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Freeze-Out Transactions in Germany and the U.S.: A Comparative Analysis

Published online by Cambridge University Press:  06 March 2019

Christian A. Krebs

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A freeze-out is a transaction in which a controlling shareholder forces out the minority shareholders and compensates them in cash or stock. A successful freeze-out transaction marks the end of the exchange-traded life of a corporation—it is a “going private” transaction. A freeze-out is therefore the counterpart to an initial public offering. Whereas the latter leads to the public listing of a corporation and thus a multiplication of shareholders, the freeze-out transaction aims at reducing the number of shareholders of a corporation to one.

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Articles
Information
German Law Journal , Volume 13 , Issue 8 , 01 August 2012 , pp. 941 - 978
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Copyright © 2011 by German Law Journal GbR 

References

1 Cf. Subramanian, Guhan, Fixing Freezeouts, (Harvard Law Sch. John M. Olin Ctr. for Law, Econ. and Bus., Discussion Paper No. 501, 2004); Marco Ventoruzzo, Freeze-Outs: Transcontinental Analysis and Reform Proposals 2 (European Corporate Governance Inst., Working Paper No. 137, 2009). In the U.S. legal system, the term squeeze-out is used to refer to measures—whether legal or not—which confer benefits from the corporation on the controlling shareholder to the detriment of the minority shareholder, thereby creating a de facto incentive for the minority shareholders to leave the corporation. See id.; Holger Fleischer, Großkommentar Aktiengesetz Vor §§327a–f mn.4 (4th.ed. 2007). In Europe and in Germany, however, the term squeeze-out has been established as the equivalent of the term freeze-out. Cf. Council Directive 2004/25/EC, art. 15, 2004 O.J. (L 142) (EU); Fleischer at §327a. In the following, the term freeze-out will be used to describe general principles and in relation to U.S. law. The term squeeze-out will be used in relation to European and German law and never in relation to its ambiguous meaning in the U.S. legal system.Google Scholar

2 The terms controlling shareholder and controller are used interchangeably in this text.Google Scholar

3 As the state corporation law of the U.S. today is dominated by Delaware law, which is widely recognized as the most developed corporate law in the U.S. and which governs over 50% of U.S. corporations, Delaware will serve as a proxy for the U.S. for the purposes of this analysis. A reference to the U.S. in this article can therefore be understood as a reference to Delaware.Google Scholar

4 See Kraakman, Reinier H. & Hansmann, Henry, The End of History for Corporate Law, 89 Geo. L.J. 439 (2001).Google Scholar

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6 A delisting is generally also possible without a freeze-out, but freeze-outs are a convenient way to achieve a delisting. The reduction of the number of shareholders to one means that no regular exchange trade is possible anymore, so that the admission to the securities exchange is void or will be revoked, depending on the regulations of the respective stock exchange. In Germany, such a measure which leads to the loss of the stock exchange admission is called “cold” delisting. Fleischer, supra note 1, at mn. 33.Google Scholar

7 See Ventoruzzo, supra note 1, at 6 (giving a more detailed overview and additional reasons like reducing agency costs and reducing the corporation's tax burden by increasing the debt-to-equity ratio because of the tax deductibility of interest payments).Google Scholar

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52 At least in the absence of other control measures like influence on board members, shareholder agreements or special charter rights.Google Scholar

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57 See Subramanian, supra note 1, at 24 n.133.Google Scholar

58 Del. Code Ann. tit. 8, § 262(b)(2) (2010).Google Scholar

59 Allen, Kraakman & Subramanian, supra note 56.Google Scholar

60 Id.; Subramanian, supra note 1, at 24 n.135.Google Scholar

61 Allen, Kraakman & Subramanian, supra note 56; Subramanian, supra note 1, at 24 n.136.Google Scholar

62 Del. Code Ann. tit. 8, § 262(d)(1) (2010).Google Scholar

63 Subramanian, supra note 1, at 24 n.137.Google Scholar

64 Id. Google Scholar

65 Ventoruzzo, supra note 1, at 11–13 nn.29-30, 34-35.Google Scholar

66 See id. at 13 (noting that this term was coined by Robert B. Thompson).Google Scholar

67 Gesetz zur Regelung von öffentlichen Angeboten zum Erwerb von Wertpapieren und Unternehmensübernahmen [The amendment was introduced by the Act on the Regulation of Company Acquisitions and Public Offers to Purchase Securities], Dec. 20, 2001, BGBl. I at 3822 (Ger.).Google Scholar

