Aquisition of German Publicly Traded Companies - An Introduction To The Legal Framework - Part 3
Mondaq Business Briefing › Germany Law Articles in English (2004)
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Aquisition of German Publicly Traded Companies - An Introduction To The Legal Framework - Part 3
Defensive Measures During an Acquisition
The Stock Corporation Act grants the shareholders of a stock corporation the right to delegate certain powers to the company's management by authorizing certain activities that the company's management may take at a future date subject to the exercise of its business judgment. Furthermore, the Takeover Act permits the authorization by the shareholders' assembly of defensive measures against a takeover bid. The combination of these two constructs have given rise to a series of defensive measures that can successfully deter a hostile takeover bid.Authorized Capital. The shareholders' assembly may authorize up to a 50% increase in the company's share capital for cash contributions or contributions in kind. The authorization may have a five year term and enable the management board to restrict the existing shareholders' subscription rights as to some or all of the newly issued shares. The capital increase will require the approval of the company's supervisory board, however. Furthermore, restricting the subscription rights of existing shareholders is subject to certain limitations. See also "Statutory Framework—Stock Corporation Act—Subscription Rights."The issuance of authorized capital in connection with a business combination would enable the company to issue new shares representing up to one-third of the company's share capital following the c...See the full content of this document
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