In a decision handed down on 8 February 2010, the German Federal
Supreme Court (BGH) upheld a rule in the articles of association of
Biotest AG, which authorises the chairman of a shareholders'
meeting to restrict the right of the shareholders to speak and pose
questions at shareholders' meetings. Ashurst assisted Biotest with
regard to company law-related questions, as well as in the
proceedings themselves.
The rule in the articles of association is based on an
organisational provision newly introduced into the German Stock
Corporation Act (Aktiengesetz) by the German Act on Corporate
Integrity and Modernisation of the Right of Avoidance (Gesetz zur
Unternehmensintegrität und Modernisierung des Anfechtungsrechts -
UMAG) on 1 November 2005, according to which it is possible to
limit the rights of shareholders to speak at shareholders' meetings
on the basis of time. The provision has been criticised in legal
literature because it does not give the chairman of the meeting any
guidelines as to what is actually appropriate.
This problem was tackled by including detailed rules in Biotest's
articles of association, which have been disputed. According to the
rules, the chairman of the meeting may, at any time, even at the
beginning of a shareholders' meeting, limit the length of time for
which shareholders are entitled to speak and ask questions to 15
minutes per request to speak or 10 minutes for at least three
further requests to speak. Moreover, the time for which a
shareholder is entitled to speak may be limited to a maximum of 45
minutes. The shareholders' meeting should, therefore, not last more
than six to ten hours, depending on the subject matter of the
resolution.
In the view of the Federal Supreme Court, the articles of
association therefore comply with the will of the legislator in
allowing the shareholders' meeting to once again become a tight
platform for discussion which concentrates on important
decisions.
The regulation in the articles of association was challenged
legally by a Biotest shareholder. The proceedings were previously
conducted by two courts of instance, the Regional Court of
Frankfurt and the Higher Regional Court of Frankfurt.
Ashurst corporate partner Reinhard Eyring, who was leading on
the matter, commented:
"Even if the regulation in the articles of association contains
specific requirements in relation to limits to shareholders' rights
to speak and pose questions, it is nonetheless still the case that
these limits have to be appropriate in each individual case. The
articles of association expressly provide for this. However, as a
result of the regulation in the articles of association, it is
possible to prevent the right of shareholders to debate from being
inappropriately extended by a few shareholders at the expense of
the remaining shareholders, and it is then also possible to
concentrate on the important factual issues. By revaluating the
discussion culture linked with this, the information rights of all
shareholders are safeguarded."
Advisors to Biotest AG
Representative in the
legal proceedings:
Corporate partner Reinhard Eyring (lead), corporate associates Dr
Gerrit Clasen and David Sänger (all Frankfurt).
Advice on regulation in the articles of association:
Corporate partner Reinhard Eyring (lead) and corporate counsel
Martina Rothe (Frankfurt).
Biotest is a supplier of pharmaceutical and biotherapeutic
pharmaceutical products and reagents and systems for diagnostics
and microbiology. Biotest employs over 2000 people worldwide. The
preference shares of Biotest AG are listed on the SDAX of the
Deutsche Börse (German Stock Exchange).