European Business Organization Law Review

, Volume 16, Issue 2, pp 255–279 | Cite as

The Parting of the Ways: Delisting Under German and UK Law

Article

Abstract

Delisting refers to cancelling a company’s authorisation to be listed on a stock exchange. It combines questions of company law and securities law. In late 2013, the two most important financial markets in Europe saw significant changes to rules on shareholder protection in delisting situations. While the 2nd Senate of the German Federal Court of Justice abolished shareholder protection in delistings under company law, the United Kingdom Financial Conduct Authority bolstered minority shareholder protection based on securities regulation. This paper examines the policy reasons and the approaches in the United Kingdom and in Germany. It argues that the former is a good example of modern policy-making, in terms of both procedure and content, while the latter displays an old-fashioned understanding of financial markets regulation. The paper argues that the main reason for the Federal Court of Justice’s decision was to take a step back from acting as a de facto legislature in company law, thereby accepting inconsistencies in the new legal framework. The paper concludes that there is a serious need for regulatory reform in Germany, undertaken either by the legislature or by the stock exchanges.

Keywords

Stock exchange Delisting Shareholder protection Grace period Cash offer Majority of the minority Financial conduct authority German federal court of justice BaFin Macrotron Frosta 

References

  1. Achleitner A-K, Betzer A, Goergen M, Hinterramskogler B (2013) Private equity acquisitions of continental European firms: the impact of ownership and control on the likelihood of being taken private. Eur Financ Manag 19:72CrossRefGoogle Scholar
  2. Arnold M, Rothenburg V (2014) BGH-Entscheidung zum Delisting: Alle Fragen geklärt? Deutsches Steuerrecht (DStR) p 150Google Scholar
  3. Bessler W (2012) The listing and delisting of German firms on NYSE and NASDAQ: were there any benefits? J Int Financ Mark Inst Money 22:1024CrossRefGoogle Scholar
  4. Bird H (1998) A critique of the proprietary nature of share rights in Australian publicly listed corporations. Univ Melb Law Rev 22:131Google Scholar
  5. Blair M, Walker G, Willey S (2012) Financial markets and exchanges law, 2nd edn. Oxford University Press, OxfordGoogle Scholar
  6. Bollen R (2010) International standard-setting and the regulation of hedge funds: part II. Co Secur Law J 28:370Google Scholar
  7. Böttcher L, Blasche S (2010) The limitations of the management board’s directive powers in German stock corporations. German Law J 11:493Google Scholar
  8. Brummer C (2008) Stock exchanges and the new markets for securities laws. Univ Chic Law Rev 75:1435Google Scholar
  9. Bungert H (2014) Keine Barabfindung beim Delisting. Entscheidungen zum Wirtschaftsrecht (EWiR) p 3Google Scholar
  10. Carson J (2011) Self-regulation in securities markets. Worldbank Research Working Paper No. 5542. www.worldbank.org. Accessed Jan 2011
  11. Cheffins B (2001) Does law matter? The separation of ownership and control in the United Kingdom. J Leg Stud 30:459CrossRefGoogle Scholar
  12. Cheffins B, Koustas D, Chambers D (2012) Ownership dispersion and the London Stock Exchange’s ‘two-thirds rule’; an empirical test. University of Cambridge Faculty of Law Research Paper No. 17/2012, available at SSRNGoogle Scholar
  13. Choi S, Guzman A (1998) Portable reciprocity: rethinking the international reach of securities regulation. South Calif Law Rev 71:903Google Scholar
  14. Coffee JC (1998–1999) The future as history: the prospects for global convergence in corporate governance and its implications. Northwestern Univ Law Rev 93:641Google Scholar
  15. Coffee JC (2007) Law and the market: the impact of enforcement. Univ Pa Law Rev 156:229Google Scholar
  16. Cox J (2000) Premises for reforming the regulation of securities offerings. Law Contemp Probl 63:11CrossRefGoogle Scholar
