Release proceedings: Definition, legal significance, and areas of application
The release proceeding is an important concept in German law that is particularly applied in corporate law, labor law, and public law. It refers to a judicial or administrative procedure in which a specific measure or decision is approved, confirmed, or its effectiveness is brought about, provided that this would otherwise be blocked by legal obstacles or pending legal disputes. The aim of the release proceeding is to maintain an organization’s ability to act and to create legal certainty.
Definition and nature of the release proceeding
The release proceeding regularly refers to a legally standardized process that serves to make a measure effective despite objections being raised or lawsuits pending. Thus, it constitutes an exception to the so-called suspensive effect (delaying effect) of legal remedies. In numerous areas of law, the release proceeding is used to prevent the blockade of essential decisions by minorities or individual plaintiffs and to ensure the continuation of regular business operations.
Release proceedings in corporate law
Release proceedings pursuant to § 246a AktG
The most prominent example of a release proceeding can be found in German stock corporation law under §§ 246a, 327e AktG. The release proceeding under § 246a AktG is designed to prevent shareholders from excessively delaying and thereby blocking a company’s registration of major shareholders’ meeting resolutions (such as mergers, changes in legal form, or squeeze-outs) in the commercial register by filing actions for annulment or rescission.
Procedure sequence
- After an action for rescission or annulment has been brought against a resolution of the general meeting, the company may apply to the competent regional court for registration of the measure in the commercial register (“release order”) if the court concludes that the action is manifestly unfounded or that overriding interests of the public, the company, or the shareholders require the registration.
- The regional court decides in written proceedings, and the decision takes immediate effect.
- An immediate appeal against the order may be lodged with the higher regional court.
Significance for companies and minority protection
The release proceeding ensures that majority decisions, especially structural measures, cannot be permanently blocked by minority shareholders. The legitimate interests of minority shareholders are safeguarded in particular through the possibility of appeal as well as a risk of reversal if the measure later proves to be unlawful.
Other corporate law applications
Apart from stock corporation law, comparable release proceedings exist in other types of companies, for example, in mergers or transformations under the Transformation Act (§ 16 UmwG).
Release proceedings in labor and co-determination law
In labor law, release proceedings are particularly relevant in the context of participatory rights of employee representative bodies, e.g., with regard to co-determination in certain corporate decisions. Here, a judicial release proceeding can be requested if co-determination would be blocked by court disputes. The legal basis for this is found mainly in the Works Constitution Act (BetrVG).
Release proceedings in public law
Building permits and planning approval procedures
In public law, too—such as in the execution of building permits or infrastructure projects—there are variants of release proceedings. In certain cases, immediate enforcement of a decision may be ordered despite a lawsuit having been filed against the administrative decision (cf. § 80 para. 2 no. 4 VwGO). The authority or a court may order ‘immediate enforceability,’ which constitutes a release proceeding in the broad sense.
Immission control and environmental law
In the area of environmental law, release proceedings are applied in a similar way regarding immission control permits for major projects. Such procedures help to prevent long-term delays in the implementation of significant projects.
Legal basis and procedural sequence
Statutory regulations
Release proceedings are governed by specific statutory provisions, which in particular regulate the prerequisites, process, jurisdiction of the court, and legal remedies. In corporate law, these are §§ 246a, 327e AktG; in the Transformation Act, § 16 UmwG; and in public law, primarily § 80 VwGO.
Parties involved and entitlement to apply
The party entitled to apply for a release proceeding is usually the party that is directly affected by the blockage of a measure, such as the company in the case of a corporate restructuring measure or the authority in public law approval procedures.
Legal consequences and reversal
If the release proceeding is successful, the respective measure (for example, the registration in the commercial register) becomes effective despite ongoing judicial review. If the main proceedings later lead to a different outcome, a reversal or other compensatory measures may become necessary.
Objectives and functions of the release proceeding
The release proceeding serves the following primary objectives:
- Prevention of abuse of rights: Avoidance of misuse of legal remedies to block majority decisions
- Preservation of companies’ and authorities’ ability to act: Ensuring the continuation of essential business processes and infrastructure projects
- Effective legal protection for minorities: Ensuring substantive review of measures despite their implementation
Legal protection and safeguarding mechanisms for those affected
Despite the accelerated effectiveness of a measure through a release proceeding, legal protection remains ensured. In particular, the right to judicial appeal and the possibility to demand reversal in the main proceedings if substantive conditions are lacking protect individual interests.
Summary
The release proceeding is a specialized legal instrument that is applied in numerous legal fields. In particular, it safeguards the ability to act in corporate and administrative matters despite pending legal disputes. In doing so, it ensures a balanced interplay between majority decisions and minority protection while also protecting the public interest by enabling the timely implementation of essential decisions.
Literature and further regulations
- Stock Corporation Act (AktG)
- Transformation Act (UmwG)
- Administrative Court Procedure Act (VwGO)
- Works Constitution Act (BetrVG)
- Case law of the Federal Court of Justice (BGH) and the higher regional courts on release proceedings
Note: This overview covers the essential legal aspects of release proceedings and provides a comprehensive insight into the statutory provisions and practical effects of this procedural mechanism.