68 Kristian Stange, Zwangsausschluss von Minderheitsaktionären (Squeeze-Out) 30 (2010).Google Scholar

69 Gesetz zur Bereinigung des Umwandlungsrechts [UmwBerG] [Law to Clean up the Transformation Law], Nov. 11, 1994, BGBl. I at 3210, as amended by Gesetz [G], Jan. 1, 1995, BGBl. I at 428 (Ger.).Google Scholar

70 Deutscher Bundestag: Drucksachen und Protokolle [BT] Begründung zum Regierungsentwurf [Legislator's Explanatory Notes], 12/6699, 114 at 144 (Ger.).Google Scholar

71 Eberhard Vetter, Squeeze-Out in Deutschland, Zeitschrift für Wirtschaftsrecht (ZIP) 1817, 1818 (2000).Google Scholar

72 Cf. Fleischer, supra note 1, § 327(a)–(f) n.34, n. 39 (providing a detailed account of the direct and indirect possibilities to exclude shareholders).Google Scholar

73 Also known as “sale of assets squeeze-out” or “Moto Meter method.”Google Scholar

74 See Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at §§ 179(a), 262(1) no. 2 (Ger.).Google Scholar

75 Bundesverfassungsgericht [BVerfG – Federal Constitutional Court], Case Nos. 1 BvR 68/95, 1 BvR 147/97, Aug. 23, 2000, 2001 Neue Juristische Wochenschrift (NJW) 279 (2001) (Ger.).Google Scholar

76 Bayerisches Oberstes Landesgericht [BayObLGZ – Bavarian Higher Regional Court] Case No. 3Z BR 37/98, Sept. 17, 1998, 1998 Zeitschrift für Wirtschaftsrecht (ZIP) 2002 (1998) (Ger.); Oberlandesgericht Stuttgart [OLG -Higher Regional Court], Case No. 8 W 43/93, Dec. 4, 1996, 1997 Zeitschrift für Wirtschaftsrecht (ZIP) 362 (1997) (Ger.). The arguably more suitable appraisal procedure is not applied by the courts.Google Scholar

77 See Council Directive, supra note 1 and accompanying text; Council Directive 04/25, art. 21, 2004 O.J. (L 142) 12, 23 (EC) (providing that, per Art. 21, the Directive was to be transposed into national law no later than 20 May 2006).Google Scholar

78 The complementary sell-out right pursuant to Wertpapiererwerbs- und Übernahmegesetz [WpÜG] [Securities Acquisition and Takeover Act], Dec. 20, 2001, BGBl. I at 3832 (Ger.); Council Directive 04/25, art. 16, 2004 O.J. (L 142) 12, 23 (EC) and § 39(c) respectively, are beyond the scope of this analysis.Google Scholar

79 Bundesgerichtshof [BGH – Federal Court of Justice], Case No. II ZR 302/06, Mar. 16, 2009, 180 BGHZ 154, 2009 (Ger.).Google Scholar

80 See, e.g., Holger Fleischer, Das Neue Recht des Squeeze Out, Zeitschrift für Unternehmens- und Gesellschaftsrecht (ZGR) 757, 758 (2002).Google Scholar

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82 Christoph Van der Elst & Lientje Van den Steen, Balancing the Interests of Minority and Majority Shareholders: A Comparative Analysis of Squeeze-Out and Sell-Out Rights, 6 Eur. Co. & Fin. L. Rev. 391, 398 (2009).Google Scholar

