Shareholder Activism in Germany

Abstract

Shareholder activism by hedge funds has taken hold in Germany in spite of large ownership concentration. This essay uses the example of Stada Arzneimittel AG to highlight features of activism, German style. It goes on to discuss the legal issues raised by activist campaigns at the two stages of acquiring a shareholding in the target company and, subsequently, of interacting with its management and pressuring for strategic or corporate governance changes. In light of the theory and evidence on the short-term and long-term effects of shareholder activism, the essay concludes that German and European law has rightly refrained from intervening in this most recent corporate governance development. The law lacks a reliable filter to sort desirable from undesirable forms of activism.

Keywords: shareholder activism, hedge fund activism, major shareholdings disclosure, insider trading, company secrets

JEL Classification: G34, K22