¹ Cf. Subramanian, Guhan, Fixing Freezeouts, (Harvard Law Sch. John M. Olin Ctr. for Law, Econ. and Bus., Discussion Paper No. 501, 2004); Marco Ventoruzzo, Freeze-Outs: Transcontinental Analysis and Reform Proposals 2 (European Corporate Governance Inst., Working Paper No. 137, 2009). In the U.S. legal system, the term squeeze-out is used to refer to measures—whether legal or not—which confer benefits from the corporation on the controlling shareholder to the detriment of the minority shareholder, thereby creating a de facto incentive for the minority shareholders to leave the corporation. See id.; Holger Fleischer, Großkommentar Aktiengesetz Vor §§327a–f mn.4 (4th.ed. 2007). In Europe and in Germany, however, the term squeeze-out has been established as the equivalent of the term freeze-out. Cf. Council Directive 2004/25/EC, art. 15, 2004 O.J. (L 142) (EU); Fleischer at §327a. In the following, the term freeze-out will be used to describe general principles and in relation to U.S. law. The term squeeze-out will be used in relation to European and German law and never in relation to its ambiguous meaning in the U.S. legal system.Google Scholar

² The terms controlling shareholder and controller are used interchangeably in this text.Google Scholar

³ As the state corporation law of the U.S. today is dominated by Delaware law, which is widely recognized as the most developed corporate law in the U.S. and which governs over 50% of U.S. corporations, Delaware will serve as a proxy for the U.S. for the purposes of this analysis. A reference to the U.S. in this article can therefore be understood as a reference to Delaware.Google Scholar

⁴ See Kraakman, Reinier H. & Hansmann, Henry, The End of History for Corporate Law, 89 Geo. L.J. 439 (2001).Google Scholar

⁵ See In re Pure Res., Inc. S'holders Litig., 808 A.2d 421, 436 (Del. Ch. 2002).Google Scholar

⁶ A delisting is generally also possible without a freeze-out, but freeze-outs are a convenient way to achieve a delisting. The reduction of the number of shareholders to one means that no regular exchange trade is possible anymore, so that the admission to the securities exchange is void or will be revoked, depending on the regulations of the respective stock exchange. In Germany, such a measure which leads to the loss of the stock exchange admission is called “cold” delisting. Fleischer, supra note 1, at mn. 33.Google Scholar

⁷ See Ventoruzzo, supra note 1, at 6 (giving a more detailed overview and additional reasons like reducing agency costs and reducing the corporation's tax burden by increasing the debt-to-equity ratio because of the tax deductibility of interest payments).Google Scholar

⁸ Id. Google Scholar

⁹ A reason for that may be the onerous obligations introduced with the Sarbanes-Oxley Act of 2002 in the U.S.Google Scholar

¹⁰ Kommentar zum aktiengesetz: aktG §327(a) mn. 2 (Gerald Spindler & Eberhard Stilz eds., 2d ed. 2010); Fleischer, supra note 1, at mn. 8.Google Scholar

¹¹ While in U.S. law derivative lawsuits are prone to be abused to extract exorbitant legal fees, in Germany direct shareholder claims tend to be used illegitimately.Google Scholar

¹² See infra Part E.V.1.Google Scholar

¹³ The mandatory bid rule is required by Art. 5(1) of the European Takeover Directive and therefore exists in all EU jurisdictions. However, the applicable threshold was left to be determined by the Member States.Google Scholar

¹⁴ Deutscher Bundestag: Drucksachen und Protokolle [BT] Begr RegE WpÜG, 14/7034, S. 32 (Ger.).Google Scholar

¹⁵ This paragraph draws heavily on Subramanian, supra note 1, at 3.Google Scholar

¹⁶ Del. Code Ann. tit. 8, § 251 (2012).Google Scholar

¹⁷ Singer v. Magnavox, 380 A.2d 969 (Del. 1977).Google Scholar

¹⁸ Subramanian, supra note 1, at 3.Google Scholar

¹⁹ Id. at 4.Google Scholar

²⁰ Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983).Google Scholar

²¹ Id. at 711.Google Scholar

²² Id. at 709 n. 7.Google Scholar

²³ Subramanian, supra note 1, at 7.Google Scholar

²⁴ In re Pure Res., Inc., S'holders Litig., 808 A.2d 421, 436 (Del. Ch. 2002).Google Scholar

