Politics

The law protecting small shareholders falls through the cracks in the “Digital Agenda”

The German finance and justice ministers presented a joint Bill at the end of July in Berlin to protect small investors. It sets out to achieve “more transparency in investing” in, for example, requiring more information on providers of funding, mortgages for shareholders on subordinate debts, and other similar financial instruments. The reform also aims at giving legal force to “collective consumer protection” as one of the areas of supervision entrusted to Bafin (Federal Regulator for Financial Supervision). The “Digital Agenda” approved by the German Council of Ministers on August 20 states that a young digital economy must be given support by “relaxing conditions for accessing start-up funding through competitive general international conditions for venture capital and crowd-investments”. Laws protecting small investors, by contrast, provide the exact opposite by requiring crowd investors of 250 Euros or more to print a data sheet on the investments, sign it by hand, take it to the post office and send it to the crowd-investing platform in order to make their investment in a start up official. Many digital economy associations believe that this procedure risks causing negative repercussions on funding start-ups.

Doubts surround European Directives on shareholders

Brussels’ directives aimed at strengthening shareholders’ rights are running up against opposition within the German economy. The Bundesverband der Deutschen Industrie (BDI), the Bundesvereinigung der Deutschen Arbeitgeber (BDA) and Deutsche Industrie und Handelskammertag (DIHK) are presenting a common front against what they see as measures that are unnecessary indeed unsuitable and disproportionate. They object especially to the new right of shareholders’ meetings to rule on the remuneration of boardroom directors of stock exchange listed companies and on the transactions involving individuals close to or within the company and they request that in Germany these issues remain within the area of responsibility of the Supervisory Board, In their opinion, the new rule would shift responsibility and cause delays in finalising contracts with boardroom members, and affect transactions. Furthermore, the lack of time that presently besets shareholders’ meetings would be aggravated by getting tied up in more red tape. The success that the German code of corporate governance has achieved in terms of limitation and transparency of directors’ emoluments would be undermined. The economic associations request that shareholders be allowed to decide whether or not to vote on these and other issues such as the extent to which remuneration policy ought to be published.