83 Cf. Kallmeyer, Harald, Ausschluß von Minderheitsaktionären, Die Aktiengesellschaft 59 (2000); Matthias Habersack, Der Finanzplatz Deutschland und die Rechte der Aktionäre, Zeitschrift für Wirtschaftsrecht (ZIP) 1230, 1237 (2001); Vetter, supra note 71, at 1819; Eberhard Vetter, Squeeze-Out nur durch Hauptversammlungsbeschluss?, Der Betrieb 743 (2001); Maximilian Schiessel, Ist das deutsche Aktienrecht kapitalmarkttauglich?, Die Aktiengesellschaft 442, 452 (1999).Google Scholar

84 These are the actions used by predatory shareholders as illustrated below. See infra text accompanying note 102.Google Scholar

85 Cf. Christoph Van der Elst & Lientje Van den Steen, supra note 82; Fleischer, supra note 1, § 327(a) n.64.Google Scholar

86 See infra Part E.I.3.Google Scholar

87 Cf. Fleischer, supra note 1, § 327(a) n.65.Google Scholar

88 Van der Elst & Van den Steen, supra note 82, at 430.Google Scholar

89 The controlling shareholder has a right of appeal if the court does not follow his suggestions pursuant to Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl I at §§ 327(c) ¶ 2, 293(c) ¶ 2 (Ger.).Google Scholar

90 Fleischer, supra note 1, § 327(c) n.17.Google Scholar

91 See infra Part E.IV.1–4.Google Scholar

92 Singhof et al., supra note 10, § 327(e) n.4.Google Scholar

93 See infra Part E.V.1.Google Scholar

94 Singhof et al., supra note 10, § 327(a) n.4.Google Scholar

95 Stange, supra note 68, at 279. The following empirical data is taken from Stange unless otherwise indicated.Google Scholar

96 Singhof et al., supra note 10, § 327(a) n.4.Google Scholar

97 Id. Google Scholar

98 Id. This number rises to 50% for the squeeze-outs conducted in the years 2004-2007. This rise can be explained by the fact that 2002 and 2003 a lot of companies with an over 95% shareholder took the opportunity to simplify their shareholder structure.Google Scholar

99 Weber, Martin, Die Entwicklung des Kapitalmarktrechts im Jahre 2006, Neue Juristische Wochenschrift (NJW) 3685, 3693 (2006).Google Scholar

100 Bundesverfassungsgericht [BverfG – Federal Constitutional Court], Case No. 1 BvL 16/60, Sept. 7, 2011, 14 BVerfGE 263 (Ger.).Google Scholar

101 Stange, supra note 68, at 84.Google Scholar

102 Bundesverfassungsgericht [BverfG – Federal Constitutional Court], Case No. 1 BvR 390/04, May. 30, 2007, 11 BVerfGK 253(Ger.).Google Scholar

103 “Predatory” or “professional” shareholders are those who own only a minimal amount of shares (often as little as one share) and then use lawsuits to enjoin important corporate structural changes to induce the company to “buy out” their claims at a settlement value that reflects their “hold-out” or “nuisance” potential and not any actual damages to the shareholder.Google Scholar

104 A 90% quorum is sanctioned by the Takeover Directive and therefore unlikely to be held unconstitutional. See supra notes 77–78 and accompanying text.Google Scholar

105 Fairness opinions and audit reports by an independent expert need to be distinguished in Germany. Fairness opinions are neither required nor regulated by law. They have been introduced into German practice through international M&A transactions with the U.S. (where the practice to use fairness opinions for reasons of legal prudence has been established since the seminal judgment in Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985)). Their aim is to help the management of a company to ascertain and prove the fairness of a determined price in an M&A transaction or other corporate transaction which requires the determination of a company's value. Managers therefore use fairness opinions “voluntarily” to reduce transaction and liability risks. Audit reports by independent experts, in contrast, are an element of many corporate structural measures (like squeeze-outs, mergers, capital increases by contribution in kind and similar measures) which are required by German law to ascertain a certain adequacy of the price or share exchange ratio offered (a “gatekeeper strategy”). The goals of fairness opinion and independent audit report are therefore not completely congruent. Moreover, the independent auditor must be a professional auditor (bound by professional rules) and is appointed by the court for the specific task. In contrast, the drafters of fairness opinions are not necessarily bound by professional rules and are directly chosen by the company. In practice, fairness opinions are done by investment banks, M&A advisors or audit companies. On the use of fairness opinions in Germany, see Klaus Cannivé and Andreas Suerbaum, Die Fairness Opinion bei Sachkapitalerhöhungen von Aktiengesellschaften: Rechtliche Anforderungen und Ausgestaltung nach IDW S 8, Die Aktiengesellschaft 317 (2011); Holger Fleischer, Zur Rechtlichen Bedeutung der Fairness Opinion im Aktien- und Übernahmerecht, Zeitschrift für Wirtschaftsrecht (ZIP) 201 (2011).Google Scholar

