- constributions into the company in "exchange" of business share / share
- they are residual owners of the company
- they cannot claim return on the contribution
- in the case of insolvency of the company they are last on the payment order
- liability
- private limited - unpaid contributions into share capital
- public limited - no liability
- exception - piercing veil
- separate legal personality
- assets of shareholder are shielded from creditors of company
- assets of company shielded from creditors of shareholders
- asset shielding
- separation of ownership and management
- separate [ersons are managing company separate people are owning the company
- continental europe - centralised ownership, separation not present
- US & UK - dispresed ownership, separation present
shareholder rights
- attend general meeting
- information rights
- decide major changes of company that have impact on ownership
- winding up
- transformation
- changes in article of association
- sales of enterprise
- nomination, election, removal, remuneration of board
- day to day business decisions
- right to profit (dividend)
- right to liquidation share
- right to file lawsuit
- action pro socio in personalized companies to claim fulfilment of obligation from other shareholders / partner in the business
- derivative suit - if directors breach duties, they will not file a lawsuit against themselves in the name of the company
- pre emption rights
- other contractual rights
minority shareholders - special rights?
- may be oppressed by majority shareholders - law is balancing out their lack of power
- challenge general meeting resolution
- right to call an extraordinary general meeting
- right to file a law suit
- threshold needed for the exercise of these rights, certain jurisdictions
- elimination of minority shareholders
- squeeze-out / sell-out
shareholders' duties
- pay contribution to share capital
- not abuse their right
- other rights based on constitutional documents & shareholders agreements
general meeting
- once a year
- extraordinary general meeting (special occasions)
- who calls?
- statutory body - board of directors
- supervisory board
- majority & minority shareholders
- voting
- one share one vote / one shareholder having multiple votes
- proxy voting - voting in someone's absence
- quorum
- quorum to hold general meeting
- quorum to pass decisions
- super majority
- regular majority
competence to take business decisions in public limited company
german model
management board has exclusive competenties with respect to administration of company and neither general meeting nor supervisory board may pass resolutions regarding the management of the company
- general meeting may only take business decisions
- fundamental decisions
- request of management board; general meeting prohibited from giving instructions to the board
nordic model
neither supervisory or management board have exclusive competence
UK model
- all powers of management are primarily vested in the board, but
- statutes can reserve matters to general meeting
- general meeting can give directions to directors on ad hoc basis, but 75% vote
- simple majority can dismiss directors without cause
- board will not seek to exercise a power contrary to wishes of shareholders
competence to take business decisions in private limited company
- freedom to organise competence between general meeting and board
- the cmpetence of the general meeting is unrestricted
- the general meeting may take business decisions
exit from companies
- private companies
- hard to find buyer
- no market
- can be excluded
- public companies
- free transferability of shares
- listed companies: market
- squeeze out sell out rights
- shareholders are pushed from the company depsite the fact they want to stay
- threshold is needed
directive 2007/36/EC - certain rights of shareholders in listed companies
- provisions on
- shareholders' voting rights, proxy voting rights & cross-border voting
- shareholders' rights to put items on agenda of general meeting to ask questions
- provisions on companies' rights
- the right to use electronic means to communicate with the shareholders and to enable electronic voting at the general meeting