Annual General Meeting in the AG in Germany
Overview for Supervisory Boards, Management Boards and Shareholders on the Annual General Meeting in Germany
The annual general meeting is one of the three mandatory bodies of a german stock corporation, along with the management board and the supervisory board. The annual general meeting is also the physical meeting of the shareholders. This is where the shareholders of the company exercise their rights. This is primarily done by passing resolutions. The annual general meeting also serves as a forum for communication between the shareholders and the management board and supervisory board.
Since the management board conducting the business of the german joint stock company is determined by the supervisory board and its composition is decided at the general meeting, the general meeting can also be referred to as the supreme body of the joint stock company.
For a non-binding inquiry, please contact one of our lawyers directly by phone or e-mail or use the contact form at the bottom of this page.
Our Legal Expertise for the Annual General Meeting
Our highly qualified and specialized team of lawyers and specialists in german corporate law at our offices in Hamburg, Berlin, Munich, Frankfurt and Cologne will advise you on all matters relating to the annual general meeting. Members of our team are also academically involved in stock corporation law, so we have special know-how in this area. Your first contact persons are:
- Dr. Ronny Jänig, LL.M. (Durham), Attorney at law, Certified specialist for corporate law
- Finn Dethleff, Attorney at law
- Dr. Boris Schiemzik, Attorney at law, Certified specialist for corporate law
- Dr. Jens Nyenhuis, LL.M. (Cape Town) Attorney at law, Certified specialist for corporate law
Our Advice for Shareholders, Management Board Members and Supervisory Board Members on the Annual General Meeting in Germany
Our advisors support management boards, supervisory boards and shareholders primarily on the following topics of the annual general meeting:
- Legal and strategic advice to management and supervisory boards on the preparation of general meetings (invitation, agenda, etc.)
- Scope of rights and powers of the general meeting, minority shareholders and individual shareholders
- Exercise and enforcement of shareholders' rights BEFORE, DURING and AFTER the shareholders' meeting
- Advice and representation in disputes between general meeting/shareholders on the one hand and management board/supervisory board on the other hand
- Judicial enforcement and defense of rights of the general meeting and shareholders (lawsuits against supervisory board, management board, etc.)
- Preparation and defense of motions for special audit, appointment of special auditor
- Preparation and defense of applications for appointment of special representatives
- Preparation and defense of lawsuits against resolutions of the shareholders' meeting
Relationship between the Annual General Meeting and the Supervisory Board and Management Board in Germany
The German Stock Corporation Act (AktG) provides detailed regulations on the relationship between the annual general meeting and the two management bodies, the management board and the supervisory board. It is significant in this respect that, on the basis of Art. 23 para. 5 of the AktG, which declares the provisions of the AktG to be unchangeable in large parts, the distribution of competences as well as the rights and duties of the annual general meeting are firmly defined. Neither the articles of association nor individual resolutions of the annual general meeting should be able to change the legally defined distribution of competences.
The AktG bindingly assigns the management of the german company to the management board, and the supervision of management to the supervisory board, so that the general shareholders' meeting - in contrast to the shareholders' meeting of the GmbH - is primarily a purely decision-making body. Put simply: The annual general meeting can only say yes or no to proposed resolutions - nothing more.
Tasks and Rights of the General Meeting
Pursuant to Art. 119 para. 1 of the AktG, the annual general meeting passes resolutions in the cases expressly stipulated by german law as well as in the company's articles of association. This is understood as meaning that the annual general meeting has sole decision-making power in these cases. The central standard of the AktG in this respect is Art. 119 para. 1 AktG, according to which the annual general meeting in Germany is authorized to decide by resolution in the following cases:
- Appointment of members of the supervisory board (unless selected by way of employee co-determination).
- Appropriation of profits
- Discharge of the management board, supervisory board
- Appointment of auditors
- Amendment of articles of association
- Capital measures (capital procurement, capital increase, capital reduction)
- Appointment of special auditors to examine transactions relating to the formation or management of the company (special audit)
In addition to these points, there are also numerous provisions of the AktG which assign further competences and powers to the annual general meeting:
- Conclusion and amendment of an intercompany agreement (Art. 293 para. 1, 295 para. 1 AktG)
- Integration of a subsidiary (Art. 319 para. 2, 320 para. 1 sentence 3 AktG).