Frequently asked questions
What legal requirements must release proceedings meet?
Release proceedings in Germany are subject to numerous legal requirements which can vary depending on the field of application, such as the public sector or private companies. Fundamentally, release procedures must be structured to comply with applicable legal frameworks, including the German Civil Code (BGB) for contractual releases, the Commercial Code (HGB) for commercial release processes, or the Limited Liability Companies Act (GmbHG) for corporate matters. It is mandatory to ensure that all releases are documented, verifiable, and protected against unauthorized changes. This particularly requires, in the context of electronic release processes, the use of technical measures for authentication and logging. It should also be examined whether co-determination rights of the works council (for example, under § 87 BetrVG) must be taken into account, especially if release proceedings affect operational organization. Lastly, data protection requirements under the GDPR must be considered whenever personal data is processed in the context of release procedures.
What liability risks exist for errors in release proceedings?
If errors occur during a release proceeding, such as insufficient review of proposals for decisions, this may entail far-reaching liabilities. Company directors and decision-makers may be personally liable if they fail to exercise due care and the company or third parties suffer damage as a result (§ 43 GmbHG, § 93 AktG). In the public sector, there is also a risk of liability under official and budgetary law principles if a release process is not properly documented and executed. An incomplete or formally incorrect release may render the decision ineffective and make any contracts or measures contestable. Carefully designed procedural instructions and regular compliance training are therefore essential to minimize risks.
Are there statutory requirements for documentation of release proceedings?
Yes, there are numerous statutory requirements for the documentation of release proceedings. According to commercial and tax regulations (§ 257 HGB, § 147 AO), business-relevant documents, which include release decisions, must be stored for at least six or ten years, respectively, in a way that is protected against alterations. In public administration, written form is required under the Administrative Procedure Act (VwVfG) and records must be kept as per relevant administrative regulations. The GDPR requires additional detailed logging and the creation of a record of processing activities whenever personal data is processed in release procedures, in order to fulfill accountability and evidence obligations. Documentation must also be traceable and reviewable at any time, so that in the event of legal disputes or audits by regulators, the decision-making process can be reconstructed in full.
What role do internal guidelines play in the legal context of release proceedings?
Internal guidelines—such as work instructions, organizational and control policies, or compliance policies—are of fundamental importance in the legal context of release proceedings. They give concrete shape to statutory requirements, regulate responsibilities, define escalation levels and procedural steps, and serve as binding standards of conduct for the individuals involved. Violations of internal guidelines may result in employment law consequences, such as warnings or dismissal, and liability, for example if an employee bypasses a release proceeding without authorization. Moreover, during external audits (e.g., by BaFin or auditors), compliance with and implementation of internal rules are often assessed as part of proper business operations. Therefore, internal procedures should be regularly reviewed for legal adequacy and up-to-date compliance and be adapted in response to changes in law.
How is data protection legally ensured in release proceedings?
The legally secure conduct of release proceedings requires strict compliance with the General Data Protection Regulation (GDPR) whenever personal data is processed. This includes technical and organizational safeguarding of data processing (Art. 32 GDPR), restricting access rights to the necessary minimum (need-to-know principle), as well as logging and traceability of access and processing activities. Controllers and processors must observe information and accountability obligations, for example, through transparent notifications to affected persons (Art. 13, 14 GDPR) and maintenance of a record of processing activities (Art. 30 GDPR). When using software solutions for releases, attention must be paid to privacy-friendly design (privacy by design) and, especially where high risks for data subjects’ rights and freedoms exist, to conducting data protection impact assessments.
What obligations for participation do supervisory bodies have in release proceedings?
Supervisory bodies such as supervisory boards, advisory boards, or the works council have statutorily regulated participation and monitoring rights in certain release decisions. Under the Stock Corporation Act (§ 111 AktG), significant management measures—which often include investment or procurement decisions—must be subject to the approval or supervision of the supervisory board. Comparable regulations are found in the GmbHG for management powers requiring the consent of the shareholders’ meeting (§ 45 GmbHG). In internal company practice, the works council may be consulted based on the Works Constitution Act (BetrVG) when introducing and designing release procedures that affect employees or working processes. Failure to involve the respective bodies can render the decision ineffective and may result in claims for damages.
Can a release proceeding be contested or revoked retroactively?
The possibility of contesting or revoking a release proceeding is generally legally available if formal errors, violations of legal obligations, internal rules, or authorizations are found during its conduct. Under corporate law (e.g., contestation of shareholders’ resolutions pursuant to § 246 AktG, § 46 GmbHG), the effectiveness of the decision can be reviewed in court within legal deadlines. In public law, administrative acts may be withdrawn or revoked under §§ 48, 49 VwVfG, especially when legal violations or major procedural defects are present. In the private sector, parties can—depending on the terms of the contract—contest or withdraw unlawful releases. Practical consequences may range from correction of technical errors to full reversal of measures already taken.