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107 Such cases are: Controlling entity executes a domination agreement, a profit transfer agreement, or both, with the target company (Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at §§ 291, 305) or so-called “integration” (this rare measure is different from a merger pursuant to German law) of the target company into the controlling entity (Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at § 320(b)).Google Scholar

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109 This appears to be a typically German valuation method. It is quite old and still commonly used pursuant to the audit standard IDW S1 set by the German Institute of Accountants (Institut der Wirtschaftsprüfer in Deutschland e.V.). “The standard calculates the net present value of the net profits accrued to the shareholders.” Christoph Van der Elst & Lientje Van den Steen, supra note 82, at 430 n.101.Google Scholar

110 Cf. Fleischer, supra note 1, § 327(b) n.13.Google Scholar

111 Allen, Kraakman & Subramanian, supra note 56, at 479.Google Scholar

112 Id. (providing an example where one DCF valuation valued stock at $13 a share and the opposing valuation valued it above $60 a share).Google Scholar

113 Bundesverfassungsgericht [BverfG – Federal Constitutional Court], Case No. 1 BvR 1613/94, Apr. 27, 1999, 100 BVerfGE 289, 307 (Ger.).Google Scholar

114 Arne KIeßling, Der Übernahmerechtliche Squeeze-Out GEmäß §§ 39a, 39b WpÜG 144 (2008).Google Scholar

115 Bundesgerichtshof [BGH – Federal Court of Justice], Case No. II ZB 15/00, Mar. 12, 2001, 147 BGHZ 108 (Ger.).Google Scholar

116 Oberlandesgericht Stuttgart [OLG – Higher Regional Court], Case No. 20 W 6/06, Feb. 16, 2007, 2007 Zeitschrift für Wirtschaftsrecht (ZIP) 682 (2007) (Ger.); Oberlandesgericht Düsseldorf [OLG – Higher Regional Court], Case No. I-26 W 13/06, Sept. 09, 2009, 2009 Zeitschrift für Wirtschaftsrecht (ZIP) 1427 (2009) (Ger.); Oberlandesgericht Stuttgart [OLG – Higher Regional Court], Case No. 20 W 2/08, Dec. 18, 2009, 2009 Zeitschrift für Wirtschaftsrecht (ZIP) 274 (2010) (Ger.).Google Scholar

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118 Oberlandesgericht Frankfurt [OLG – Higher Regional Court], Case No. 5 W 15/10, Dec. 21, 2010, 2011 Zeitschrift für das gesamte Familienrecht (FamRZ) 832 (2011) (Ger.).Google Scholar

119 Hartwin Bungert & Carsten Wettich, Neues zur Ermittlung des Börsenwerts bei Strukturmaßnahmen, Zeitschrift für Wirtschaftsrecht (ZIP) 449, 450 (2012).Google Scholar

120 Even though the court did not define the time-gap further, the case law to date suggests that a time frame of up to six months does not qualify as considerable. See cases cited supra note 116 (7.5 months considerable); Bundesgerichtshof [BGH – Federal Court of Justice], Case No. II ZB 2/10, June 28, 2011, 2011 Zeitschrift für Wirtschaftsrecht (ZIP) 1708 (2011) (Ger.) (3.5 months not considerable); Oberlandesgericht Stuttgart [OLG -Higher Regional Court Case No. 20 W 3/09, Jan. 19, 2011, 2011 Zeitschrift für Wirtschaftsrecht (ZIP) 382 (2011) (Ger.) (up to 6 months not considerable); Oberlandesgericht Frankfurt a.M. [OLG – Higher Regional Court], Case No. 21 W 13/11, Apr. 29, 2011, 2011 AG 832 (Ger.) (4.5 months not considerable).Google Scholar