²⁵ See Kahn v. Tremont, 694 A.2d 422, 428 (Del. 1997); William T. Allen, Jack B. Jacobs & Leo E. Strine, Jr., Function over Form: A Reassessment of Standards of Review in Delaware Corporation Law, 56 Bus. L.J. 1287, 1308 (2001).Google Scholar

²⁶ Cf. In re Trans World Airlines, Inc. S'holders Litig., CIV. A. No. 9844, 1988 WL 111271 (Del. Ch. 1988) (unpublished decision).Google Scholar

²⁷ Citron v. E. I. Du Pont de Nemours & Co., 584 A.2d 490 (Del. Ch. 1990); Rabkin v. Olin Corp., 1990 WL 47648 (Del. Ch. 1990) (unpublished decision).Google Scholar

²⁸ Kahn v. Lynch, 638 A.2d 1110 (Del. 1994).Google Scholar

²⁹ Although the standard of review formally remains the same, it is noted by Rock, Davies, Kanda, and Kraakman that the standard as applied seems to be more lenient. See Edward Rock, Paul Davies, Hideki Kanda & Reinier Kraakman, Fundamental Changes, in The Anatomy of Corporate Law: A Comparative and Functional Approach 183, 204 (Reinier Kraakman et al. eds., 2d ed. 2009).Google Scholar

³⁰ Rosenblatt v. Getty Oil Co., 493 A.2d 929 (Del. 1985).Google Scholar

³¹ Subramanian does not mention that there is the benefit of marginally stronger transactional security: in case a court would find either one of the procedural safeguards deficient to reverse the burden of the fairness review, there would still be the other safeguard.Google Scholar

³² In In re Cox Commc'ns, Inc. S'holders Litig., 879 A.2d 604 (Del Ch. 2005), Chancellor Leo Strine apparently reacted to Subramanian's concern with the proposal (obiter dictum) to defer to business judgment review if both an independent Special Committee and MOM approval were established, as was already proposed in Subramanian's paper. See Subramanian, supra note 1, at 55.Google Scholar

³³ Subramanian, supra note 1, at 11.Google Scholar

³⁴ Solomon v. Pathe Commc'ns, 672 A.2d 35 (Del. 1996).Google Scholar

³⁵ Ventoruzzo, supra note 1, at 26.Google Scholar

³⁶ Subramanian, supra note 1, at 12.Google Scholar

³⁷ In re Siliconix Inc. S'holders Litig., No. CIV. A. 18700, 2001 WL 716787 (Del. Ch. 2001) (unpublished decision).Google Scholar

³⁸ Glassman v. Unocal Exploration Corp., 777 A.2d 242 (Del. 2001).Google Scholar

³⁹ Id. at 247.Google Scholar

⁴⁰ In re Pure Res., Inc., S'holders Litig., 808 A.2d 421 (Del. Ch. 2002).Google Scholar

⁴¹ Id. at 445.Google Scholar

⁴² Ronald J. Gilson & Jeffrey N. Gordon, Controlling Shareholders, 152 U. Pa. L. Rev. 785, 799 n.47 (2003).Google Scholar

⁴³ Christopher A. Iacono, Comment, Tender Offers and Short-Form Mergers by Controlling Shareholders Under Delaware Law: The “800-Pound Gorilla” Continues Unimpeded—In re Pure Resources, Inc., Shareholders Litigation, 28 Del. J. Corp. L. 645, 668 (2003); Subramanian, supra note 1, at 51.Google Scholar

⁴⁴ Subramanian, supra note 2, at 16–23.Google Scholar

⁴⁵ Cannon, Kimble Charles, Augmenting the Duties of Directors to Protect Minority Shareholders in the Context of Going-Private Transactions: The Case for Obligating Directors to Express a Valuation Opinion in Unilateral Tender Offers After Siliconix, Aquila, and Pure Resources, 2003 Colum. Bus. L. Rev. 191 (2003); Levy, Ely R., Freeze-Out Transactions the Pure Way: Reconciling Judicial Asymmetry Between Tender Offers and Negotiated Mergers, 106 W. Va. L. Rev. 305 (2004); Resnick, Brian M., Note, Recent Delaware Decisions May Prove to Be “Entirely Unfair” to Minority Shareholders in Parent Merger with Partially Owned Subsidiary, 2003 Colum. Bus. L. Rev. 253 (2003).Google Scholar

