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Corporate Governance – portrayed in the individual cultural and legal framework, from the standpoint of equity capital.

VIPsight is a dynamic photo archive, sorted by nations and dates, by and for those interested in CG from all over the world.

VIPsight offers, every month:
transparent and independent current information / comments / facts and figures on corporate governance locally and internationally,

  • written by local CG experts,
  • selected and structured by the Club of Florence,
  • financed by its initiator VIP and other sponsors with a background of “Equity and Advisory” interests.

VIPsight International

Article Index

VIPsight - 2nd Edition 2017




Ensuring stability to preserve a flexible corporate culture

On June 2nd, 2017 the Deutsche Wohnen AGM decided to change the legal status of the company from an AG into an SE. At the same time, the company confirmed that this will not result in a substantial change of governance rights. So why do it at all? The answer is easy, the new legal status means that the company can keep its flexibility and corporate culture, including the flexibility to ongoing adjustments to the business model.

At the AGM, it also became clear that the next move in this regard is already on the way. Deutsche Wohnen will pay more attention to the service and infrastructure elements surrounding its core rental business. Topics of interest range from catering the needs of special interest groups, via a careful selection of shop renters focused on the needs of the local population, up to security services and cable. The company made already some progress in this direction. For example, cable connections to 24.000 households living in homes rented by Deutsche Wohnen have been reacquired, with an amortization period for the investment of just 12 month. So in all, this upgrade to the business model serves several purposes at once. Renters get a better service, allowing for higher rents, while the rendering of the services creates an additional income stream. A noteworthy impact could also occur with regard to the reputation of the company, helping to improve its status as a good citizen.


Good corporate governance practice vers. good business?

The fight of the Hastor-family for a representation on the supervisory board of GRAMMER AG has many interesting features. The family currently controls more than 20 percent of the equity of the company. Several months prior to this year´s AGM they tried to obtain approval for an extraordinary AGM, which was denied by the court. The idea was to replace most of the members of the supervisory board by people proposed by the investor.

While this already looked like a questionable “cold” takeover attempt (any thoughts about a bid for the shares not yet controlled by the Hastor family?), another important element involving a very unusual conflict of interest is even more interesting. The Hastor family made its reputation in Germany through a fierce battle with VW. Consequently bad memories turned up with car makers when they acquired a substantial holding in an important supplier to the automotive industry.

As is common with this kind of events, there are arguments pro and contra. However, one crucial element, which is probably not at the disposal of the parties involved, sticks out. Without doubt, a substantial shareholder should be represented on the supervisory board of a company in an appropriate way. This is nothing but good corporate governance practice. But it is also good corporate governance practice to provide detailed information about the business to the supervisory board members –which is currently probably the worst nightmare with some car manufacturers. So it was no surprise at all when GRAMMER informed about reactions by its customers on this situation, including a sharp decline in the order intake. Hence the question: what is your preference, a good corporate governance practice or a good business?


Find here the German AGM quorum 2017 - DAX companies


Bayer AG: Getting ready to integrate and consolidate Monsanto

At the AGM of Bayer AG on April 28th, CEO Werner Baumann presented not only a new record year, he also demonstrated confidence that the takeover of Monsanto will be completed by the end of this year and Monsanto will be fully consolidated for the year, since six of the required approvals by cartel authorities have already been granted.

Several institutional investors criticized that unlike Monsanto´s shareholders, investors in Bayer could not vote on the transaction. However, from Bayer´s perspective the risk of legal proceedings could have threatened the entire transaction. Hence, shareholders had no say on the biggest single transaction in Bayer`s history. Nonetheless, the high consent to the discharge of the managing directors for the year 2016 is a clear indication that most shareholders like the takeover.


KSB AG: Another victim of the KGaA-share-substitutes wave

KSB AG, the leading German manufacturer of pumps, valves and related system, could become the next victim of the trend to dispose of important corporate governance elements. According to the agenda for the AGM to be held on May 10th, 2017, the supervisory board and the managing directors propose to give up the AG status (joint stock corporation) in favor of an association limited by shares (so-called Kommanditgesellschaft auf Aktien). The German word sounds similar to shares, and the basic regulations for this type of legal entity are defined in the Aktiengesetz. However, it is a very different kind of animal, more comparable to a participation certificate than a share. In particular, investors need to give up most of their corporate governance rights when compared to a joint stock corporation in favor of defined people or corporations.

Strange enough, German law does not require the beneficiaries of such a conversion of an AG into a Kommanditgesellschaft auf Aktien to pay a compensation to the shareholders. What is more, many institutional investors are not allowed to invest into share substitutes and therefore are required to sell their investment. Nonetheless, the AGM agenda does not foresee a compensation payment for KSB shareholders who do not want to have their shares converted into KGaA-share substitutes.