- ferred shares (see 1.3 Types or Classes of Shares and General Shareholders’ Rights ). Bearer shares are the easiest to transfer and are therefore particularly suit- able for listed stock corporations. Registered shares are often subject to statutory transfer restrictions. According to Section 68 of the Stock Corporation Act, the articles of association may make the transfer subject to the consent of the company. Subject to the provisions in the articles of association, such consent can be given by the executive board, the supervisory
board or the general meeting. 3.3 Security Over Shares
Shareholders are generally entitled to grant security over their shares. Notably, the pledge of shares plays
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