8.5 Chapter 5 – Shareholders and preventive restructurings: Germany

German law is at the heart of this chapter. In exceptional situations, shareholder rights may be interfered with in Germany outside of insolvency proceedings where the company threatens to become insolvent (par. 5.2). The emphasis is then on a necessary restructuring pursued by the majority. Germany does not, strictly speaking, have any preventive restructuring procedure. Early restructuring is possible in Germany only if the board of the company requests the opening of formal insolvency proceedings which may end in the liquidation of the company’s assets. Prior to the plan procedure, the board can use a Schutzschirm to quietly prepare a plan at an early stage. The opening of final insolvency proceedings is then postponed. The German plan procedure, for which the opening is required, is largely in accordance with the provisions of the Directive.

German legislation and literature have devoted extensive attention to the position of shareholders and their rights within the procedure. Since 2012, it has been possible to include shareholder rights in a plan, i.e. to include a company law provision in the plan (par. 5.4.9). Anything that is permitted under company law is possible under the plan. The German plan procedure makes no distinction between resolutions of the general meeting or the consent of individual shareholders required for the restructuring (such as a resolution to increase capital) and the direct or indirect amendment of shareholder rights (such as the amendment of the profit entitlement attached to a share or a dilution of shares). This is different under the ACPP. In other words, a German plan can cover more than just debt restructuring. It may, for example, also include the formation of a supervisory board or a change in the company’s objectives under the articles of association. The resolutions of the general meeting and the consents of individual shareholders included in a plan are considered to have been adopted and issued in the prescribed form by the confirmation of the plan. Nor may the general meeting and individual shareholders impede the preparation of a plan in other ways, because they may not exert any influence on the management of the company during the plan procedure. All this can be explained by the fact that the compulsory plan in Germany is imposed as part of formal insolvency proceedings. In my view, the content of a plan under the ACPP rightly relates only to debt restructuring. Company law cannot be affected beyond what is permissible in view of the content of a plan. There is no justification for any ‘further’ impairment.