Latest Developments in the German Law on Public Companies by the Act on Corporate Integrity and Modernisation of the Right of Resolution-Annulment (UMAG) - Shareholder Activism and Directors' Liability Reloaded

摘要

In the past, a group of 50 to 100 well-known German shareholders, labelled predatory and abusive shareholders (rauberische Aktiondre), developed a lucrative business using weaknesses of the German Public Companies Act (Aktiengesetz or AktG) in order to hold German public companies to ransom. They filed actions challenging shareholders' resolutions underlying capital or structural measures. In order to become effective, the resolutions have to be registered with the German Companies House (Handelsregister). However, Companies House would not register a shareholders' Tesolution in the case of a shareholder challenging the resolution. Any shareholder has the right to file an annulment action either to have a shareholders' resolution set aside (Anfechtungsklage) or to confirm that it is void (Nichtigkeitsklage). There is no minimum amount of shares to be owned or quorum to be reached - under German law a single share grants the right to have any company resolution judicially reviewed. The right of resolution-annulment had been designed as the cornerstone of minority protection.