⁴⁶ Abramczyk, Jon E. et al., Going-Private Dilemma? Not in Delaware, 58 Bus. L.J. 1351 (2003); McElroy, Thomas M., II, Note, In re Pure Resources: Providing Certainty to Attorney Structuring Going-Private Transactions, or Not?, 39 Wake Forest L. Rev. 539 (2004).Google Scholar

⁴⁷ Gilson & Gordon, supra note 42; Subramanian, supra note 1.Google Scholar

⁴⁸ Subramanian, supra note 1.Google Scholar

⁴⁹ Subramanian, supra note 1, at 15.Google Scholar

⁵⁰ Subramanian, supra note 1, at 10.Google Scholar

⁵¹ Bates, Thomas W. et al., Shareholder Wealth Effects and Bid Negotiation in Freeze-Out Deals: Are Minority Shareholders Left Out in the Cold? 81 J. Fin. Econ. 707 (2006). Bates et al. observe that “on average, minority claimants in freeze-out bids actually receive approximately 11% more than their pro-rata share of deal surplus generated at the bid announcement, an excess distribution of roughly $6.1 million. These results are inconsistent with the notion that controlling shareholders systematically undertake freeze-out transactions at the expense of the minority claimants of the target firm.”Google Scholar

⁵² At least in the absence of other control measures like influence on board members, shareholder agreements or special charter rights.Google Scholar

⁵³ See, e.g., In re Cysive, Inc. S'holders Litig., 836 A.2d 531 (Del. Ch. 2003) (finding a 35% stockholder to be a controller).Google Scholar

⁵⁴ See Subramanian, supra note 1, at 48 n.226 (noting that the so-called “freeze-out statute,” Del. Code Ann. tit. 8, § 203 (2007), is “generally not applicable to most ‘real’ freeze-outs”).Google Scholar

⁵⁵ Paul Davies and Klaus Hopt, Control Transactions, The Anatomy of Corporate Law: A Comparative and Functional Approach 232 (Reiner Kraakman et al. eds., 2d ed. 2009).Google Scholar

⁵⁶ William T. Allen, Reinier Kraakman & Subramanian, Guhan, Commentaries and Cases on the Law of Business Organization 496 (3d ed. 2009).Google Scholar

⁵⁷ See Subramanian, supra note 1, at 24 n.133.Google Scholar

⁵⁸ Del. Code Ann. tit. 8, § 262(b)(2) (2010).Google Scholar

⁵⁹ Allen, Kraakman & Subramanian, supra note 56.Google Scholar

⁶⁰ Id.; Subramanian, supra note 1, at 24 n.135.Google Scholar

⁶¹ Allen, Kraakman & Subramanian, supra note 56; Subramanian, supra note 1, at 24 n.136.Google Scholar

⁶² Del. Code Ann. tit. 8, § 262(d)(1) (2010).Google Scholar

⁶³ Subramanian, supra note 1, at 24 n.137.Google Scholar

⁶⁴ Id. Google Scholar

⁶⁵ Ventoruzzo, supra note 1, at 11–13 nn.29-30, 34-35.Google Scholar

⁶⁶ See id. at 13 (noting that this term was coined by Robert B. Thompson).Google Scholar

⁶⁷ Gesetz zur Regelung von öffentlichen Angeboten zum Erwerb von Wertpapieren und Unternehmensübernahmen [The amendment was introduced by the Act on the Regulation of Company Acquisitions and Public Offers to Purchase Securities], Dec. 20, 2001, BGBl. I at 3822 (Ger.).Google Scholar

⁶⁸ Kristian Stange, Zwangsausschluss von Minderheitsaktionären (Squeeze-Out) 30 (2010).Google Scholar

⁶⁹ Gesetz zur Bereinigung des Umwandlungsrechts [UmwBerG] [Law to Clean up the Transformation Law], Nov. 11, 1994, BGBl. I at 3210, as amended by Gesetz [G], Jan. 1, 1995, BGBl. I at 428 (Ger.).Google Scholar

⁷⁰ Deutscher Bundestag: Drucksachen und Protokolle [BT] Begründung zum Regierungsentwurf [Legislator's Explanatory Notes], 12/6699, 114 at 144 (Ger.).Google Scholar

⁷¹ Eberhard Vetter, Squeeze-Out in Deutschland, Zeitschrift für Wirtschaftsrecht (ZIP) 1817, 1818 (2000).Google Scholar

