Making Annual General Meetings in Germany more attractive

Shareholder representatives and companies are calling for a more open dialogue between the board of directors and shareholders at the annual general meeting.Together with the commercial law firm Freshfields Bruckhaus Deringer, Deutsches Aktieninstitut has conducted a comparative study of annual general meetings in Germany, the UK, the Netherlands, France, Switzerland and the USA. Central to their recommendations is a proposal for a targetedreform of the law on defective resolutions, which would have an immediate and noticeable impact on the practice of general meetings.

‘At present, the desire of shareholders and companies for a more open and lively exchange at annual general meetings is being hindered primarily by very strict resolution deficiency laws in international comparison,’ emphasises Henriette Peucker, Managing Director of Deutsches Aktieninstitut. ‘This is neither in the interests of companies nor shareholders. A limited reform of the law on defective resolutions makes sense and is the key to change.’

In the study ‘Annual General Meetings in Germany - Are German annual general meetings attractive enough for the future?’, Deutsches Aktieninstitut and the commercial law firm Freshfields Bruckhaus Deringer analysed the legal framework and practical experiences of holding annual general meetings in the aforementioned countries. This analysis is complemented by interviews with board members who have practical experience in conducting annual general meetings in these countries. 

Reforming the law on defects in resolutions is a key adjustment factor

In Germany, even minor errors or incomplete answers to questions can render a resolution of the Annual General Meeting null and void through an annulment action. Consequently, companies are extremely cautious and formalistic in their communication. ‘In order to improve the culture of debate at the annual general meeting, we recommend limiting the retroactive invalidity of resolutions to errors in the provision of information that are material to the shareholder, i.e. serious errors,’ explains Dr Sabrina Kulenkamp, Partner at Freshfields Bruckhaus Deringer.

Pre-submission of questions and motions

To streamline the Annual General Meeting in Germany, we recommend making the advance submission of questions and responses more legally secure and flexible. Answers should therefore be possible before and during the Annual General Meeting.

Additionally, proposals should generally be announced 14 days prior to the Annual General Meeting. Since the majority of shareholders cast their votes before the Annual General Meeting, this will ensure that all shareholders can form a comprehensive opinion.

‘The Annual General Meeting in Germany should be modernised in such a way that secure and more open communication between the Executive Board and shareholders is possible while safeguarding shareholder rights,’ explains Kulenkamp. ‘Our study provides legislators with concrete proposals on how to make the annual general meeting an attractive forum for dialogue between shareholders and companies,’ says Peucker.

The study ‘Annual General Meetings in Germany - Are German annual general meetings attractive enough for the future?’ can be found here.