- Consent to the transfer of the entire assets of the company
- Subsequent formation, post-formation transactions
Outside the AktG, the German Conversion Act (UmwG) in particular provides for a large number of powers of approval for the annual general meeting:
- Merger
- Splitting and spin-off
- Change of legal form
The annual general meeting in Germany can only be involved in the day-to-day management of a company in one particular case. If the supervisory board refuses to give the necessary consent to a management measure of the management board, the management board can appeal to the general meeting in this matter and demand that a resolution be passed accordingly. However, apart from this, resolutions of the annual general meeting on management issues are not legally binding.
Detailed information on the duties and rights of the annual general meeting and on the process of an annual general meeting in Germany can be found on our special pages.
Time of convening the Annual General Meeting
When is the annual general meeting held in german AGs? The annual general meeting is held once a year. The management board in Germany must convene the shareholders' meeting ("convocation") without undue delay after receipt of the report of the supervisory board (meaning the report on the audit result on the annual financial statements prepared by the management board). According to the express provisions of the AktG, the annual general meeting must be held within the first eight months of the financial year. If the fiscal year is the calendar year (normal case), the annual general meeting must be held by the end of August.
The management board in Germany must take this into account in its scheduling - preparation of the annual financial statements, submission to the supervisory board, deadlines for convening the annual general meeting. If the management board fails to convene the shareholders' meeting, shareholders (minority shareholders) can take legal action to force the invitation to the shareholders' meeting ("convocation").
Organization and Procedure of the Annual General Meeting in Germany
The "Annual General Meeting" is the meeting of the shareholders at which the latter must decide on the appropriation of profits and the discharge of the management board and supervisory board on the basis of the annual financial statements adopted by the supervisory board. If a shareholders' meeting is convened exclusively for another purpose, it is an "extraordinary" shareholders' meeting.
The management board in Germany must convene the ordinary shareholders' meeting by law. Beyond this, it is only legally obliged to convene it in certain cases, e.g. if a qualified minority of shareholders requests it or if the well-being of the company makes it necessary. The very strict forms and deadlines of the AktG must be observed when convening the meeting itself. Incorrect invitations can lead to the invalidity of all resolutions of the annual general meeting concerned. The date and time of the meeting is at the discretion of the convener if the articles of association are silent on this. The agenda must also be published. Shareholders can influence this agenda if they hold at least 5% of the capital stock or if they together hold at least the pro rata amount of 500,000 euros.
The actual procedure of the annual general meeting is determined by individual statutory regulations supplemented by customary established practices.
Decision of the Annual General Meeting by Resolution
The annual general meeting in Germany decides by resolution of the shareholders attending the meeting. There are a number of important aspects concerning the decision of the general meeting:
Resolution by Majority of Shareholders
Resolutions of the annual general meeting in Germany are generally adopted by a majority of the votes cast. Thus, a simple majority of votes (+50%) is sufficient. This principle is overridden if the law or the articles of association (if permissible) stipulate a larger majority or further requirements.
Voting Prohibitions in Germany
The AktG provides that in certain situations german shareholders are prohibited from voting on resolutions at the annual general meeting, i.e. their vote does not count in voting or in calculating the result of the vote. Under Art. 136 of the AktG, shareholders are prohibited from voting if
- it is a question regarding their own discharge,
- it is a matter of discharging them from a liability, or
- it is a matter of asserting claims against them.
In german practice, the discharge from liability and the assertion of claims are of particular relevance. A member of the management board who is also a shareholder may therefore not participate in the decision on his own discharge, nor may he participate in the decision on claims for damages against him. The legal provision is based on the idea that no one should be judge in their own matters.
In addition to Art. 136 AktG, the Stock Corporation Act also provides for (special) voting prohibitions in other places, for example in the case of resolutions on the appointment of a special auditor or the initiation of a special audit.
Defects in Resolutions, Action for Rescission in Germany
Resolutions of the annual general meeting in Germany may be defective, i.e. suffer from a defect. The range of conceivable defects extends from
- errors in the invitation to the annual general meeting
- to inadequate information of the shareholders on the subject matter of the resolution
- to violations of the law in the content of the resolution.
The german law gives shareholders the right to challenge defective resolutions by taking legal action. Depending on the severity of the violation, actions for annulment or actions for rescission may be brought.
For more information on actions against resolutions of the annual general meeting, please see our special page.
Shareholder Forum, Organization of Majorities in Advance of the Meeting
In order to enable german shareholders to interact and to make it easier for them to jointly achieve any minority quotas, Art. 127a AktG provides for the creation of a shareholders' forum in the electronic Federal Gazette. The shareholders' forum is an internet forum, the details of which are governed by the shareholders' forum ordinance (AktFoV).