Share transfer claim after final release decision – In-depth analysis of the case law of the Higher Regional Court of Frankfurt am Main
In its judgment of January 5, 2024 (Case No. 17 U 66/22), the Higher Regional Court of Frankfurt am Main addressed central questions regarding the claim to share transfer upon execution of a merger-related squeeze-out from the perspective of a final release decision. The ruling provides important insights into the scope and enforcement of transfer claims, as well as the interplay between corporate structural measures and the shareholder dispute process under stock corporation law.
Corporate law background and relevance
In the context of a so-called squeeze-out, minority shareholders face the risk of losing their stake in the company against their will. Under § 62 (5) of the Transformation Act (UmwG) in conjunction with §§ 327a et seq. of the German Stock Corporation Act (AktG), the legislator provides that shares may be transferred to the principal shareholder on the basis of a resolution. The crucial question in dispute was under what actual and legal circumstances, following a final release decision, can the principal company’s claim to transfer of shares be enforced, and what binding effect the release procedure under § 246a AktG has.
Discretionary powers and protective effects in the release procedure
Interest in expediting proceedings and legal certainty
The release procedure is designed to establish legal certainty: if the court grants the application and the resolution becomes final, entry into the commercial register can proceed regardless of any pending challenges. This establishment of procedural speed is intended to protect structurally significant transformations, such as mergers or squeeze-outs, from delays caused by lengthy legal remedies. Once finality is achieved, the release decision has the force of law, which is also decisive for any transfer claims. This constitutes a statutorily provided obstacle to renewed substantive review by subsequent instances regarding the preconditions for the transfer.
Scope of the transfer claim
The Higher Regional Court of Frankfurt am Main emphasized the protection of legitimate expectations for the principal shareholder created by the final release. If a release decision under § 246a AktG is final, objections to the execution of the transfer resolution—such as ongoing challenge proceedings or other concerns about the effectiveness of the transfer—generally do not stand in the way of the claim to share transfer. The decision thus highlights the protective function for transformation measures, where a recognized interest in expediting proceedings prioritizes legal certainty for the company over the individual interest of each shareholder.
Civil procedural enforcement and limitations
Binding effect for civil courts
In the present case, the civil courts were required not to review anew the substantive legality of the share transfer given the binding effect of the release decision. Procedural obstacles, such as ongoing ancillary proceedings, can generally no longer be raised against the transfer claim. Enforcement by way of an action for performance is therefore substantially facilitated as long as the formal finality exists.
Investor and minority shareholder protection
Nevertheless, the court emphasized that any valuation disputes regarding the adequacy of compensation do not hinder execution of the transfer. The protection of shareholders’ rights in this context is ensured subsequently through appraisal proceedings, which independently determine the adequacy of the compensation. This procedural separation between enforcement of the transfer and securing the substantive compensation is characteristic of the German capital market.
Outlook and practical implications
The decision of the Higher Regional Court of Frankfurt strengthens the ability of principal shareholders and companies to act and plan with confidence when implementing fundamental structural measures. It also provides clarity regarding the procedural role of the release decision in the context of claims for share transfer under stock corporation law, and defines the limits of minority shareholders’ rights to challenge during this phase. However, any valuation disputes remain to be resolved in separate appraisal proceedings, thereby ensuring continued protection of minority shareholders.
For more current information on the effects of court rulings on structural measures and transfer claims in the context of the squeeze-out, you may contact MTR Legal Rechtsanwalt. If needed, you can request an individual review of legal issues relating to corporate and transformation law structures.
