Federal Constitutional Court - Press office -
Press release no. 53/2012 of 11 July 2012
Judgment of 11 July 2012
1 BvR 3142/07
1 BvR 1569/08
Constitutional complaints regarding delisting unsuccessful
In its judgment pronounced today, the First Senate of the Federal
Constitutional Court rejected as unfounded two constitutional complaints
relating to the consequences of the revocation of the admission of
shares to trading on a German stock exchange in what is known as the
regulated market upon the application of the stock corporation itself
(voluntary delisting). According to the judgment, admission to trading
in the regulated market is not protected by the fundamental right to
property. Furthermore, in its Macrotron decision from 2002, the Federal
Court of Justice (Bundesgerichtshof – BGH) observed the bounds of
further development of the law by judges (Decisions of the Federal Court
of Justice in Civil Matters (Entscheidungen des Bundesgerichtshofes in
Zivilsachen –BGHZ 153, 47), in which it demanded that the minority
shareholders be made a mandatory offer for a takeover of their shares or
be paid a compensation for the loss of the share’s increased
transferability resulting from the stock exchange listing, and that it
must be possible to review the offer in corporate proceedings.
Press release no. 79/2011 of 16 December 2011, which can be retrieved
(in German) from the website of the Federal Constitutional Court,
provides information on the facts and on the legal background of the
proceedings.
In essence, the judgment is based on the following considerations:
I. Area protected by the shareholder’s fundamental right to property –
proceedings 1 BvR 1569/08
1. The property guaranteed by Article 14.1 of the Basic Law (Grundgesetz
– GG) includes the ownership in a company that is embodied in the share.
The elaboration by company law of the ownership in a company is
characterised by the private benefit of the property and the right to
dispose of it. The protection of the fundamental right to property
covers the substance of the ownership in a company in its elaboration
under the law governing membership rights and under company law. The
area of protection is therefore affected if shareholders lose their
legal position embodied in the share, or if the substance of the legal
position is altered, for instance by the integration of the stock
corporation into a group, by the conclusion of a control agreement or of
a profit transfer agreement or by a squeeze-out of the shareholder.
2. According to these standards, the revocation of the admission of
shares to trading in the regulated market does not affect the area
protected by the shareholder’s fundamental right to property.
a) The continued existence of the membership right and the relative
participation rights resulting from membership are not affected. The
shareholders’ position under the law governing membership rights is not
weakened, as would be the case for instance by a watering down of their
participation rights. The internal structure of the company is not
altered by its withdrawal from the regulated market of the stock
exchange.
b) It is true that the Federal Constitutional Court’s case-law
acknowledges the share’s special transferability as a “characteristic”
of the property in shares. This means, however, that only the legal
transferability is part of the property acquired, which is protected
under Article 14.1 GG. The transferability of the share, which is
understood as the legal authority to sell it in a market at any time, is
not affected by the delisting. According to the elaboration in
non-constitutional (ordinary) law, shares not listed at the stock
exchange are as transferable as listed ones; in principle, they can be
sold without requirements as to form having to be complied with, and
without the trade being bound to a trading platform established under
public law. However, the actual tradability of the share is, in
principle, insignificant with regard to the question of the existence
and the allocation of the property in the share. If it were possible to
ascertain an increased transferability in actual terms, this would be a
mere opportunity for earnings and trade.
c) Thus, admission to the regulated market is a value-creating factor.
Several other such factors can be identified with regard to shares; they
are merely considered as market opportunities, which means that they are
not protected by constitutional law. The Federal Constitutional Court’s
relevant case-law to date, in particular its DAT/Altana ruling
(Decisions of the Federal Constitutional Court, Entscheidungen des
Bundesverfassungsgerichts – BVerfGE 100, 289, 305), does not demand a
different assessment. In this decision, the Senate merely emphasised,
for the case that property in shares has already been interfered with,
that the stock market value of the share affected in the specific case
must be taken into account as a value-creating factor when it comes to
the assessment of compensation.
d) Neither the fact that admission to the regulated market results in
the application of numerous special company-law and commercial-law
provisions concerning stock exchange listed companies, nor the standards
of stock exchange law that are applied in the regulated market make it
possible to consider the listing in the regulated market as part of
property. The provisions are intended to contribute to a better
corporate culture and to greater corporate success, and in particular,
they are intended to protect against undesirable developments. It is
true that the detailed set of regulations applying to stock exchange
listed companies and the high standards of protection under stock
exchange law indirectly serve, inter alia, the individual shareholder’s
asset and membership interests. In this respect, however, their benefit
to the shareholder is merely a reflex, which does not make the special
regime of regulations for stock exchange listed companies and the
standard under stock exchange law an object of protection of the
shareholder’s property in shares.
e) Thus, the challenged decisions do not violate the fundamental right
to property of the complainant in proceedings 1 BvR 1569/08 because the
area protected by it is not affected at all by the delisting. The
downgrading of the share to stock exchange regulated qualified
over-the-counter trading without a mandatory offer by the company or by
its main shareholder that can be reviewed in corporate proceedings,
which is at issue here, is also constitutionally unobjectionable.
