Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Part 4
Expulsion of minority stockholders
Section 327a
Transfer of shares of stock in return for cash settlement
(1) The general meeting of a stock corporation or of public partly limited partnership may adopt a resolution, upon a corresponding demand being made by a stockholder owning shares of stock in the company in the amount of ninety-five (95) percent of the share capital (principal stockholder), to transfer the shares of stock of the other stockholders (minority stockholders) to the principal stockholder against appropriate cash settlement being granted. Section 285 (2), first sentence, shall have no application.
(2) Section 16 subsections (2) and (4) shall apply to determining whether the principal stockholder owns ninety-five (95) percent of the shares of stock.
Section 327b
Cash settlement
(1) The principal stockholder is to determine the amount of the cash settlement; it must take account of the company’s circumstances at the time the resolution is adopted by its general meeting. The management board is to make available to the principal stockholder all documents required for this purpose and is to provide information to same.
(2) From that day onwards on which the entry of the resolution as to the transfer in the Commercial Register has been published by notice, the cash settlement is to accrue interest at five (5) percentage points per annum above the respectively applicable basic rate of interest pursuant to section 247 of the Civil Code (BGB); the assertion of further-reaching damages is not precluded.
(3) Prior to the general meeting being convened, the principal stockholder is to forward to the management board the declaration by a credit institution authorised to do business in the area of application of the present Act by which the credit institution warrants that it will fulfil the obligation of the principal stockholder to pay to the minority stockholders, without undue delay once the resolution as to transfer has been entered in the register, the cash settlement determined for the shares of stock that have devolved to the principal stockholder.
Section 327c
Preparations for the general meeting
(1) The notice to be published on the transfer as an item of business set out in the agenda is to set out the following particulars:
1. The business name and seat of the principal stockholder, in the case of natural persons their name and address;
2. The cash settlement determined by the principal stockholder.
(2) The principal stockholder is to submit a written report to the general meeting presenting the pre-requisites for the transfer and explaining and justifying the appropriateness of the cash settlement. One or several expert auditors are to audit the appropriateness of the cash settlement. The court shall select and appoint them upon a corresponding petition having been filed by the principal stockholder. Section 293a subsections (2) and (3), section 293c subsection (1), third to fifth sentences, and subsection (2), as well as sections 293d and 293e shall be applied mutatis mutandis.
(3) From the time onwards at which the general meeting is convened, the following documents are to be kept available at the company’s business premises for inspection by the stockholders:
1. The draft resolution as to the transfer;
2. The annual accounts and the management reports for the last three (3) financial years;
3. The report submitted by the principal stockholder pursuant to subsection (2), first sentence;
4. The audit report submitted pursuant to subsection (2), second to fourth sentences.
(4) Upon a corresponding demand being made, copies of the documents designated in subsection (3) are to be provided to each stockholder without undue delay and at no charge.
(5) The duties pursuant to subsections (3) and (4) shall not be applicable if the documents designated in subsection (3) are kept accessible, for the same period of time, on the company website.
Section 327d
Conduct of the general meeting
At the general meeting, the documents designated in section 327c (3) are to be made accessible. The management board may give the principal stockholder the opportunity to give an oral presentation at the outset of the meeting of the draft of the resolution as to the transfer, and of the calculation of the amount of the cash settlement.
Section 327e
Entry in the register of the resolution as to the transfer
(1) The management board is to file an application for entry in the Commercial Register of the resolution as to the transfer. The minutes of the resolution as to the transfer and its annexes, as execution copies or publicly certified copies, are to be attached to the application for entry in the register.
(2) Section 319 subsections (5) and (6) shall apply mutatis mutandis.
(3) Upon the resolution as to the transfer having been entered in the Commercial Register, all shares of stock owned by the minority stockholders shall devolve to the principal stockholder. Where share certificates have been issued regarding these shares of stock, they shall securitise, until they are physically handed over to the principal stockholder, solely the claim to a cash settlement.
Section 327f
Court review of the settlement payment
The action for avoidance of the resolution adopted as to the transfer may not be based on section 243 (2), or on the fact that the settlement payment determined by the principal stockholder is not appropriate. Where the cash settlement is not appropriate, the court specified in section 2 of the Act on Valuation Proceedings under Corporate Law (SpruchG) shall establish, upon a corresponding petition having been filed, the appropriate cash settlement. The same shall apply if the principal stockholder has not offered any cash settlement, or has not offered it duly and properly, and no action for avoidance based on that fact has been brought within the period for avoidance, or the action for avoidance has been retracted or has been dismissed in a final and conclusive manner.
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