Company LawInvestment & Deal Activity 24. March 2020

Germany: The planned innovations in company law resulting from the ‘Act to mitigate the consequences of the COVID 19 pandemic’.

24. March 2020
Dr. Matthias Müller, MBA
act legal Germany

The protective measures for the avoidance of the further spread of the COVID-19 pandemic do restrict the freedom to hold meetings; this also affects general / shareholder meetings of listed and private companies. This could have a significant negative effect as it will delay resolutions on important matters, such as approving annual accounts, capital measures, appointment of new boards.

The draft legislation for the law to mitigate the impact of the COVID 19 pandemic in civil-, insolvency and criminal procedural law provides for various simplifications for calling and holding such meetings and taking resolutions if such meetings are held still in 2020.

In case of stock corporations (AktiengesellschaftAG) and Societas Europaea (SE), for example,

  • the board of directors (Vorstand) can decide on the possibility to cast votes in the general meeting via electronic means even if this is not provided for in the articles of association;
  • the convening period can be reduced to below 21 days; and
  • the board of directors can decide to hold the general meeting within the business year (i.e. after the first 8 months)

The above changes are ‘safeguarded’ by a limitation of the possibilities of shareholders to challenge resolutions by the general meeting.

In  case of a company with limited liability (GmbH) there will the possibility to take resolutions in writing even if not all shareholders agree are extended (currently this is only possible if all shareholders agree to this). Also, the law will introduce some provisions regarding cooperative (Genossenschaft), associations (Vereine) and foundations (Stiftungen) which will make it easier to hold meetings and pass resolutions and to keep the board of directors in office even though ordinary period of their office might have been terminated automatically due to time limiations.

And last but not least, in case of a merger, the German transformation act requires to submit a balance sheet of the company which transfers its assets to another entity, and that the effective date of such balance sheet is not older than 8 months. This period will be extended to 12 months in order to account for the fact that due to the Coronacrisis, the taking of the shareholder resolutions required for the merger might take longer than 8 months.

Dr. Matthias Müller, MBA
About the authors

Dr. Matthias Müller, MBA

Attorney at law

Adviser to numerous prestigious domestic and foreign companies, investors and corporate groups on M&A transactions and joint ventures, real estate transactions as well as corporate law and special and restructuring situations and insolvency law. Implementation and handling of complex transactions. Competitors say: “sovereign and strong negotiator, very wide expertise, very smart appearance, large international network, at major law firm level” (JUVE Directory of German Commercial Law Firms).

Dr. Marco Loesche, Notary

Attorney at law, Notary

Comprehensive legal advice to medium-sized companies on all day-to-day issues of corporate law, in particular the reorganization of corporate structures and the development of acceptable negotiating options, even in complex configurations and conflict situations. Particular expertise in providing legal support alongside tax consultant-driven topics. As a notary, advice to and support of companies of all sizes with their corporate law issues. Special focus on notarial support and handling of transactions in corporate law as well as company acquisitions and sales.

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