121 It is currently unclear if an adjustment below the calculated average price would also be permissible. Cf. Bungert & Wettich, supra note 119.Google Scholar

122 Cf. Hans Moritz, “Squeeze-Out”: Der Ausschluss von Minderheitsaktionäeren nach §§ 327 a ff AktG 125 (2004).Google Scholar

123 Id. at 126.Google Scholar

124 Id.; Stange, supra note 68 at 152.Google Scholar

125 Oberlandesgericht Frankfurt a.M. [OLG – Higher Regional Court], Case No. 5 W 39/09 (June 17, 2010), http://openjur.de/u/305834.html (Ger.); Oberlandesgericht Stuttgart [OLG – Higher Regional Court], Case No. 20 W 9/08, Mar. 17 2010, 2010 Zeitschrift für Wirtschaftsrecht (ZIP) 1498 (2010) (Ger.); Oberlandesgericht Munich [OLG – Higher Regional Court], Case No. 31 Wx 12/06, Oct. 26, 2006, 2007 Zeitschrift für Wirtschaftsrecht (ZIP) 375 (2007) (Ger.).Google Scholar

126 Equally Patrick Hohl, Betriebsberater 596 (2011), in a commentary on Oberlandesgericht Frankfurt a.M. [OLG -Higher Regional Court], Case No. 5 W 39/09 (June 17, 2010), http://openjur.de/u/305834.html (Ger.).Google Scholar

127 Allen, Kraakman, & Subramanian, supra note 55, at 479.Google Scholar

128 This problem exists in all structural corporate measures which require a registration with the commercial register to take legal effect.Google Scholar

129 Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at § 327e(2), 319(6) (Ger.).Google Scholar

130 German stock corporations almost always have shares with a nominal value of EUR 1., so that usually means that the plaintiff or group of plaintiffs needs to have held at least 1000 shares.Google Scholar

131 This latter case was introduced recently with the Act on the Implementation of the Shareholders’ Rights Directive, Gesetz zur Umsetzung der Aktionärsrechterichtlinie [ARUG], May 28, 2009, BGBl I at § 2479 (Ger.), in an attempt to further reduce the impact of predatory shareholders.Google Scholar

132 Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at §§ 327e(2), 319(6) (Ger.).Google Scholar

133 Stange, supra note 68, at 256.Google Scholar

134 Appraisal Procedure Act [SpruchG] [Spruchverfahrensgesetz], June 12, 2003, BGBl I at §§4(1)no.3, 5(1) no.3 (Ger.).Google Scholar

135 Appraisal Procedure Act [SpruchG] [Spruchverfahrensgesetz], June 12, 2003, BGBl I at § 13 (Ger.).Google Scholar

136 Id. § 6.Google Scholar

137 Cf. Schiessl, Maximilian, Fairness Opinions im übernahme- und Gesellschaftsrecht Zugleich ein Beitrag zur Organverantwortung in der AG, Zeitschrift für Unternehmens- und Gesellschaftsrecht (ZGR) 814, 837 (2003).Google Scholar

138 At the time the data was gathered in twenty-four cases, an initiation of the appraisal was not yet possible because of a pending action to enjoin, so the actual percentage of cases may well have been higher.Google Scholar

139 Stange, supra note 68, at 279.Google Scholar

140 Currently 0.12%.Google Scholar

141 See e.g., Thomas Heidel et al., Festschrift für Wienand Meilicke 2268 (2003); Stange supra note 68, at 259.Google Scholar

142 Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at § 327b(2) (Ger.).Google Scholar

