Broadening of the Right to Ask Questions as a Result of the Shareholders’ Rights Directive (2007/36/EC) (Ausweitung des Fragerechts durch die Aktionärsrechterichtlinie)
Zeitschrift für Wirtschaftsrecht (ZIP), p. 2317, 2009
10 Pages Posted: 13 Dec 2009
Date Written: December 7, 2009
Article 9 para 1 of the Shareholders’ Rights Directive 2007/36/EC stipulates that “every shareholder shall have the right to ask questions related to items on the agenda of the general meeting” and that “the company shall answer the questions put to it by shareholders”. The German Stock Corporations Act (AktG) also grants shareholders the right to ask questions at the general meeting. However, Section 131 AktG requires that the information sought concerns company matters and be “necessary” for a proper assessment of the items on the agenda. German law is therefore stricter than European law. Nevertheless the German Act to Implement the Shareholders’ Rights Directive (Gesetz zur Umsetzung der Aktionärsrechterichtlinie, ARUG) does not provide for any amendment to Section 131 AktG.
Thus, after expiration of the transposition deadline in Art. 15 para 1 of the Directive (3rd August 2009), the provisions of the German Stock Corporation Act (AktG) have to be interpreted in accordance with the Directive. This means that the necessity requirement in Section 131 AktG must be construed as simply meaning that the questions asked must be related to items on the agenda. It is argued that while such an interpretation is possible, the German legislator should consider amending Section 131.
As a result of Art. 9 of the Directive the right to ask questions is broadened, meaning that more questions are admissible. Companies are therefore under an obligation to divulge more information. Many companies will fear that this will allow predatory shareholders to ask an excessive number of questions and thereby provoke mistakes that will enable them to challenge decisions taken by the general meeting in court. Such a challenge is usually brought with a view to obtaining an improper advantage from the company in exchange for withdrawing the suit. In this article it is, however, argued that the broadening of the right to ask questions is counteracted by two aspects.
Firstly, the broadening of the right to ask questions does not – contrary to first impressions – also mean a broadening of the possibility to challenge decisions of the general meeting on the ground that they were based on inaccurate or incomplete information. Decisions of the general meeting can only be challenged on such grounds, if the information that was withheld or inaccurate was “material” (Section 243(4) AktG). However, whereas necessary information is always considered “material” in the sense of Section 243(4) AktG, information that is merely “related to an item on the agenda” without being “necessary” is not “material” in that sense. This means that while additional information can be requested, the withholding of such information does not enable shareholders to challenge decisions of the general meeting. Shareholders can only enforce their right to receive such information by applying for a court order pursuant to Section 132 AktG. There is therefore no additional potential for blackmail.
Secondly, with regard to questions which are only “related to items on the agenda” without being “necessary”, answers can be withheld more easily. Section 131(3) No 1 AktG gives the company the right to withhold information, if the information could be detrimental to the company. However, the detriment feared would have to be significant. It is argued in this article that the requirement that the detriment be significant should only be applied to “necessary” information. By contrast, the company should already be able to withhold information which simply “relates to items on the agenda”, if it could be detrimental, i.e. if the possible disadvantages in providing the information slightly outweigh the advantages.
Note: Downloadable document is in German.
Keywords: Art. 9 of the Shareholders‘ Rights Directive, ARUG, Section 131 German Stock Corporations Act (AktG), § 131 AktG, right to ask questions, general meeting, necessity requirement, Aktionärsrechterichtlinie, Anfechtung, Fragerecht, Hauptversammlung, richtlinienkonforme Auslegung, Auskunftsverweigerung
JEL Classification: G30, G38, K20, K22, K23
Suggested Citation: Suggested Citation