II. Permissibility of further development of the law by judges –
mandatory offer for a takeover of shares (Macrotron decision) –
proceedings 1 BvR 3142/07
The rulings challenged in proceedings 1 BvR 3142/07, which held
admissible the corporate proceedings which had been applied for to be
instituted against the complainant to review the share purchase offer
made by it, are also constitutionally unobjectionable.
1. The ordinary courts’ assessment that the complainant’s offer was a
mandatory offer to be inferred from an overall analogy to company-law
provisions governing other structural measures (§§ 305, 320b, 327b of
the Stock Corporation Act (Aktiengesetz – AktG), §§ 29, 207 of the
Corporate Transformation Act (Umwandlungsgesetz – UmwG)), and the
corresponding application of the Corporate Proceedings Act
(Spruchverfahrensgesetz), respect the bounds set by the constitution to
the judicial authority to decide (Article 2.1 in conjunction with
Article 20.3 GG).
a) The application and interpretation of the laws by the courts is in
harmony with the rule of law (Art. 20 Abs. 3 GG) if it takes place
within the bounds of justifiable interpretation and permissible further
development of the law by judges. The duties connected with the
administration of justice include the further development of the law.
Therefore, an analogous application of provisions from ordinary law and
the closing of gaps in the legislation are in principle constitutionally
unobjectionable. The further development of the law by judges may
however not result in the recognisable will of the legislature being
pushed aside and being replaced by an autonomous weighing of interests
by judges. Instead, the duty of the administration of justice is
restricted to bringing to bear the sense and purpose of a law that has
been laid down by the legislature as reliably as possible under changed
circumstances, or to fill a gap in the legislation that runs counter to
the legislative objective by means of the recognised methods of
interpretation.
b) The overall analogy challenged by the complainant lives up to these
standards. Statute law does not contain a provision prescribing that in
case of the revocation of the listing of a share in the regulated stock
exchange market, the majority shareholder or the corporation itself must
offer the minority shareholders a compensation for an impairment of
tradability. Only the provision under capital markets law of § 39.2 of
the Stock Exchange Act (Börsengesetz – BörsG) provides that the
delisting may not contradict the protection of investors; it leaves,
however, the further elaboration of the modalities of the delisting to
the respective stock exchange rules.
The courts originally dealing with the matter regarded this protection
under capital markets law as insufficient; they ultimately assumed that
with regard to its requirements and legal consequences, the situation
under company law applying to voluntary delisting had to be assessed in
the same manner as the existing provisions under capital markets law.
This is not a gross contradiction to the clearly recognisable will of
the legislature, or any other derogation from the law in terms of
judges’ self-assumed authority (richterliche Eigenmacht). The ordinary
courts have inferred the consistent fundamental idea from the statutory
duties of compensation existing in the cases of integration (§ 320b
AktG), merger (§ 29 UmwG), change of legal form (§ 207 UmwG) and the
conclusion of a control and profit transfer agreement (§ 305 AktG) that
mandatory offers prescribed by statute provide the shareholders with the
possibility to decide whether they want to uphold their membership right
under the circumstances that have substantially changed by the
structural measure. They particularly provide minority shareholders, who
cannot prevent such a structural measure, with the possibility of
withdrawing from the stock corporation due to the changed circumstances
against adequate compensation. The fact that the legislature, in spite
of repeatedly becoming active in corporate transformation and company
law, did not see a reason to counteract the legal development initiated
by the Federal Court of Justice’s Macrotron decision is another factor
that speaks against the assumption that the limits of the judiciary’s
being bound by the law have been transgressed.
As the overall analogy that has been established with regard to the
requirement of a mandatory offer in the case of a complete withdrawal
from the stock exchange is constitutionally unobjectionable, this also
applies to the corresponding application of the provisions of the
Corporate Proceedings Act to make it possible to review the adequateness
of the purchase price offered.
2. The result of constitutionally unobjectionable overall analogy also
does not run counter to the assumption that the revocation of the stock
exchange listing does not affect the area protected by the fundamental
right to property. It is true that one of the factors that initiated the
legal development concerning the overall analogy was the fact that in
its Macrotron decision, the Federal Court of Justice held that the
property in shares was affected. However, to answer the question of
whether a further development of the law by judges is still
constitutional, it is not decisive whether the further development of
the law can be justified, inter alia, by Article 14.1 GG. For the
further development of the law is not evaluated according to its motives
but only according to whether the interpretation as such respects the
boundaries of a constitutionally permissible further development of the
law.
Thus, the overall analogy – with the result that in the case of
voluntary delisting, a mandatory offer that can be judicially reviewed
is demanded –, is permissible, but not required under the constitution.
It is left to the further case-law of the ordinary courts to examine, on
the basis of the circumstances in share trading that will then apply,
whether the line of argument followed in case-law until then will be
upheld, and to evaluate how the change from the regulated market to
qualified over-the-counter trading will be assessed in this context.
This press release is also available in the original german version.
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