⁷² Cf. Fleischer, supra note 1, § 327(a)–(f) n.34, n. 39 (providing a detailed account of the direct and indirect possibilities to exclude shareholders).Google Scholar

⁷³ Also known as “sale of assets squeeze-out” or “Moto Meter method.”Google Scholar

⁷⁴ See Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at §§ 179(a), 262(1) no. 2 (Ger.).Google Scholar

⁷⁵ Bundesverfassungsgericht [BVerfG – Federal Constitutional Court], Case Nos. 1 BvR 68/95, 1 BvR 147/97, Aug. 23, 2000, 2001 Neue Juristische Wochenschrift (NJW) 279 (2001) (Ger.).Google Scholar

⁷⁶ Bayerisches Oberstes Landesgericht [BayObLGZ – Bavarian Higher Regional Court] Case No. 3Z BR 37/98, Sept. 17, 1998, 1998 Zeitschrift für Wirtschaftsrecht (ZIP) 2002 (1998) (Ger.); Oberlandesgericht Stuttgart [OLG -Higher Regional Court], Case No. 8 W 43/93, Dec. 4, 1996, 1997 Zeitschrift für Wirtschaftsrecht (ZIP) 362 (1997) (Ger.). The arguably more suitable appraisal procedure is not applied by the courts.Google Scholar

⁷⁷ See Council Directive, supra note 1 and accompanying text; Council Directive 04/25, art. 21, 2004 O.J. (L 142) 12, 23 (EC) (providing that, per Art. 21, the Directive was to be transposed into national law no later than 20 May 2006).Google Scholar

⁷⁸ The complementary sell-out right pursuant to Wertpapiererwerbs- und Übernahmegesetz [WpÜG] [Securities Acquisition and Takeover Act], Dec. 20, 2001, BGBl. I at 3832 (Ger.); Council Directive 04/25, art. 16, 2004 O.J. (L 142) 12, 23 (EC) and § 39(c) respectively, are beyond the scope of this analysis.Google Scholar

⁷⁹ Bundesgerichtshof [BGH – Federal Court of Justice], Case No. II ZR 302/06, Mar. 16, 2009, 180 BGHZ 154, 2009 (Ger.).Google Scholar

⁸⁰ See, e.g., Holger Fleischer, Das Neue Recht des Squeeze Out, Zeitschrift für Unternehmens- und Gesellschaftsrecht (ZGR) 757, 758 (2002).Google Scholar

⁸¹ See Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. I at 1089, last amended by Gesetz [G], Aug. 24, 2004, BGBl. I at 2198, § 78 (Ger.) (noting that the management board is generally the competent corporate body to summon a shareholder meeting and set the agenda); cf. Fleischer, supra note 1, at § 327(a) n.57.Google Scholar

⁸² Christoph Van der Elst & Lientje Van den Steen, Balancing the Interests of Minority and Majority Shareholders: A Comparative Analysis of Squeeze-Out and Sell-Out Rights, 6 Eur. Co. & Fin. L. Rev. 391, 398 (2009).Google Scholar

⁸³ Cf. Kallmeyer, Harald, Ausschluß von Minderheitsaktionären, Die Aktiengesellschaft 59 (2000); Matthias Habersack, Der Finanzplatz Deutschland und die Rechte der Aktionäre, Zeitschrift für Wirtschaftsrecht (ZIP) 1230, 1237 (2001); Vetter, supra note 71, at 1819; Eberhard Vetter, Squeeze-Out nur durch Hauptversammlungsbeschluss?, Der Betrieb 743 (2001); Maximilian Schiessel, Ist das deutsche Aktienrecht kapitalmarkttauglich?, Die Aktiengesellschaft 442, 452 (1999).Google Scholar

⁸⁴ These are the actions used by predatory shareholders as illustrated below. See infra text accompanying note 102.Google Scholar

⁸⁵ Cf. Christoph Van der Elst & Lientje Van den Steen, supra note 82; Fleischer, supra note 1, § 327(a) n.64.Google Scholar

⁸⁶ See infra Part E.I.3.Google Scholar

⁸⁷ Cf. Fleischer, supra note 1, § 327(a) n.65.Google Scholar

⁸⁸ Van der Elst & Van den Steen, supra note 82, at 430.Google Scholar

⁸⁹ The controlling shareholder has a right of appeal if the court does not follow his suggestions pursuant to Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl I at §§ 327(c) ¶ 2, 293(c) ¶ 2 (Ger.).Google Scholar

