Shareholders and the General Meeting
Individual and Majority Rights of the Shareholders
In addition to the decision-making authorities held by the General Meeting, the shareholders have certain rights both individually and together with other shareholders. These are detailed here:
Right to InformationEach shareholder is entitled to request verbal information in the General Meeting from the Board of Management on corporate matters relevant to the General Meeting provided that the information requested serves to assist the shareholder in the making a proper evaluation of the relevant item on the agenda. Such a request need not be complied with if this would be detrimental to the enterprise or to an affiliated enterprise or in certain other cases.
The German Stock Corporation Act does not permit shareholders to view the books and documents of the enterprise. The shareholders do, however, receive certain written information on the company via its publications in the media - in particular on the company`s internet site, in the Commercial Register and in the electronic version of the Federal Gazette.
If a shareholder wishes to nominate persons other than those nominated by the existing Supervisory Board for election to the Supervisory Board of the company, he can make a corresponding application to the company up to two weeks prior to the General Meeting. The nomination must contain details of the name, the profession, the place of residence and membership of other Supervisory Boards and shall furthermore specify mandates held by the person nominated on committees and comparable supervisory bodies within the country and abroad.
In addition, every shareholder entitled to participate and vote in the General Meeting can nominate persons for election to the Supervisory Board of the company at the General Meeting.
According to the German Stock Corporation Act, a shareholder in a German stock corporation has pre-emptive rights to all issues of shares by the company, convertible bonds and income bonds, corresponding to the share of the existing company equity held by the shareholder. The German Stock Corporation Act permits the exclusion of this pre-emptive right only by resolution of the General Meeting. For the exclusion of the pre-emptive right a 75% majority of the shares issued and represented at the Meeting is required.
According to the German Stock Corporation Act and the German Transformation Act (UmwG), the shareholders can institute a German valuation proceeding in order to examine the appropriateness of valuations in certain corporate transactions. These include mergers, control and profit transfer agreements between a majority shareholder and the company he controls as well as the forced squeeze-out of minority shareholders from a company.
Any shareholder can file a suit against the validity of the resolutions of the General Meeting.
The General Meeting, by a simple majority of the votes cast, can request the company to institute legal proceedings against the Members of the Board of Management and the Supervisory Board. Further admission of an action against the supervisory board and board of management members on behalf of the company may be claimed by shareholders holding in the aggregate at least 1 % of the issued shares or shares representing at least €100,000 of our capital stock. The competent court will allow the action to proceed if (i) the shareholders acquired their shares before any information was published from which they became aware of the alleged breach of duty or damage; (ii) the company failed to file a suit itself within a reasonable period of time after being asked to do so by the shareholders; (iii) facts exist, that justify the suspicion that the company has suffered damage by dishonesty or gross breach of the law or the articles; and (iv) there are no overriding interests of the company against the assertion of such damage claim.
Minority RightsShareholders holding 5% of the shares issued or the pro rata value of € 500,000 between them are entitled to have matters for resolution placed on the agenda of the General Meeting, which must be published in the electronic version of the Federal Gazette.
Shareholders holding 5% of the shares issued can demand a General Meeting to be convened. Shareholders holding 1% of the shares issued or shares representing at least € 100,000 of the capital stock may under certain requisites claim the admission of court actions against members of the Board of Management and Supervisory Board. Shareholders holding shares amounting to 1% of the capital stock or a pro rata value of € 100,000 can also demand that the competent court appoint special auditors to examine matters relating to the enterprise or corporate governance in so far as facts are at hand that would indicate dishonesty or gross breaches of the law or of the Memorandum and Articles of Incorporation where these matters are concerned.
Right of VetoA right of veto with regard to certain decisions of General Meeting arises from the majority requirements defined in the German Stock Corporation Act or the Memorandum and Articles of Incorporation for shareholders who hold a certain proportion of shares. All of these rights cannot be listed here, only the following shall be mentioned:
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Shareholders holding more than 5% of the shares have a right of veto with regard to incorporation into another enterprise
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Shareholders holding more than 10% of the shares have a right of veto with regard to the suspension of the assertion of certain claims against the Board of Management
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Shareholders holding more than 25% of the shares have a right of veto with regard to certain resolutions, if these require a majority of at least 75% of the shares issued and represented in the resolution and a simple majority of the votes cast at the General Meeting. These include certain capital measures (authorized or conditional capital), the liquidation of the company, a merger involving the company or any other form of transformation of the company and the exclusion of pre-emptive rights.
