GERMANY Law and Practice Contributed by: Marc Löbbe, Michaela Balke, Oliver Schröder and Martin Kolbinger, SZA Schilling, Zutt & Anschütz
7.3 Producing Financial Statements The offer document of a public offer has to con - tain a thorough analysis of the effects of the transaction on the asset, financial and earnings position of the target and thus will need to con - tain pro-forma combined financial statements as part of such analysis. If shares are issued in connection with a busi - ness combination, under EU Regulation No 809/2004 a prospectus has to precede a share issue, which must also include pro-forma finan - cial statements about the companies involved in the transaction and, therefore, also about the bidder. These pro-forma financial statements need to be prepared in a manner consistent with the accounting policies applied by the issuer in Transaction documents in private transactions are generally non-public and subject to the agreed confidentiality restrictions. In public transactions, the offer document itself and the target’s reasoned statement are pub - lished (see 7.1 Making a Bid Public ), but ancil - lary agreements (such as business combination agreements or irrevocable undertakings) are generally not publicly available. recent annual financial statements. 7.4 Transaction Documents
the shareholders or partners. Sometimes (volun - tary) advisory boards are also established. By contrast and with the exception of the one- tier SE, stock corporations in Germany have a two-tier board system. The same applies for co- determined legal entities. In these cases, while the management board runs the company and takes the main business decisions, the (manda - tory) supervisory board acts as an advisory and supervisory body. Generally, both boards must act in the target company’s best interest. This applies irrespective of a listing of the shares of the company in question. For board decisions, business judgement prin - ciples generally apply (see 8.3 Business Judge- ment Rule ). 8.2 Special or Ad Hoc Committees To the extent stock corporations are concerned, takeover committees are sometimes established at supervisory board level in order to increase the efficiency of the decision-making processes if the target company has a large number of supervisory board members. However, it is very unusual to establish a takeover committee at management board level. 8.3 Business Judgement Rule In Germany, the business judgement rule applies to entrepreneurial decisions of the members of the management board, if the respective mem - ber of the management board could reasonably assume that they were acting in the company’s best interest on the basis of appropriate infor - mation. The business judgement rule does not apply in case of mandatory legal requirements, however.
8. Duties of Directors 8.1 Principal Directors’ Duties
Many private companies in Germany are organ - ised as limited liability companies or partner - ships, and have one-tiered boards consisting of the management. Management is generally bound by the obligation to act in the target com - pany’s best interest, and by the instructions of
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