⁹⁰ Fleischer, supra note 1, § 327(c) n.17.Google Scholar

⁹¹ See infra Part E.IV.1–4.Google Scholar

⁹² Singhof et al., supra note 10, § 327(e) n.4.Google Scholar

⁹³ See infra Part E.V.1.Google Scholar

⁹⁴ Singhof et al., supra note 10, § 327(a) n.4.Google Scholar

⁹⁵ Stange, supra note 68, at 279. The following empirical data is taken from Stange unless otherwise indicated.Google Scholar

⁹⁶ Singhof et al., supra note 10, § 327(a) n.4.Google Scholar

⁹⁷ Id. Google Scholar

⁹⁸ Id. This number rises to 50% for the squeeze-outs conducted in the years 2004-2007. This rise can be explained by the fact that 2002 and 2003 a lot of companies with an over 95% shareholder took the opportunity to simplify their shareholder structure.Google Scholar

⁹⁹ Weber, Martin, Die Entwicklung des Kapitalmarktrechts im Jahre 2006, Neue Juristische Wochenschrift (NJW) 3685, 3693 (2006).Google Scholar

¹⁰⁰ Bundesverfassungsgericht [BverfG – Federal Constitutional Court], Case No. 1 BvL 16/60, Sept. 7, 2011, 14 BVerfGE 263 (Ger.).Google Scholar

¹⁰¹ Stange, supra note 68, at 84.Google Scholar

¹⁰² Bundesverfassungsgericht [BverfG – Federal Constitutional Court], Case No. 1 BvR 390/04, May. 30, 2007, 11 BVerfGK 253(Ger.).Google Scholar

¹⁰³ “Predatory” or “professional” shareholders are those who own only a minimal amount of shares (often as little as one share) and then use lawsuits to enjoin important corporate structural changes to induce the company to “buy out” their claims at a settlement value that reflects their “hold-out” or “nuisance” potential and not any actual damages to the shareholder.Google Scholar

¹⁰⁴ A 90% quorum is sanctioned by the Takeover Directive and therefore unlikely to be held unconstitutional. See supra notes 77–78 and accompanying text.Google Scholar

¹⁰⁵ Fairness opinions and audit reports by an independent expert need to be distinguished in Germany. Fairness opinions are neither required nor regulated by law. They have been introduced into German practice through international M&A transactions with the U.S. (where the practice to use fairness opinions for reasons of legal prudence has been established since the seminal judgment in Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985)). Their aim is to help the management of a company to ascertain and prove the fairness of a determined price in an M&A transaction or other corporate transaction which requires the determination of a company's value. Managers therefore use fairness opinions “voluntarily” to reduce transaction and liability risks. Audit reports by independent experts, in contrast, are an element of many corporate structural measures (like squeeze-outs, mergers, capital increases by contribution in kind and similar measures) which are required by German law to ascertain a certain adequacy of the price or share exchange ratio offered (a “gatekeeper strategy”). The goals of fairness opinion and independent audit report are therefore not completely congruent. Moreover, the independent auditor must be a professional auditor (bound by professional rules) and is appointed by the court for the specific task. In contrast, the drafters of fairness opinions are not necessarily bound by professional rules and are directly chosen by the company. In practice, fairness opinions are done by investment banks, M&A advisors or audit companies. On the use of fairness opinions in Germany, see Klaus Cannivé and Andreas Suerbaum, Die Fairness Opinion bei Sachkapitalerhöhungen von Aktiengesellschaften: Rechtliche Anforderungen und Ausgestaltung nach IDW S 8, Die Aktiengesellschaft 317 (2011); Holger Fleischer, Zur Rechtlichen Bedeutung der Fairness Opinion im Aktien- und Übernahmerecht, Zeitschrift für Wirtschaftsrecht (ZIP) 201 (2011).Google Scholar

¹⁰⁶ See supra Part E.IV.1–4.Google Scholar

¹⁰⁷ Such cases are: Controlling entity executes a domination agreement, a profit transfer agreement, or both, with the target company (Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at §§ 291, 305) or so-called “integration” (this rare measure is different from a merger pursuant to German law) of the target company into the controlling entity (Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at § 320(b)).Google Scholar

¹⁰⁸ Cf. Oberlandesgericht Düsseldorf [OLG – Higher Regional Court], Case No. I-26 W 7/06, Apr. 10, 2006, 2219 WM 2222 (2006) (Ger.).Google Scholar

