GERMANY Law and Practice Contributed by: Eva Nase and Kay-Uwe Neumann, POELLATH
4.2 Role of Shareholders The involvement of the shareholders in the manage - ment of a company differentiates according to the legal form of the company. AGs, SEs and KGaAs In an AG, SE and KGaA, the general meeting is enti - tled to appoint the members of the supervisory and administrative board, generally by simple majority, and to dismiss them by 75% of the share capital repre - sented. However, the members of the management board and the managing directors in a single-tier sys - tem SE are appointed by the supervisory board or the administrative board, respectively. The general meet - ing cannot instruct the supervisory or administrative board, nor the management board. If the management board so requires, the general meeting is entitled to resolve upon management affairs. In practice, such requests do not happen often. Apart from this, the general meeting does not have any influence on the management. Listed Companies Listed companies also do not engage with their shareholders, particularly not outside the general meetings. In preparing such meetings, the CEO has calls with shareholder representatives and potential proxy voters, but abstains from providing them with any information that has not already been disclosed in the invitation or that the CEO does not intend to disclose in the general meeting to all other sharehold - ers. However, the DCGK suggests that the chair of the supervisory board should, to an appropriate extent, be in regular conversation with investors on supervisory board-related issues. Non-Listed Companies Conversely, non-listed companies typically do engage with their shareholders. GmbH In a GmbH, the involvement of the shareholders in the management is also statutorily more extensive. In contrast to the AG, the shareholders’ meeting resolves upon the appointment and dismissal of the manag - ing directors and on the conclusion of their service agreements. The shareholders of the GmbH are also
capital companies that fulfil at least two of the follow - ing criteria (small capital companies): • the balance sheet total does not exceed EUR7.5 million; • the sales revenues within the last 12 months amount to less than EUR15 million; and • the company employs, on an annual average, fewer than 50 employees. In a listed company, the features of the remuneration system must be described. The remuneration system has to be published on the company’s website for the duration of the application of the remuneration system, and for ten years at least. In addition, the management board and the supervisory board of a listed company must disclose certain information in the annual remuneration report, such as the fixed and variable remuneration paid to each member of the management and the supervisory board. The remu - neration report is also published on the company’s website for at least ten years. The AktG requires the remuneration report to be audited. The AktG also requires ad hoc and annual disclosure of related party transactions, including transactions of the company with its various members of corporate bodies. The purpose of the company is determined by its shareholders in the articles of association. The share - holders can only exert influence on the decision-mak - ing process by way of resolutions. The general meet - ings of an AG, SE and KGaA have fewer rights and powers than the shareholders’ meeting of a GmbH, in particular due to their ability to instruct the managing directors (see 2.2 Types of Decisions ). Furthermore, the shareholders have fiduciary duties towards the company and the other shareholders, so have to promote the purpose of the company and may not act to its detriment. 4. Shareholders 4.1 Companies and Shareholders
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