Draft law on virtual Annual General Meetings restricts shareholders’ rights

  • Restricted right to speak and ask questions would create second-class shareholder meetings
  • Investors warn of negative consequences for shareholder engagement and fewer opportunities to exert influence for more sustainable business practices
  • Detailed statement with proposals for strengthening shareholder rights submitted

Berlin, Frankfurt am Main, Florence. The Association of Ethical Shareholders Germany, Shareholders for Change (SfC) and CRIC, an association promoting ethics and sustainability in investment, view the draft law of the Federal Ministry of Justice on virtual general meetings with concern. The three networks, which represent institutional investors and small shareholders, criticise the planned far-reaching restrictions on the right to speak and ask questions as counterproductive for a lively culture of debate. In their detailed statement published today, they point out negative consequences of the draft law for shareholder engagement and opportunities to exert influence for more sustainable management. The networks present alternatives and concrete proposals for strengthening shareholder rights.

Dr. Barbara Happe, board member of the Association of Ethical Shareholders Germany, criticises: “The draft law falls short of the promises made in the coalition agreement in key areas and massively restricts shareholder rights, especially with regard to the right to ask questions and speak. If companies can already limit the number and length of speeches and questions at their own discretion in advance, this undermines fundamental shareholder rights and would lead to a loss of culture of debate at Annual General Meetings in Germany.”

Tommy Piemonte of the Bank of Church and Caritas eG and a member of Shareholders for Change adds: “Especially for smaller and medium-sized institutional investors who are committed to sustainable development at companies, the AGM is an opportunity to point out to the company’s management, but also to shareholders, certain sustainability risks that they would otherwise not or do not want to see. Therefore, curtailing the rights to ask questions and speak would come at the expense of sustainable development and all shareholders.”

CRIC Board Chair David Reusch demands: “Dialogue strategies in general and shareholder engagement in particular hold a great and so far comparatively little used potential, especially in Germany, to influence companies in the sense of a more sustainable economy. To this end, the Annual General Meeting and shareholder rights should be strengthened, not weakened.”

The joint statement (in German only) can be found at https://www.kritischeaktionaere.de/virtuelle-hauptversammlungen/gemeinsame-stellungnahme-zum-gesetzentwurf-fur-virtuelle-hauptversammlungen/

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CRIC (Corporate Responsibility Interface Center) is a non-profit association for the promotion of ethics and sustainability in financial investment and sees itself as both an information platform and a centre of competence. The aim of CRIC’s activities is to give more weight to ecological, social and cultural aspects in companies and the economy. With almost 130 members, mainly in Germany, Austria and Switzerland, CRIC is the largest investor community for ethical and sustainable investment in the German-speaking countries. The focus of its work is on raising awareness, dialogue with the business community (Engl. Engagement) and accompanying scientific research. CRIC was founded in 2000. Further information at www.cric-online.org, on Twitter and LinkedIn.

Shareholders for Change (SfC), founded in 2017 by European institutional investors, jointly pursue the so-called “engagement” with the aim of motivating companies, states and other investment objects to take greater account of sustainability aspects. The SfCs currently have thirteen members from seven European countries, including Germany, and together represent around 30 billion euros in assets under management. Engagement activities are mainly carried out with European companies through share voting exercises and dialogue formats such as letters, telephone conferences or face-to-face meetings. The content of SfC’s engagement activities focuses on three themes: Labour and Human Rights, Aggressive Tax Avoidance and Tax Justice, and CO2 Emissions and Climate Change. More information is available at www.shareholdersforchange.eu.

The Association of Ethical Shareholders Germany is a shareholder association and non-governmental organisation that campaigns for environmental and climate protection, human rights due diligence and disarmament at German stock corporations. The umbrella organisation represents 8,000 small shareholders as well as 27 human rights and environmental organisations from civil society and actively participates in general meetings to articulate their interests, criticisms and questions. Further information at www.ethicalshareholders.org.

Permanent link to this article: https://www.kritischeaktionaere.de/en/virtual-agms/draft-law-on-virtual-general-meetings-restricts-shareholders-rights/