## Facts

- A German stock corporation (AG) owned 100% of two foreign operating subsidiaries (one British, one Swedish).
- The Swedish subsidiary was economically significant, generating about 30% of the AG’s revenues; the British subsidiary was comparatively minor.
- The management board restructured by contributing both subsidiaries’ shares to a newly formed company in exchange for 100% of the shares in that new holding company.
- The restructuring changed the subsidiaries from direct subsidiaries of the AG into indirect subsidiaries (subsidiaries of a wholly owned subsidiary), a “daughter-to-granddaughter” structure.
- The board presented the transaction to the general meeting, which approved it with about 69% of the votes (below a three-quarters threshold used for amendments to the articles).
- Minority shareholders (together just under 30%) challenged the resolution, arguing the transaction materially impaired shareholder membership/participation rights through increased “mediatisation” and therefore required (i) mandatory general-meeting approval and (ii) a three-quarters majority.
- Lower courts dismissed the challenge; the minority shareholders sought further review.

## Issues

1. Whether corporate law recognizes an “unwritten” general-meeting competence to approve board-led management measures that materially affect shareholders’ position, despite the statutory allocation of management power to the board.
2. Whether converting a significant operating subsidiary into a “granddaughter” company through insertion of an intermediate wholly owned holding company triggers that unwritten competence due to “mediatisation.”
3. If such competence is triggered, whether approval must be by a three-quarters majority analogous to the majority required for amendments to the articles.
4. Whether, on these facts, the 69% shareholder vote was legally insufficient and the transaction violated minority shareholders’ rights.

## Decision

- The high court rejected the minority shareholders’ appeals and affirmed the lower-court judgment.
- The court held unwritten general-meeting competences exist only exceptionally and within narrow limits.
- A daughter-to-granddaughter restructuring can, in principle, fall within this exceptional category because it may increase shareholders’ indirectness from the operating business.
- The exceptional competence is triggered only when the measure’s economic significance and effect on shareholder rights are roughly comparable to the magnitude of the earlier “Holzmüller”-type scenario.
- If the exceptional competence applies, the required consent is a three-quarters majority.
- The challenged restructuring did not reach the required magnitude; therefore, no mandatory general-meeting approval (and no three-quarters majority) was required, and the shareholders’ claim failed.

## Legal Principles

- Board autonomy in managing the corporation is the rule; shareholder voting rights beyond statutory or charter allocations arise only as a narrow exception.
- An “unwritten” general-meeting competence is recognized only where a board measure comes close in effect to changes achievable only by amending the articles, thus touching the general meeting’s core constitutional role and shareholders’ membership rights.
- Increased “mediatisation” from interposing additional wholly owned layers may be relevant, but it does not by itself require shareholder approval.
- The impairment must be substantial and of roughly “Holzmüller-level” economic and structural significance before mandatory general-meeting involvement is required.
- When the exceptional competence applies, the appropriate approval threshold is a three-quarters majority, by analogy to the majority for amendments to the articles.
- A restructuring that preserves full group ownership and leaves voting/profit participation unchanged, while merely shifting internal holding structure, will not necessarily meet the materiality threshold.

## Conclusion

The court limited unwritten shareholder approval rights to rare, high-impact restructurings comparable in magnitude to major asset transfers, holding that a daughter-to-granddaughter conversion within a wholly owned group generally remains within board competence unless it reaches a Holzmüller-level effect on shareholders’ structural position.


Gelatine (BGH) [BGHZ 159, 30] (Ger. 2004)