  17. Doidge C, Karolyi A, Stulz R (2008) Why do foreign firms leave U.S. equity markets? An analysis of deregistration under SEC Exchange Act Rule 12 h-6. Fisher College of Business Working Paper 2008-03-013, August 2008Google Scholar
  18. Ferran E, Ho LC (2014) Principles of corporate finance law, 2nd edn. Oxford University Press, OxfordCrossRefGoogle Scholar
  19. Financial Conduct Authority (2013) Feedback on CP12/25: enhancing the effectiveness of the listing regime and further consultation, CP13/15. http://www.fca.gov.uk. Accessed November 2013
  20. Financial Conduct Authority (2014) FCA Handbook. http://www.fca.org.uk. Accessed May 2014
  21. Financial Services Authority (2008) A review of the structure of the listing regime, DP 08/01. http://www.fsa.gov.uk. Accessed Jan 2008
  22. Financial Services Authority (2012a) Amendments to the listing rules, prospectus rules, disclosure rules and transparency rules, CP 12/02. http://www.fsa.gov.uk. Accessed Jan 2012
  23. Financial Services Authority (2012b) Enhancing the effectiveness of the listing regime and feedback on CP12/2, CP 12/25. http://www.fsa.gov.uk. Accessed Oct 2012
  24. Fleckner A (2006) Stock exchanges at the crossroads. Fordham Law Rev 74:2541Google Scholar
  25. Franks J, Meyer C (2001) Ownership and control of German corporations. Rev Financ Stud 14:943CrossRefGoogle Scholar
  26. Gadinis S, Jackson HE (2006) Markets as regulators: a survey. South Calif Law Rev 80:1239Google Scholar
  27. Haar B (2014) Investor protection through model case procedures—implementing collective goals and individual rights under the 2012 amendment to the German Capital Markets Model Case Act (KapMuG). Eur Bus Organ Law Rev 15:83CrossRefGoogle Scholar
  28. Habersack M (2014) Comment. Juristenzeitung (JZ) 69:147Google Scholar
  29. Heldt C, Royé C (2012) Das Delisting-Urteil des BVerfG aus kapitalmarktrechtlicher Perspektive. Die Aktiengesellschaft (AG), p 660Google Scholar
  30. Henderson M, Epstein R (2009) The going-private phenomenon: causes and implications (editorial). Univ Chic Law Rev 76:1Google Scholar
  31. IOSCO (2010) Objectives and principles of securities regulation. http://www.iosco.org. Accessed June 2010
  32. Jackson H, Roe M (2009) Public and private enforcement of securities laws: resource-based evidence. J Financ Econ 93:207CrossRefGoogle Scholar
  33. Klöhn L (2012) Delisting—Zehn Jahre später. Neue Zeitschrift für Gesellschaftsrecht (NZG) 15:1041Google Scholar
  34. Kocher D, Widder S (2014) Delisting ohne Hauptversammlungsbeschluss und Abfindungsangebot. NJW p 127Google Scholar
  35. La Porta R, Florencio Lopez-De-Silanes F, Shleifer A, Vishny RW (1997) Legal determinants of external finance. J Financ 52:1131CrossRefGoogle Scholar
  36. La Porta R, Lopez-de-Silanes F, Shleifer A, Vishny RW (1998) Law and finance. J Polit Econ 106:1113CrossRefGoogle Scholar
  37. La Porta R, Lopez-de-Silanes F, Shleifer A, Vishny RW (2000) Investor protection and corporate governance. J Financ Econ 58:3CrossRefGoogle Scholar
  38. La Porta R, Florencio Lopez-De-Silanes F, Shleifer A (2006) What works in securities laws? J Financ 61:1CrossRefGoogle Scholar
  39. Latimer P, Maume P (2015) Promoting information in the marketplace for financial services. SpringerGoogle Scholar
  40. Löbbe M (2004) Corporate groups: competences of the shareholders’ meeting and minority protection—the German Federal Court of Justice’s recent Gelatine and Macrotron cases redefine the Holzmüller doctrine. German Law J 5:1057Google Scholar
  41. Luttermann C, du Plessis JJ (2012) Banking on trust: the German financial sector, global capital markets and corporate finance and governance. In: du Plessis JJ, Großfeld B, Luttermann C, Saenger I, Sandrock O, Casper M (eds) German corporate governance in international and European context, 2nd edn. Springer, Heidelberg, p 329CrossRefGoogle Scholar
  42. Macey J, O’Hara M, Pompilio D (2008) Down and out in the stock market: the law and economics of the delisting process. J Law Econ 51:683CrossRefGoogle Scholar
  43. Mahoney PG (1997) The exchange as regulator. Va Law Rev 83:1453CrossRefGoogle Scholar
