GERMANY Law and Practice Contributed by: Christoph Nolden, Nicolas Ott, Stefan Mendelin and Thomas Glaser, SZA Schilling, Zutt & Anschütz
10. Shareholders’ Remedies 10.1 Remedies Against the Company
• one-time payment to those shareholders of the dependent company who wish to leave the dependent company. 9. Insolvency 9.1 Rights of Shareholders If the Company Is Insolvent As long as the company (and not the shareholders themselves) becomes insolvent, there are generally no restrictions on the disposal of their shares. After the opening of insolvency proceedings over the assets of the company, the shareholder may exercise the rights arising from their membership as long as this is not contrary to the purpose of the insolvency proceed- ings. They retain the right to attend shareholders’ meetings, as well as their voting rights and the right to information, and can still dispose of the company’s insolvency-free assets. The remaining competences also include the decision on the continuation of the company if the insolvency plan provides for this. Pursuant to Section 225a para- graph 3 of the Insolvency Act, an insolvency plan ena- bles any regulation permissible under corporate law to be implemented. This includes: • the continuation of the dissolved company; • the transfer of membership rights; • changing the purpose of the company; and • any amendment to the articles of association incumbent upon the shareholders. The opening of insolvency proceedings against the assets of a stock corporation or a limited liability com- pany leads to its dissolution. The general meeting is not involved and has no influence on the dissolu- tion. Besides the insolvency, the general meeting can decide to dissolve the company. A 75% majority is required for this purpose, unless the articles of asso- ciation stipulate further requirements.
Shareholders’ membership rights can be divided into proprietary rights and administrative rights (see 1.3 Types or Classes of Shares and General Sharehold- ers’ Rights ). In the event of an infringement of these rights, German law provides the shareholder with vari- ous appropriate legal remedies, which depend on the nature of the right concerned. An infringement of proprietary rights (eg, dividend rights) can be asserted across all legal forms by way of an action for performance. Such action for perfor- mance may be brought by any shareholder without the requirement for a certain quorum and is therefore also available to minority shareholders. An infringement of administrative rights (eg, voting rights) is often linked to a respective deficiency in the shareholder resolution concerned. This can be assert- ed by way of an action regarding resolution deficien- cies (see 2.11 Challenging a Resolution ). 10.2 Remedies Against the Directors When shareholders are not satisfied with the compa- ny’s management, they have different means of exert- ing influence, depending on the company’s legal form. In a stock corporation, the means for stockholders to exert influence on the company’s management are rather restricted. The executive board is appointed by the supervisory board and not by the general meeting. Furthermore, the executive board has the right and the duty to manage the affairs of the company on its own responsibility without following instructions from the general meeting. Therefore, the main way for share- holders to influence the executive board indirectly is by election of supervisory board members. Beyond that, the general meeting may appoint, in order to audit (inter alia) events occurring in the course of the management of the company’s affairs. There is also minority protection in this context. If the motion for the appointment of a special auditor is not carried at the general meeting, the court must – under certain condi- tions – appoint a special auditor upon a corresponding petition by stockholders, whose shares are at least
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