VW Must Learn Its Lesson: Federal Court Of Justice Declares Approval Resolutions On Coverage Settlement To Be Null And Void

In its ruling of 30 September 2025, the Second Civil Senate of the Federal Court of Justice (FCJ) (docket No. II ZR 154/23) declared the resolution of the Volkswagen AG general meeting approving a coverage settlement with D&O insurers in connection with the "diesel scandal" to be null and void. At the same time, the FCJ referred the question of the contestability of approval resolutions for liability settlements with former members of the management board back to the Higher Regional Court (Oberlandesgericht, OLG) of Celle.

Background to the ruling:

In June 2021, Volkswagen AG concluded liability settlements with its former board members Winterkorn and Stadler in connection with the "diesel scandal", as well as related coverage settlements with D&O insurers in settlement and discharge of possible third-party damage claims. In addition to the personal contributions to be paid by the board members in the amount of EUR 11.2 million and EUR 4.1 million, respectively, it was agreed that the D&O insurers would make payments of around EUR 270 million. The settlements also included a waiver by VW of possible damage claims against all other former or current members of the management board and the supervisory board. The general meeting approved these agreements in July 2021 by majority resolution of over 99%. However, investor protection associations lodged objections to the minutes and filed lawsuits contesting the approval resolutions.

Decision of the Federal Court of Justice:

The Federal Court of Justice has now declared the approval resolution on the coverage settlement to be null and void because the agenda of the general meeting failed to meet the requirements of Section 121 (3) sentence 2 of the German Stock Corporation Act (Aktiengesetz, AktG). Specifically, it was not sufficiently communicated that the coverage settlement included – with the exception of former board members Winterkorn and Stadler – a waiver of claims against all current and former board members. This information was only included in the management board's report, which was not part of the agenda specified in the invitation to the meeting. It was therefore not apparent to the average shareholder that a far-reaching waiver was to be voted on as part of the additional information on the agenda items. This constitutes a violation of the law, which results in the resolution being contestable.

As regards the liability settlements with the former board members Winterkorn and Stadler, the FCJ also raised the objection that the information provided on their financial circumstances was insufficient and that their respective financial capacity was not adequately explained to shareholders in the report of the supervisory board and the management board. The information given did not reliably indicate whether the assumption made in the report - that the financial capacity of the former members of the management board was far from sufficient to cover the damages attributable to them, even taking into account the insurance sum – had been adequately explained.

Practical relevance of the ruling:

When preparing and holding general meetings, the requirements for convening a general meeting should not be underestimated in practice. Two important key statements from the FCJ's press release on the as yet unpublished grounds for the decision must be highlighted:

1. Agenda and transparency:

Companies should ensure that all relevant information is included in the agenda and that shareholders are comprehensively informed about each item, so that they can prepare adequately for the general meeting. The agenda published must clearly indicate to shareholders what is going to be discussed and decided upon. This includes all essential information of relevance to the resolution.

The agenda is especially of key importance in case of resolutions on the waiver of damage claims against members of the executive bodies, as it has both a positive and a negative binding effect. The negative binding effect means that no resolutions may be passed on items that have not been properly announced. Conversely, all items announced in the agenda are subject to the positive binding effect, which means that they must be addressed at the general meeting.

Although the law does not specify the required level of detail for the agenda, Section 124 (2) sentence 3 of the German Stock Corporation Act (AktG) stipulates special requirements for resolutions on contracts that require approval. These also include settlements regarding compensation claims of the company. In such cases, a precise description of the points that are essential and critical to the settlement is required. This includes, in particular, far-reaching waivers vis-à-vis members of executive bodies, which must be disclosed in a clear and comprehensible manner. Information that is provided solely in reports by the management board or supervisory board does not satisfy these requirements.

2. Duties to provide information:

Members of the management board should be aware of their sometimes extensive disclosure obligations under Section 131 of the German Stock Corporation Act (AktG) and fulfil them diligently in order to avoid subsequent legal disputes about the validity of the resolutions passed at the general meeting. Insufficient information may violate the shareholders' right to information at the general meeting and therefore justify the contestability of resolutions. Here, the personal circumstances of members of executive bodies exceptionally fall under this right to information if they are relevant to the approval resolution on a liability settlement with the member of the executive body concerned. This includes not only income details, but also information about existing assets and the coverage of possible liability claims. In the specific case before the Federal Court of Justice, the decisive factor was the extent to which possible liability claims by third parties would have been covered by the former board members' own assets.

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