GERMANY Law and Practice Contributed by: Christoph Nolden, Nicolas Ott, Stefan Mendelin and Thomas Glaser, SZA Schilling, Zutt & Anschütz
Establishment of Board Candidates Companies should monitor the terms of office and/or retirement ages of board members and try to antici- pate at what point in time an activist shareholder might start campaigning for their own board candidates. It is worth building up a strong pipeline of board candi- dates that cover different areas at an early stage, in order to improve the company’s position when faced with activist demands for board refreshment. Development of Defence Manual Companies would do well to prepare a defence manual containing at least a set of communication guidelines and contact details from specialised con- sultants (eg, communication advisers and law firms). Larger companies should even consider setting up a response task force. If an activist shareholder launch- es an offensive, experience has shown that valuable time can be saved if the company acts according to a structured programme.
includes transparent declaration of compliance with the German Corporate Governance Code, maintain- ing board independence, and robust engagement strategies for virtual and hybrid AGMs. Monitoring shareholder structure for early signs of activism using ARUG II tools remains best practice. What follows is an outline of some of the most promising strategies. Know Your Shareholders Companies are advised to make use of the new infor- mation rights that came into force with the ARUG II and monitor their shareholder base (see 11.1 Legal and Regulatory Provisions ). If a known activist appears, researching their previous tactics is recommended. Once prepared, it may be useful to reach out to the activist at an early stage. Aside from this, it is gener- ally advisable to get in touch with shareholders on a regular basis ‒ and thereby address the interests and concerns of the company’s shareholders before they escalate ‒ and to communicate the advantages of the company’s strategy (particularly in an M&A context). Self-Assessment From an Activist Perspective Companies should self-assess their business from the perspective an activist might take. Any weaknesses can be addressed with the help of external advisers where necessary to keep activist shareholders from investing at all. Otherwise, companies should start promoting the advantages of their own strategic planning. In this context, it can be advisable to lobby proxy advisers, as well as team up with significant shareholders.
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