Shareholder's Right to Information and Questioning
Information Rights Inside and Outside the Annual General Meeting in Germany
From the point of view of the german legislator, the shareholder is an investor who, together with a large number of other investors, provides the company with the capital required for its business. The individual shareholder is one among many. Against this background and in order to ensure the proper functioning of the company's management ( Management Board / Supervisory Board), the legislator has endowed the (individual) shareholder with only rudimentary rights to information and other information possibilities. Unlike the shareholder of a limited liability company (GmbH), a stockholder cannot demand information about the company's affairs from the management board at any time in Germany.
These limited information possibilities are particularly unfortunate if the german AG in question is not the large public company envisaged by the legislator, but a company with a small number of shareholders, possibly even cooperating shareholders. In a stockholder dispute (shareholder dispute), a stockholder is without information and thus severely limited in his ability to act if he has not previously secured himself otherwise by contract.
Legal expertise in the area of stockholder information
Our highly qualified and specialized team of attorneys-at-law and specialists in german corporate law will advise you quickly and competently on all questions concerning the stockholder's right to information. The advisory spectrum of our stock corporation lawyers can be described as follows:
- Strategic advice on the exercise of information rights and other information options, both for defense by the board of directors and for enforcement by the stockholder
- Extrajudicial and judicial enforcement of information claims / defense against information claims
- Advice on the right to information in the run-up to annual general meetings
- Judicial enforcement of the right to information
- Judicial enforcement of deficiencies in resolutions of annual general meetings due to violation of the right to information (shareholder lawsuit)
- Extrajudicial and judicial enforcement / defense of special audit requests
For a non-binding inquiry, please contact one of our experts directly by telephone or e-mail or use the contact form at the bottom of this page.
Information System of the German Stock Corporation Law
At the outset, german stock corporation law offers stockholders a wide range of information options. These can be differentiated in four directions:
- according to the person requesting and receiving the information - all shareholders / individual shareholder,
- according to the time of information - periodically / aperiodically,
- the way in which the information is obtained - actively / passively
- the timing of the information - before / after.
The AktG and related regulatory materials focus on the individual and periodic right to information of individual shareholders at the annual shareholders' meeting (Art. 131 AktG), collective information rights in connection with individual management decisions at the annual shareholders' meeting, and the periodic and aperiodic mandatory publications of the company as central sources of information for shareholders.
Right to Information and Right to Ask Questions at the Annual General Meeting
Each individual shareholder may request information from the management board on the affairs of the company at the annual general meeting (Art. 131 AktG). The prerequisite - and this is a very important restriction of the right to information - is that the information requested by the shareholder is necessary for the proper assessment of a specific item on the agenda. Information can therefore only be requested on items on the agenda.
In german practice, this has the effect at the annual general meeting that the questions relate almost exclusively to the previous financial year, at least in terms of time - the usual agenda items of the annual financial statements and the approval of the actions of the management board and supervisory board relate primarily to the previous financial year.
In principle, the management board in Germany may not refuse to provide information that is lawfully requested. Section 131 para. 2 AktG lists a few exceptions to this principle. One practically relevant reason for a (permissible) refusal to provide information is the risk that the provision of information would have a not inconsiderable disadvantage for the company or a company affiliated with it.
If the management board in Germany refuses to provide information, the court decides on the legality of the refusal at the request of a shareholder. In this respect, the shareholder can enforce his right to information by filing a lawsuit.
It should be noted that the right to information or a refusal to provide information or incomplete information is probably the most frequently cited defect in resolutions by shareholders for actions against resolutions of the annual shareholders' meeting.
Publicity Obligations of the AG for specific Causes in Germany
Under german stock corporation law, the management board alone is responsible for managing the company's business (together with sole liability for damages). Only in exceptional cases do the supervisory board and, supplementarily, the shareholders have co-decision-making powers in management matters.
These exceptional cases include in particular measures and decisions in matters relating to capital measures, german corporate group law, takeover law and conversion law. In such cases, the company is obliged to provide shareholders with comprehensive information in advance of the decision by the annual general meeting to enable them to make an informed decision when exercising their voting rights.
In addition, there are a number of other information obligations of the german company which (also) benefit the shareholders. One example of this is the notification obligations in the company gazettes (mostly the Federal Gazette) regarding significant shareholdings / amounts of shareholdings concerning the company in accordance with Art. 20 AktG.
Accounting of the AG in Germany
The general disclosure obligations under german commercial law - namely the information obligations set out in Art. 325 et seq. German Commercial Code (HGB) - are directed not only at creditors and potential shareholders (investors) but also at the company's shareholders. For example, the balance sheet, income statement and notes to the financial statements, as well as the supplementary management reports, provide shareholders with an insight into key aspects of the company's accounting.
Special Audits and Appointment of Special Auditors
The special audit plays a special role in the information system under german stock corporation law. In addition to the right to information, it allows the shareholder to obtain aperiodic clarification of any facts relating to management: recent and older facts, as well as simple and complex transactions. Above all, the special audit provides the shareholder - from the management board and supervisory board - with unfiltered information and is therefore an effective control of the management.
Special audits are initiated by a resolution of the annual general meeting with a simple majority in Germany. The resolution does not require any special justification. In addition, no further preconditions are required. The resolution on a special audit appoints an external expert, the special auditor, to investigate specific management measures. The expert, who is usually a lawyer and/or auditor depending on the audit assignment, has extensive rights of inspection and information vis-à-vis the management board and supervisory board as part of his audit. At the end of the special audit there is a special audit report which must be made available to all shareholders.
If the annual shareholders' meeting in Germany rejects a motion to appoint special auditors, minority shareholders whose shares together amount to one hundredth of the capital stock or a pro rata amount of 100,000 EUR at the time of filing the motion may apply to the court for the appointment of special auditors. However - and this is a significant restriction - the prerequisite is that facts exist which justify the suspicion that dishonesty or gross violations of the law or the articles of association have occurred in the transaction to be audited.
In addition to the general special audit (Art. 142 AktG), the german law provides for special audits for matters relating to german accounting law (Art. 258 AktG) and german group law (Art. 315 AktG).
The special audit forms the basis for subsequent proceedings. These include the appointment of a special representative (Art. 147 AktG) and the action admissibility procedure (Art. 148 AktG). Both procedures serve to assert liability claims against the management board and supervisory board.
Capital Market Information
Shareholders of listed german companies benefit to a large extent from the increased disclosure obligations under german capital market law. For example, companies are required by law (in particular the German Securities Trading Act (WpHG), the German Securities Acquisition and Takeover Act (WpÜG)) or by special stock exchange regulations to report to the public / investing public and thus also to shareholders at shorter intervals (half-yearly reports, quarterly reports) and to report separately on insider trading and other special events. Incorrect provision of information leads to the liability of the responsible persons, in this case expecially the management board of the AG.