¹⁰⁹ This appears to be a typically German valuation method. It is quite old and still commonly used pursuant to the audit standard IDW S1 set by the German Institute of Accountants (Institut der Wirtschaftsprüfer in Deutschland e.V.). “The standard calculates the net present value of the net profits accrued to the shareholders.” Christoph Van der Elst & Lientje Van den Steen, supra note 82, at 430 n.101.Google Scholar

¹¹⁰ Cf. Fleischer, supra note 1, § 327(b) n.13.Google Scholar

¹¹¹ Allen, Kraakman & Subramanian, supra note 56, at 479.Google Scholar

¹¹² Id. (providing an example where one DCF valuation valued stock at $13 a share and the opposing valuation valued it above $60 a share).Google Scholar

¹¹³ Bundesverfassungsgericht [BverfG – Federal Constitutional Court], Case No. 1 BvR 1613/94, Apr. 27, 1999, 100 BVerfGE 289, 307 (Ger.).Google Scholar

¹¹⁴ Arne KIeßling, Der Übernahmerechtliche Squeeze-Out GEmäß §§ 39a, 39b WpÜG 144 (2008).Google Scholar

¹¹⁵ Bundesgerichtshof [BGH – Federal Court of Justice], Case No. II ZB 15/00, Mar. 12, 2001, 147 BGHZ 108 (Ger.).Google Scholar

¹¹⁶ Oberlandesgericht Stuttgart [OLG – Higher Regional Court], Case No. 20 W 6/06, Feb. 16, 2007, 2007 Zeitschrift für Wirtschaftsrecht (ZIP) 682 (2007) (Ger.); Oberlandesgericht Düsseldorf [OLG – Higher Regional Court], Case No. I-26 W 13/06, Sept. 09, 2009, 2009 Zeitschrift für Wirtschaftsrecht (ZIP) 1427 (2009) (Ger.); Oberlandesgericht Stuttgart [OLG – Higher Regional Court], Case No. 20 W 2/08, Dec. 18, 2009, 2009 Zeitschrift für Wirtschaftsrecht (ZIP) 274 (2010) (Ger.).Google Scholar

¹¹⁷ Bundesgerichtshof [BGH – Federal Court of Justice], Case No. II ZB 18/09, July 19, 2010, 186 BGHZ 229 (Ger.); cf. Olaf Müller-Michaels, BGH Schafft ein Neues Feld für Diskussionen und Streitigkeiten, in Betriebs-Berater 1944 (2010).Google Scholar

¹¹⁸ Oberlandesgericht Frankfurt [OLG – Higher Regional Court], Case No. 5 W 15/10, Dec. 21, 2010, 2011 Zeitschrift für das gesamte Familienrecht (FamRZ) 832 (2011) (Ger.).Google Scholar

¹¹⁹ Hartwin Bungert & Carsten Wettich, Neues zur Ermittlung des Börsenwerts bei Strukturmaßnahmen, Zeitschrift für Wirtschaftsrecht (ZIP) 449, 450 (2012).Google Scholar

¹²⁰ Even though the court did not define the time-gap further, the case law to date suggests that a time frame of up to six months does not qualify as considerable. See cases cited supra note 116 (7.5 months considerable); Bundesgerichtshof [BGH – Federal Court of Justice], Case No. II ZB 2/10, June 28, 2011, 2011 Zeitschrift für Wirtschaftsrecht (ZIP) 1708 (2011) (Ger.) (3.5 months not considerable); Oberlandesgericht Stuttgart [OLG -Higher Regional Court Case No. 20 W 3/09, Jan. 19, 2011, 2011 Zeitschrift für Wirtschaftsrecht (ZIP) 382 (2011) (Ger.) (up to 6 months not considerable); Oberlandesgericht Frankfurt a.M. [OLG – Higher Regional Court], Case No. 21 W 13/11, Apr. 29, 2011, 2011 AG 832 (Ger.) (4.5 months not considerable).Google Scholar

¹²¹ It is currently unclear if an adjustment below the calculated average price would also be permissible. Cf. Bungert & Wettich, supra note 119.Google Scholar

¹²² Cf. Hans Moritz, “Squeeze-Out”: Der Ausschluss von Minderheitsaktionäeren nach §§ 327 a ff AktG 125 (2004).Google Scholar

