Stock Corporation Law: The Entitlement of Shareholders to be provided with Information

The management and supervisory boards of German stock corporations (Aktiengesellschaft; "AG") may refuse to provide information in response to questions from shareholders at general meetings, if the answers to such questions are not essential (erforderlich) for purposes of the exercise by shareholders of their rights. Shareholders are, in particular, not generally entitled to be provided with detailed information on any company acquisition conducted by a stock corporation. This was confirmed by the German Federal Court of Justice ("BGH") in a recent decision on 05 November 2013 (Az. II ZB 28/12). It remains to be determined on a case-by-case basis, when disclosure is essential in terms of § 131 para. 1 sentence 1 of the German Stock Corporation Act (Aktiengesetz; "AktG").

The Legal Position applicable in respect of Stock Corporations

At the ordinary general meeting of Deutsche Bank AG in 2010, a shareholder questioned the management board about the acquisition of Bank Sal. Oppenheim. The shareholder requested to be provided with a 'detailed overview' of the acquisition, partners and content of the agreements concluded, as well as information about the conduct of the due diligence and other details. The management board only provided general responses to these questions and did not provide any details. According to the shareholder, these responses were inadequate, as a consequence of which it brought an action seeking disclosure. The BGH took the view that no entitlement existed to more comprehensive disclosure than that already made. It held that the disclosure of all of the details would significantly exceed the information required by the shareholders to enable them to discharge the management board of Deutsche Bank AG for the performance of its duties (Entlastung). The shareholder should have objected to the general answer at the general meeting, which it had not done.

According to the BGH, the restriction contained in § 131 para. 1 sentence 1 AktG, to the effect that shareholders may only request essential information, is compatible with Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of certain rights of shareholders in listed companies. The intention of same is to ensure the proper conduct of and due process at general meetings. According to the BGH, this issue was so abundantly clear that it did not see a need to submit the matter to the European Court of Justice and instead answered the question itself.

The Legal Position applicable in respect of Limited Liability Companies and Partnerships

The above decision relates to stock corporations. Shareholders of stock corporations have only limited rights to be provided with information, and can only assert these at general meetings (§ 131 AktG). The shareholders of a German limited liability company (Gellschaft mit beschränkter Haftung; "GmbH"), on the other hand, have a much more extensive right to be provided with information pursuant to § 51a of the German Limited Liability Companies Act (Gesetz betreffend Gesellschaften mit beschränkter Haftung; GmbHG); information may even be requested to be provided outside of the shareholders' meeting context. The BGH decision is therefore not applicable to limited liability companies.

As far as partnerships (Personengesellschaften) are concerned, personally liable members are entitled and have rights to be provided with information that are similarly extensive to those of the shareholders of a GmbH (§ 118 German Commercial Code (Handelsgesetzbuch; "HGB"). Unlike the case of the AG and the GmbH, however, these rights can be restricted in the articles of association / partnership agreement of these entities, unless there is reason to believe that the management of the concerned entity is not being properly conducted (§ 118 para. 2 HGB).

Limited partners (Kommanditisten) are restricted to inspecting books and annual accounts (§ 166 HGB), unless they are also shareholders of the general partner (Komplementär GmbH) in the case of a GmbH & Co. KG. Unless otherwise agreed, limited partners can furthermore request to be provided with information regarding any extraordinary transactions that, pursuant to § 164 HGB, require their approval. Depending on the type of the limited partnership entity (Kommanditgesellschaft; KG) (Familien-KG; Publikums-KG), an extensive body of case law has developed regarding the scope of the rights to information. This case law must be taken into account on a case-by-case basis.

Barbara Mayer, Jan Henning Martens