GERMANY Law and Practice Contributed by: Christoph Nolden, Nicolas Ott, Stefan Mendelin and Thomas Glaser, SZA Schilling, Zutt & Anschütz
equivalent to one-hundredth of the share capital or to a stake of EUR100,000 at the time the petition is filed. In a limited liability company, the majority shareholders can exert stronger influence on the managing directors from the outset. First, the shareholders’ meeting has the right to appoint/dismiss the managing directors. Second, the shareholders’ meeting can give instruc- tions to the managing directors and thereby directly influence the company’s management. Additionally, shareholders can bring derivative actions on behalf of the company against its board members if certain requirements are met (see 10.3 Derivative Actions ). However, in principle, there are no contrac- tual obligations and no direct claims between the company’s directors/officers and the shareholders themselves. 10.3 Derivative Actions In stock corporations, special cases of derivative actions on behalf of the company are regulated by the Stock Corporation Act. Aside from this, deriva- tive actions are not permitted. Shareholders can only bring an action on behalf of the company if they first entered into proceedings for admission before a court, according to Section 148 of the Stock Corporation Act ( Klagezulassungsverfahren ). The court will give per- mission for a derivative action if certain requirements are met. In short, the main requirements are: • achievement of a quorum – the shareholders must hold shares representing at least one-hundredth of the share capital or to a stake of EUR100,000; • the shareholders must prove that they have unsuc- cessfully requested the company to bring an action itself; • facts lead to a suspicion that the company has suf- fered damage by dishonest conduct or gross viola- tions of the law or the articles of association; and • there must be no overriding grounds in terms of the company’s best interests. The shareholders of a limited liability company have the so-called action on behalf of the company (actio pro socio) available to them. Having its origins in part- nership law, the action on behalf of the company has long been acknowledged for limited liability compa-
nies as a means to protect the minority shareholders, who can neither appoint/dismiss the managing direc- tors nor give instructions to influence the company’s management. The action on behalf of the company therefore essen- tially requires that the managing directors who are responsible for the assertion of claims refuse to do so. However, in some cases, the assertion of claims is not the sole responsibility of the managing direc- tors – rather, it requires a resolution of the sharehold- ers’ meeting. In these cases (ie, if the resolution is not adopted), the action on behalf of the company is subsidiary to actions regarding the resolution. 11. Shareholder Activism 11.1 Legal and Regulatory Provisions German law provides for compliance with the general provisions of stock corporation and securities trading law, such as: • the duty of loyalty ( Treupflicht ); • the principle of equal informational treatment of shareholders ( Gleichbehandlung ); and • the regulations concerning insider information. In accordance with these regulations, shareholders generally have no access to internal information of the stock corporation and are therefore limited to assessing the corporate strategy from the outside – ie, on the basis of publicly available information such as the company’s annual financial statements, inter- im reports and ad hoc announcements. In addition, under German securities trading law, shareholders are required to report any changes in their shareholdings if certain thresholds are met, starting at 3%. The regulations on so-called acting in concert must also be taken into account. These regulations apply when different investors co-operate to achieve a com- mon objective. Under the provisions of the Securities Acquisition and Takeover Act, the shares of the co- operating shareholders are to be attributed to each of them – meaning that they will be required to make a mandatory offer for the purchase of shares ( Pfli -
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