  44. Martinez I, Serve S (2011) The delisting decision: the case of buyout offer with squeeze-out (BOSO). Int Rev Law Econ 31:228CrossRefGoogle Scholar
  45. Maume P (2013) The Financial Markets Authority—a model example for regulatory consolidation? New Zealand Univ Law Rev 25:616Google Scholar
  46. Merkt H (2013) Germany—internal and external corporate governance. In: Fleckner A, Hopt K (eds) Comparative corporate governance. Cambridge University Press, Cambridge, p 521CrossRefGoogle Scholar
  47. Miller S (1985) Self-regulation of the securities markets: a critical examination. Wash Lee Law Rev 42:853Google Scholar
  48. O’Brien J (2012) Normal science and paradigmatic shifts: political and regulatory strategies to develop investor protection in the aftermath of the crisis. Account Financ 52:217CrossRefGoogle Scholar
  49. OECD (2012) Recommendation of the council on regulatory policy and governance. http://www.oecd.org. Accessed 20 May 2015
  50. Pekmezovic A, Walker G, Fox M (2010a) Re-organisation of market segments and transparency standards at the Frankfurt stock exchange, Part I. J Int Bank Law Regul 25:214Google Scholar
  51. Pekmezovic A, Walker G, Fox M (2010b) Re-organisation of market segments and transparency standards at the Frankfurt stock exchange, Part 2. J Int Bank Law Regul 25:285Google Scholar
  52. Pistor K (2005) Legal ground rules in coordinated and liberal market economies. In: Hopt KJ, Wymeersch E, Kanda H, Baum H (eds) Corporate governance in context: corporations, states, and markets in Europe, Japan, and the US. Oxford University Press, Oxford, p 249Google Scholar
  53. Plessis du JJ, Saenger I (2012) An overview of German business or enterprise law and the one-tier and two-tier board systems contrasted. In: du Plessis JJ, Großfeld B, Luttermann C, Saenger I, Sandrock O, Casper M (eds) German corporate governance in international and European context, 2nd edn. pp 30–48Google Scholar
  54. Rock E (2002) Securities regulation as a lobster trap. Cardozo Law Rev 23:675Google Scholar
  55. Romano R (1998) Empowering investors: a market approach to securities regulation. Yale Law J 107:2359CrossRefGoogle Scholar
  56. Romano R (2001) The need for competition in international securities regulation. Theor Inq Law 2:387Google Scholar
  57. Schmidt J (2008) Reforms in German stock corporation law—the 67th German Jurists Forum. Eur Bus Organ Law Rev 9:637CrossRefGoogle Scholar
  58. Serve S, Martinez I, Djama C (2012) Delisting and corporate governance: a review and research agenda. Research Paper, November 2012, available at SSRNGoogle Scholar
  59. Staake M (2014) In: Lindenmaier-Möhring—kommentierte BGH-Rechtsprechung (LMK) No. 356690Google Scholar
  60. Taylor M, Fleming A (1999) Integrated financial supervision—lessons from the Northern European experience. World Bank Policy Research Paper No. 2223. https://www.worldbank.org
  61. Thomale C (2013) Minderheitenschutz gegen Delisting—die MACROTRON-Rechtsprechung zwischen Eigentumsgewähr und richterlicher Rechtsfortbildung. ZGE p 686Google Scholar
  62. Tutino M, Panetta IC, Laghi E (2012) Going dark in Italy. Empirical evidence on the last decade. Working Paper, available at SSRNGoogle Scholar
  63. Ventoruzzo M (2010) Freeze-outs: transcontinental analysis and reform proposals. Va J Int Law 50:841Google Scholar
  64. Vollmer L, Grupp A (1995) Aktionärsschutz beim Börsenein- und -austritt. Zeitschrift für Unternehmens- und Gesellschaftsrecht (ZGE) p 459, at p 475Google Scholar
  65. Wienecke D (2014) Aktien- und kapitalmarktrechtlicher Schutz beim Delisting nach dem FRoSTA-Beschluss des BGH. NZG p 22Google Scholar
  66. Zetzsche D (2014) Going dark under German law—towards an efficient regime for regular delisting. Heinrich-Heine Universität Düsseldorf. Center for Business and Corporate Law Research Paper Series, available at SSRN, at pp 2–5Google Scholar

Copyright information

© T.M.C. Asser Press 2015

Authors and Affiliations

  1. 1.Technische Universität München, TUM School of ManagementMunichGermany

Personalised recommendations