¹²³ Id. at 126.Google Scholar

¹²⁴ Id.; Stange, supra note 68 at 152.Google Scholar

¹²⁵ Oberlandesgericht Frankfurt a.M. [OLG – Higher Regional Court], Case No. 5 W 39/09 (June 17, 2010), http://openjur.de/u/305834.html (Ger.); Oberlandesgericht Stuttgart [OLG – Higher Regional Court], Case No. 20 W 9/08, Mar. 17 2010, 2010 Zeitschrift für Wirtschaftsrecht (ZIP) 1498 (2010) (Ger.); Oberlandesgericht Munich [OLG – Higher Regional Court], Case No. 31 Wx 12/06, Oct. 26, 2006, 2007 Zeitschrift für Wirtschaftsrecht (ZIP) 375 (2007) (Ger.).Google Scholar

¹²⁶ Equally Patrick Hohl, Betriebsberater 596 (2011), in a commentary on Oberlandesgericht Frankfurt a.M. [OLG -Higher Regional Court], Case No. 5 W 39/09 (June 17, 2010), http://openjur.de/u/305834.html (Ger.).Google Scholar

¹²⁷ Allen, Kraakman, & Subramanian, supra note 55, at 479.Google Scholar

¹²⁸ This problem exists in all structural corporate measures which require a registration with the commercial register to take legal effect.Google Scholar

¹²⁹ Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at § 327e(2), 319(6) (Ger.).Google Scholar

¹³⁰ German stock corporations almost always have shares with a nominal value of EUR 1., so that usually means that the plaintiff or group of plaintiffs needs to have held at least 1000 shares.Google Scholar

¹³¹ This latter case was introduced recently with the Act on the Implementation of the Shareholders’ Rights Directive, Gesetz zur Umsetzung der Aktionärsrechterichtlinie [ARUG], May 28, 2009, BGBl I at § 2479 (Ger.), in an attempt to further reduce the impact of predatory shareholders.Google Scholar

¹³² Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at §§ 327e(2), 319(6) (Ger.).Google Scholar

¹³³ Stange, supra note 68, at 256.Google Scholar

¹³⁴ Appraisal Procedure Act [SpruchG] [Spruchverfahrensgesetz], June 12, 2003, BGBl I at §§4(1)no.3, 5(1) no.3 (Ger.).Google Scholar

¹³⁵ Appraisal Procedure Act [SpruchG] [Spruchverfahrensgesetz], June 12, 2003, BGBl I at § 13 (Ger.).Google Scholar

¹³⁶ Id. § 6.Google Scholar

¹³⁷ Cf. Schiessl, Maximilian, Fairness Opinions im übernahme- und Gesellschaftsrecht Zugleich ein Beitrag zur Organverantwortung in der AG, Zeitschrift für Unternehmens- und Gesellschaftsrecht (ZGR) 814, 837 (2003).Google Scholar

¹³⁸ At the time the data was gathered in twenty-four cases, an initiation of the appraisal was not yet possible because of a pending action to enjoin, so the actual percentage of cases may well have been higher.Google Scholar

¹³⁹ Stange, supra note 68, at 279.Google Scholar

¹⁴⁰ Currently 0.12%.Google Scholar

¹⁴¹ See e.g., Thomas Heidel et al., Festschrift für Wienand Meilicke 2268 (2003); Stange supra note 68, at 259.Google Scholar

¹⁴² Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at § 327b(2) (Ger.).Google Scholar

¹⁴³ This section draws on data from Stange, supra note 68, at 279.Google Scholar

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¹⁴⁷ Cf. Ventoruzzi, supra note 1, at 50.Google Scholar

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¹⁵² Rühland supra note 144, at 405; Noack & Zetzsche, supra note 150, at Sec. 39a mn. 28.Google Scholar

¹⁵³ See e.g., Maul, Silja, Die EU-Übernahmerichtlinie – ausgewählte Fragen, Neue Zeitschrift für Gesellschaftsrecht (NZG) 151 (2005) at 157; Noack & Zetzsche supra note 150, Sec. 39a mn. 28.Google Scholar

¹⁵⁴ Noack & Zetzsche, supra note 150, Sec.39a mn. 28.Google Scholar

¹⁵⁵ Oberlandesgericht Stuttgart [OLG – Higher Regional Court], Case No. 20 W 13/08, May 5, 2009, 2009 Zeitschrift für Wirtschaftsrecht (ZIP) 1059 (2009) (Ger.); Noack & Zetsche supra note 150, Sec. 39a mn. 28.Google Scholar

