Shareholder’s Property Rights

The property rights of the shareholder are connected with the shareholder’s investment into the company and the right to return. Property rights mentioned in the Limited Liability Companies Act are among other things:

• the right to dividend, i.e. the right to the profit produced by the company;

• the right to receive a portion of the company’s assets in the event of dissolution of the company;

• the right to demand the redemption of the shares in the event of merger;

• the right to receive shares in or other compensation from the receiving company in the event of a demerger; and

• the right to subscribe or receive option rights or other special rights if the company decides to offer such rights for subscription to all shareholders in proportion to current ownership.

The property rights attached to a certain share vary on a case-by-case basis, inter alia, in accordance with a decision of the general meeting or the provisions of the articles of association.

The most significant difference between the administrative rights and the property rights attached to the shares is found in their transferability separately from the share. The administrative rights can neither be the object of an independent transfer, nor is the shareholder able to reserve them to himself/herself when transferring his/her shares. However, a person may be authorized to participate and vote at the general meeting on behalf of the shareholder. The property rights are commonly transferable separately from the shares.

A shareholder may also possess rights and/or obligations that fall outside the scope of the Limited Liability Companies Act, e.g. by virtue of the memorandum of association of the company or by virtue of a shareholders agreement.