143 This section draws on data from Stange, supra note 68, at 279.Google Scholar

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145 It is a general requirement of German Takeover law that partial tender offers which are limited to an acquisition of less than 100% of the target stock are not allowed. Wertpapiererwerbs- und Übernahmegesetz [WpÜG] [Securities Acquisition and Takeover Act], Dec. 20, 2001, BGBl. I at § 29 (Ger.).Google Scholar

146 Cf. id. §§ 39a, 29.Google Scholar

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152 Rühland supra note 144, at 405; Noack & Zetzsche, supra note 150, at Sec. 39a mn. 28.Google Scholar

153 See e.g., Maul, Silja, Die EU-Übernahmerichtlinie – ausgewählte Fragen, Neue Zeitschrift für Gesellschaftsrecht (NZG) 151 (2005) at 157; Noack & Zetzsche supra note 150, Sec. 39a mn. 28.Google Scholar

154 Noack & Zetzsche, supra note 150, Sec.39a mn. 28.Google Scholar

155 Oberlandesgericht Stuttgart [OLG – Higher Regional Court], Case No. 20 W 13/08, May 5, 2009, 2009 Zeitschrift für Wirtschaftsrecht (ZIP) 1059 (2009) (Ger.); Noack & Zetsche supra note 150, Sec. 39a mn. 28.Google Scholar

156 Id. Google Scholar

157 See Rosenblatt v. Getty Oil Co., 493 A.2d 929 (Del. 1985).Google Scholar

158 See infra Part F.IV.Google Scholar

159 Wertpapiererwerbs- und Übernahmegesetz [WpÜG] [Securities Acquisition and Takeover Act], Dec. 20, 2001, BGBl. I at § 39a(1)(1) (Ger.). The Regional Court (Landgericht – “LG“) Frankfurt has exclusive jurisdiction for Takeover Squeeze-Out applications. See id. § 39a(5).Google Scholar

160 Stange, supra note 68, at 274.Google Scholar

161 Noack & Zetsche, supra note 150, at Sec.39b mn. 11.Google Scholar

162 Id. at Sec.39b mn. 21.Google Scholar

163 Cf. Noack & Zetzsche, supra note 150, at mn. 3 (accounting for data until May 2010 and found two cases). Two additional cases occurred in 2011: After successful takeovers, Nordfrost GmbH & Co. KG squeezed out the minority shareholders in Kuehlhaus Zentrum AG, and Engine Holding GmbH squeezed out the minority shareholders in Tognum AG.Google Scholar

164 See supra Part F.III.Google Scholar

165 Hasselbach, Kai, Verfahrensfragen des übernahmerechtlichen Squeeze out, Betriebsberater 2842 (2010); Noack & Zetzsche, supra note 150, at mn. 3. Google Scholar

166 Cf. Kraakman, Reinier & Hansmann, Henry, The End of History for Corporate Law, 89 Geo. L.J. 439 (2001).Google Scholar

167 Rock et al., supra note 29, at 202.Google Scholar

168 See Bundesverfassungsgericht [BverfG – Federal Constitutional Court], Case No. 1 BvR 1613/94, Apr. 27, 1999, 100 BVerfGE 289, 302 (Ger.); see also Bundesverfassungsgericht [BVerfG – Federal Constitutional Court], Case Nos. 1 BvR 68/95, 1 BvR 147/97, Aug. 23, 2000, 2001 Neue Juristische Wochenschrift (NJW) 279 (2001) (Ger.).Google Scholar

169 Cf. Roe, Mark J. & Bebchuk, Lucian A., A Theory of Path Dependence in Corporate Ownership and Governance, 52 Stan. L. Rev. 127 (1999).Google Scholar

170 Appraisal Procedure Act [SpruchG] [Spruchverfahrensgesetz], June 12, 2003, BGBl I at § 15.Google Scholar

171 Stange found that in over 40% of cases the ultimate compensation was higher than the one initially offered by the controller. However, this result includes cases where the ultimate compensation was determined by the court or (in the majority of cases) by settlement. The valuation agreed upon in a settlement is not an accurate indicator for the intrinsic value of the shares, however, as the controlling shareholder will also consider the “nuisance value” of the claim and the legal fees she will save (for example, for an additional expert testimony by a court-appointed auditor), considering that she has to bear all legal court fees pursuant to Section 15 of the Appraisal Procedure Act.Google Scholar

