The following provides an overview on recent major amendments in German law:
Stock Corporation Law
The reform of the German Stock Corporation Law implementing the European Directive on Shareholders’ Rights (Gesetz zur Umsetzung der Aktionärsrichtlinie – ARUG), which has been effective since September 2009, upgrades the use of modern media for convening and consummating shareholders’ meetings. In particular, the articles of association of a stock corporation may allow, or authorize the board to do so, shareholders to participate in the shareholders’ meeting without being actually present and to exercise their rights (including the right to cast their votes) by electronic media.
Management Compensation
The German Act on the Appropriateness of Compensation of the Management Board (Gesetz zur Angemessenheit der Vorstandsvergütung - VorstAG), in effect since 5 August 2009, requires certain criteria to be met to determine the appropriateness of the compensation of the board members. These criteria include:
- in addition to being appropriate in relation to the relevant board member’s duties, the compensation needs to be appropriate in relation to the board member’s performance;
- performance over a period of time (several years) must be a determining factor for the assessment of variable compensation components; and
- ‘customary’ levels of compensation may not be exceeded, unless there is a good reason.
The waiting period for the exercise of stock options under stock option plans that are based on capital increases resolved after 5 August 2009 must be at least four years (instead of previously two years).
Merger Control
The rules relating to the thresholds for merger control filings under the German merger control law have been relaxed since 25 March 2009 with regard to certain international transactions. According to the amended Law against Competition Restraints (Gesetz gegen Wettbewerbsbeschränkungen – GWB), mergers need to be notified only if at least one party achieves a domestic turnover of at least EUR 25 million and one other party taking part in the merger achieves a turnover in Germany of at least EUR 5 million. Previously, it was sufficient if at least one party reached the EUR 25 million domestic turnover threshold.
New German Bond Act
A new Bond Act (Schuldverschreibungsgesetz - SchVG) replaced its predecessor, which had been little changed since its promulgation in 1899. As from 5 August 2009, the new Act aims to bring the German bond regime in line with international practice. In particular, it increases the majority rights of bondholders with regard to the amendment of material terms and conditions of bonds and liberalizes meeting of bondholders and voting procedures.
If you have any questions, please contact Dr. Tim Luthra of Raupach & Wollert Elmendorff Rechtsanwaltsgesellschaft mbH.
