1.2.4 Appraisal rights

Appraisal rights are exit rights that can be used by the shareholder in specific circumstances defined by statute. In this respect, appraisal rights differ from the exit rights embodied in the winding-up remedy and the oppression remedy. Unlike appraisal rights, the Jatter remedies do not define any specific circumstances, but use criteria that have a more or less open character. An appraisal right often takes on the form of a right allowing a minority shareholder to exit the company at a für price in case the general meeting adopts a certain resolution, which resolution may well have an adverse impact on the minority shareholder or changes the company fundamentally, and to which resolution the minority shareholder does not consent.1

In this situation, the legislator could have chosen to confer on all shareholders the right to block the resolution by requiring unanimity of the votes in a meeting in which the total issued capital of the company is present or represented. As stated above, however, high thresholds may result in a complicated or paralyzed decision-making process. Instead of setting high thresholds, the legislator enabled the majority of shareholders to adopt the resolution without any resistance from minority shareholders. In order to create a balance, legislators created appraisal rights offering an exit to minority shareholders who oppose the fundamental change or adverse impact.