172 See infra Part E.I.3.Google Scholar

173 Schwenk, Michael R., Valuation Problems in the Appraisal Remedy, 16 Cardozo L. Rev. 649, 679 (1994) (citing Senator Jess J. Present, in his Memorandum in Support of Chapter 202, reprinted in 1982 New York State Legislative Annual, 96, 97).Google Scholar

174 Cf. Allen, Kraakman & Subramanian, supra note 54, at 485.Google Scholar

175 The study focused on Belgium, France, Germany, the Netherlands and the U.K.Google Scholar

176 This threshold is predetermined by Article 15 of the European Takeover Directive. However, the scope of this provision is so small that member states could have created or maintained a separate squeeze-out procedure with differing thresholds without infringing on the Directive.Google Scholar

177 Van der Elst & Van den Steen, supra note 82, at 404.Google Scholar

178 Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at § 179a (Ger.).Google Scholar

179 Rock, Davies, Kanda, & Kraakman, supra note 29, at 207 n. 117.Google Scholar

180 Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at § 304 (Ger.).Google Scholar

181 Id. § 308.Google Scholar

182 Körperschaftssteuergesetz [KStG] [Corporation Tax Act], Oct. 15, 2002, BGBl. I at 1444, § 14 (Ger.).Google Scholar

183 See infra Part E.I.1.Google Scholar

184 Compare, on the one hand, the somewhat reserved comments of several members of Parliament in the Bundestag regarding the 90% threshold in Bundestag Plenarprotokoll 17/111, 12754, and on the other hand the judgment of Oberlandesgericht München infra, note 186.Google Scholar

185 Drittes Gesetz zur Änderung des Umwandlungsgesetzes [3. UmwGÄndG], BGBl. I 2011, 1138 [Third Act Amending the Transformation Act], July 11, 2011, BGBl. I at 1138 (Ger.).Google Scholar

186 As a precursor during the financial crisis a squeeze out procedure for holders of 90% of the share capital of a company was established by Finanzmarktstabilisierungsbeschleunigungsgesetz [FMStBG] [The Financial Market Stabilization Acceleration Act], Oct. 17, 2008, BGBl. I at 1982, §§ 12(3) no.1, 12(4) (Ger.), in order to allow for the measures necessary to rescue or “stabilize” financial institutions. The – apparently – only time this procedure was used to date was in the case of the distressed Hypo Real Estate Holding AG. The squeeze-out was held valid and constitutional by the Oberlandesgericht München [OLG – Higher Regional Court], Sept. 28, 2011, 2011 NZG 1227 (2011) (Ger.).Google Scholar

187 Directive 2009/109/EC of the European Parliament and of the Council of Sept. 16, 2009, amending Council Directives 77/91/EEC, 78/855/EEC and 82/891/EEC, and Directive 2005/56/EC in regards to reporting and documentation requirements in the case of mergers and divisions.Google Scholar

188 Deutscher Bundestag: Drucksachen und Protokolle [BT] Begründung zum Regierungsentwurf [Legislator's Explanatory Notes], 17/3122 at 12 (Ger.). Reducing the threshold to 90% was necessary because the legislator was reluctant to introduce a sell-out right for minority shareholders, which would have been an alternative way to implement the directive.Google Scholar

189 This procedure is considered not to be an abuse of a legal position by most German scholars. Cf. Stephan R. Göthel, Der verschmelzungsrechtliche Squeeze Out, Zeitschrift für Wirtschaftsrecht (ZIP) 1541, 1549 (2011) (Ger.), available at http://zip-online.de/b8c99a914d25a8e135632f4037ee771c (last visited 10 Aug. 2012).Google Scholar

190 See e.g., Subramanian, supra note 1.Google Scholar

191 Ventoruzzo, supra note 1, at 61.Google Scholar

192 Id. at 62.Google Scholar