“Say on Everything” – Consultative Resolutions in Stock Corporation Law

As an anonymous pool of capital, a stock corporation follows an individual distribution of powers: while management powers lie with the executive board, shareholders bear the financial risk. The history of the stock corporation shows that the gap between decision-making power and risk-bearing continuously raises the question of whether the distribution of powers in the stock corporation makes sense.

The legislators who drafted the Stock Corporation Act of 1965 assumed that small shareholders would be rationally apathetic and that the general meeting would be heterogeneous and randomly composed, making it unsuitable for managing the company. This gave rise to the idea of the so-called leadership principle, which placed the management of the business in the hands of a few professionals. Consequently, the modern Stock Corporation Act designs the general meeting as a decision-making body that is involved in fundamental decisions (Section 119 I AktG), but only participates in the management of the company at the request of the management board (Section 119 II AktG). In recent years, however, the shareholder structure has undergone a steady shift away from uninformed small shareholders toward large institutional shareholders in the form of funds. Against this backdrop, the current division of powers is open to question.

For several years now, corporate law experts have been intensively discussing the question of whether shareholders, as the economic owners of the company, should have more say in company decisions. So-called consultative resolutions are intended to implement a right to have a say. These resolutions, which are not binding on the management board, give shareholders an enforceable right to have a say, based on the Say on Pay model under Section 120a AktG.

The introduction of consultative resolutions is being discussed under the heading of Say on Climate, particularly in relation to climate protection issues. Climate protection has also become an omnipresent topic in corporate law. The recitals of recent European legal sources refer to directing financial flows towards sustainability. In order to implement this plan, the separation of capital and management authority must be overcome. Successfully directing financial flows requires dialogue between investors and the board of directors. Incentives must be created for (potential) investors to invest their capital in sustainable companies and thereby accept lower returns. Consultative resolutions are to be used to realize these incentives.

Shareholder democracy is not only an issue in Germany. Comparable instruments already exist in other legal systems. In the US, SEC Rule 14a-8 allows shareholders to submit non-binding proposals for resolutions at shareholder meetings through so-called shareholder proposals. But consultative resolutions are not an unknown instrument in continental Europe either: in Switzerland, any shareholder is free to submit a motion for a consultative vote, provided that the subject matter falls within the competence of the general meeting.

The doctoral project aims to examine the introduction of consultative resolutions in the Stock Corporation Act. The question is how a consultative resolution can be reconciled with the current division of powers and whether the powers are still appropriate in this context. Is reform necessary, or does the division of powers already allow for more shareholder democracy de lege lata? Once the legal basis has been determined, the question of how consultative resolutions should be structured arises. To this end, the thesis compares various (consultative) resolutions in the current Stock Corporation Act and searches for generalizable characteristics. In this context, the contestability of non-binding resolutions is to be discussed in particular. Although the study uses Say on Climate as an example, it is not limited to this. The aim of the study is to determine whether, and if so, in which situations a right to have a say in addition to Say on Pay and Say on Climate is appropriate.

Personal information

After completing her schooling in Bornheim (Rhineland), Vera Obernosterer studied law at the University of Bonn from 2016 to 2022. She completed her studies with the first state law examination at the Higher Regional Court of Cologne. She completed her specialization in corporate law under Prof. Dr. Jens Koch. Since 2022, she has been working as a doctoral candidate and research assistant at the chair of Prof. Dr. Jens Koch, who was director of the Institute for Commercial and Economic Law at the University of Bonn until September 2022. In October 2022, she moved with Prof. Dr. Jens Koch to the Institute for Labor and Economic Law at the University of Cologne. She is writing her dissertation in the field of stock corporation law with an interface to the topic of sustainability, which is why she is closely associated with the Institute for Sustainability, Corporate Law, and Reporting (INUR). In 2023, she also received a doctoral scholarship from a Cologne law firm. For the 74th German Lawyers' Day in 2024, she was a speaker for the commercial law department, which addressed the question: “Are legislative measures in the field of corporate law advisable in the fight against climate change?”