GERMANY Law and Practice Contributed by: Marc Löbbe, Michaela Balke, Oliver Schröder and Martin Kolbinger, SZA Schilling, Zutt & Anschütz
11.2 Aims of Activists Activist shareholders in Germany pursue a wide vari - ety of objectives. In recent years, shareholder activism has increasingly focused on corporate strategy and restructuring/spin-off measures (eg, Bilfinger, Thys - senKrupp and more recently Fresenius) as well as takeover bids (eg, Deutsche Börse, Stada, Daimler and Celesio). This upward trend is expected to con - tinue. 11.3 Interference With Completion Activist shareholders with a reasonable direct and/or proxy majority may be in a position to determine the satisfaction of a minimum acceptance condition and thus influence the success of the offer. Often, respec - tive positions are required immediately prior to or even during a pending transaction to exert influence on the offer price. Due to the already existing frequency and the current trend regarding the objectives of share - holder activism, as well as the expected increase of such shareholder activism (not least due to the EU Shareholders’ Rights Directive), public transactions are increasingly exposed to risk in this respect. In addition, activist shareholders often intervene in corporate and restructuring measures subsequent to a transaction, which can also influence the decision to make an offer in the first place.
in German M&A transactions, but are regularly seen in the US context. Related disputes are generally non- public for the reasons set forth in 10.1 Frequency of Litigation , with some notable exceptions, such as in the Fresenius/Akorn case.
11. Activism 11.1 Shareholder Activism
Shareholder activism has increased in recent years in Germany. To achieve their goals, activist sharehold - ers make use of their minority rights under the Ger - man Stock Corporation Act (eg, the right to request an addition to the agenda or submit counterproposals at shareholders’ meetings, or to initiate legal disputes with board members or majority shareholders), as well as the possibilities to challenge shareholders’ resolu - tions (see below). The motives of activist shareholders are manifold, and their approach varies accordingly, ranging from limited activism to aggressive interaction with the company. The latter cases, in particular, have increased considerably in recent years (see 11.2 Aims of Activists ). Shareholders can file actions for rescission against resolutions of the general meeting on major structur - al measures such as statutory mergers, control and profit transfer agreements or squeeze-outs, to block the entry in the commercial register that is mandatory for them to become effective, and these actions have become a common tool for certain hedge funds (to be distinguished from activist investors in the narrow sense). This practice of professional minority share - holders using such legal proceedings to their own advantage is important for companies and investors to take into account. However, a court procedure has been introduced specifically to overcome this block - ing effect more quickly – the release procedure ( Frei - gabeverfahren ) – and now considerably reduces the potential for interference by minority shareholders.
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