At the end of July, the German Government has presented a draft bill as an amendment to the Stock Corporation Act, AktG.  A bill for an amendment of the German Stock Corporation Act was approved since 2012, but only now have those amendments been established. For details about the current legislation on stock corporations you can also refer to our German law firm.

What are the contents of the new German Stock Corporation Act?

The 2012 draft law only proposed two amendments to the Stock Corporation Act: one referring to the introduction of a public supervisory board meeting in German joint stock companies owned by public institutions and one referring to the replacement of bearer shares with a “decide on pay” proposal. The current bill contains a whole new set of provisions, among which:

• - the restriction of shares with voting rights for German non-listed companies,
• - the introduction of a record date for registered shares,
• - allowing the creation of capital through preference shares,
• - allowing reversed convertibles,
• - new regulations for legal actions against German stock corporations.

According to the new regulations, German non-listed companies should benefit from more transparent regulations when it comes to the distribution of ownership in order to prevent tax evasion, money laundering and the financing of terrorism. Compared to the old draft bill, the new legislation would allow companies to choose between the registration of bearer and registered shares. The shareholders of German stock corporations will also be required to record the date when the registered and bearer shares have been issued, but no specific time limit for registration has been provided yet.

For complete information about all the changes brought to the new AktG you can also contact our lawyers in Germany.

More flexibility for German stock corporations

One of the provisions of the draft Stock Corporation Act refers to the core capital of German listed companies. In order to benefit from more flexibility these companies will be allowed to increase their share capital by issuing non-voting preference shares. German credit institutions will also be allowed to use this rule in order to raise more capital. However, they will be required to modify their Articles of Association with a non-cumulative entitlement when it comes to issuing preference shares.

The new bill is expected to pass and to be enacted by the end of the year.