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17.02.2015
German Tax and Legal News

Federal Court of Justice rules that company general meeting can be held abroad

The Federal Court of Justice has ruled that a general meeting of a European public company can take place in Germany or abroad.

Germany‘s Federal Court of Justice issued a decision on 21 October 2014 in which it held that a general meeting of the shareholders can take place abroad if certain conditions are satisfied.

The case involved a European public company (“Societas Europaea”) that had its registered office in Germany. The company’s articles of association contained a provision that allowed the general meeting of the company to be held abroad; the meeting could be held in any city within the EU that had a population exceeding 500,000 or a stock exchange. Several shareholders sued the company.

The Federal Court decided that, in theory, such a provision in the articles of association is permissible, but it must limit the competencies of the management board to select the venue of the general meeting. In this case, because there are more than 60 cities in the EU with a population exceeding 500,000, the management directors had too much discretion to define the place where the general meeting would be held. The court stated that the articles must contain clear stipulations on potential meeting locations.

Further, the provision must ensure that the ability of the shareholders to participate in the general meeting is not adversely affected by holding the meeting abroad. The shareholders should know in advance where the meeting will be held and have ample opportunity to prepare to attend and be able to arrange travel without being required to take a disproportionately long trip.

The Federal Court also emphasized that the minutes of a general meeting held abroad must be notarized in the same way and under the same conditions as if the meeting was held in Germany. This assumes that the foreign person notarizing the minutes has a professional education and rank in the legal system in his/her country that is equivalent to a German notary and is required to comply with procedural laws for the notarial deed that correspond to the fundamental principles of German notarization law.

An important aspect of the court’s decision is its applicability to German public limited companies (“Aktiengesellschaft”); the articles of association of such companies also may allow the general meeting of shareholders to be held abroad.

The Federal Court decision may be beneficial to European public companies and German public limited companies with many foreign shareholders because they will be able to reduce their efforts and expenses relating to the convening and holding of general meetings. However, this will require clear provisions in the articles of association that comply with the requirements outlined by the Federal Court and the person notarizing the minutes of a general meeting must be equivalent to a German notary.

Contact

Marcell Baumann
Senior Manager

mbaumann@deloitte.de
Tel.: 0711 6696-269

Contact

Marcell Baumann
Senior Manager

mbaumann@deloitte.de
Tel.: 0711 6696-269

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