On 18 March 2015, the German Federal Government published a draft bill to slightly amend the German Stock Corporation Act (Aktiengesetz). Certain of the proposed amendments have already been included in previous draft bills and presented in our January 2011 and January 2012 newsletters. These comprise, among others:
- Restrictions on bearer shares to prevent money laundering: listed as well as non-listed companies still may issue registered or bearer shares; however the issuance of bearer shares by a non-listed company shall require excluding the right to demand issuance of individual share certificates and the deposition of global certificates; such restrictions will not apply to companies listed with a regulated market since such companies are subject to the provisions on disclosure of major holdings of voting rights;
- The issue of non-voting preference shares will no longer require a mandatory cumulative preference right (Zwingende Nachzahlung) which currently prevents their treatment as regulatory core capital;
- The permissibility of at least such mandatory convertible bonds that allow for a conversion right of the issuer shall be explicitly stipulated; and
- The right of individual shareholders to bring legal action to declare void corporate resolutions shall be partially restricted.
In addition, the new draft bill provides for a record date for registered shares in order to avoid share blocking and increase participation in general meetings. Currently, a record date only exists for listed companies that issued bearer shares. To attend and participate in a general meeting, owners of bearer shares have to prove that they have been shareholders of the company at the beginning of the 21st day prior the general meeting. For registered shares there is currently no corresponding provision. It is therefore common practice that listed issuers of registered shares will stop execution of share transfers in the share register several days prior to the general meeting. Pursuant to the draft bill, ownership on the 21st day preceding the general meeting shall in future also decide the right to attend and participate in the general meeting of companies that have issued registered shares.
Currently, dividend obligations of the company become immediately due. Pursuant to the draft bill, the right of dividend payments shall only become due on the third business day following the date of the general meeting. The intention is to align the German practice to international market standards.
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