Thu, Aug. 14, 2003

Evolving German Corporate Practice at GALA Capital Area Chapter

WM - Washington.   Today, Gerhard Wegen, Esq., partner at the Gleiss Lutz lawfirm and law professor at Tübingen University Law School, spoke at the German American Law Association, Capital Area Chapter, Washington D.C. His presentation, The Evolving Nature of Corporate Practice in Germany, focused on the differences in corporate law between Germany and the United States.

Wegen stressed that German corporate law imposes a strict seat requirement which results in difficulties for cross-border mergers and corporate relocations. Unlike the American corporate governance concept, the continental concept is based on corporate, not capital market law. A securities and exchange commission does not exist in Germany, which has a different tradition of security regulations.

In the context of the evolving European community law, German corporate governance changed also. In the "Centros" and "Überseering" opinions, the European Court of Justice favored creditor protection by means of disclosure and transparency as opposed to a system of a fixed minimum capital that forms the bedrock of German corporate law .

Following his instructive presentation, Prof. Dr. Wegen fielded questions from the audience. He pointed out that under German law single shareholders can challenge corporate resolutions, including those for mergers, more freely than in the United States, and some minority shareholders and their attorneys specialize in bringing nuisance suits to extract payments from the corporation before they acquiesce in corporate restructurings. Another interesting aspect is the practical problem of cross-border relocations. They are being opposed by unions afraid of losing the co-determination control granted them by German corporate law.

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