¹⁵⁶ Id. Google Scholar

¹⁵⁷ See Rosenblatt v. Getty Oil Co., 493 A.2d 929 (Del. 1985).Google Scholar

¹⁵⁸ See infra Part F.IV.Google Scholar

¹⁵⁹ Wertpapiererwerbs- und Übernahmegesetz [WpÜG] [Securities Acquisition and Takeover Act], Dec. 20, 2001, BGBl. I at § 39a(1)(1) (Ger.). The Regional Court (Landgericht – “LG“) Frankfurt has exclusive jurisdiction for Takeover Squeeze-Out applications. See id. § 39a(5).Google Scholar

¹⁶⁰ Stange, supra note 68, at 274.Google Scholar

¹⁶¹ Noack & Zetsche, supra note 150, at Sec.39b mn. 11.Google Scholar

¹⁶² Id. at Sec.39b mn. 21.Google Scholar

¹⁶³ Cf. Noack & Zetzsche, supra note 150, at mn. 3 (accounting for data until May 2010 and found two cases). Two additional cases occurred in 2011: After successful takeovers, Nordfrost GmbH & Co. KG squeezed out the minority shareholders in Kuehlhaus Zentrum AG, and Engine Holding GmbH squeezed out the minority shareholders in Tognum AG.Google Scholar

¹⁶⁴ See supra Part F.III.Google Scholar

¹⁶⁵ Hasselbach, Kai, Verfahrensfragen des übernahmerechtlichen Squeeze out, Betriebsberater 2842 (2010); Noack & Zetzsche, supra note 150, at mn. 3. Google Scholar

¹⁶⁶ Cf. Kraakman, Reinier & Hansmann, Henry, The End of History for Corporate Law, 89 Geo. L.J. 439 (2001).Google Scholar

¹⁶⁷ Rock et al., supra note 29, at 202.Google Scholar

¹⁶⁸ See Bundesverfassungsgericht [BverfG – Federal Constitutional Court], Case No. 1 BvR 1613/94, Apr. 27, 1999, 100 BVerfGE 289, 302 (Ger.); see also Bundesverfassungsgericht [BVerfG – Federal Constitutional Court], Case Nos. 1 BvR 68/95, 1 BvR 147/97, Aug. 23, 2000, 2001 Neue Juristische Wochenschrift (NJW) 279 (2001) (Ger.).Google Scholar

¹⁶⁹ Cf. Roe, Mark J. & Bebchuk, Lucian A., A Theory of Path Dependence in Corporate Ownership and Governance, 52 Stan. L. Rev. 127 (1999).Google Scholar

¹⁷⁰ Appraisal Procedure Act [SpruchG] [Spruchverfahrensgesetz], June 12, 2003, BGBl I at § 15.Google Scholar

¹⁷¹ Stange found that in over 40% of cases the ultimate compensation was higher than the one initially offered by the controller. However, this result includes cases where the ultimate compensation was determined by the court or (in the majority of cases) by settlement. The valuation agreed upon in a settlement is not an accurate indicator for the intrinsic value of the shares, however, as the controlling shareholder will also consider the “nuisance value” of the claim and the legal fees she will save (for example, for an additional expert testimony by a court-appointed auditor), considering that she has to bear all legal court fees pursuant to Section 15 of the Appraisal Procedure Act.Google Scholar

¹⁷² See infra Part E.I.3.Google Scholar

¹⁷³ Schwenk, Michael R., Valuation Problems in the Appraisal Remedy, 16 Cardozo L. Rev. 649, 679 (1994) (citing Senator Jess J. Present, in his Memorandum in Support of Chapter 202, reprinted in 1982 New York State Legislative Annual, 96, 97).Google Scholar

¹⁷⁴ Cf. Allen, Kraakman & Subramanian, supra note 54, at 485.Google Scholar

¹⁷⁵ The study focused on Belgium, France, Germany, the Netherlands and the U.K.Google Scholar

¹⁷⁶ This threshold is predetermined by Article 15 of the European Takeover Directive. However, the scope of this provision is so small that member states could have created or maintained a separate squeeze-out procedure with differing thresholds without infringing on the Directive.Google Scholar

¹⁷⁷ Van der Elst & Van den Steen, supra note 82, at 404.Google Scholar

¹⁷⁸ Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at § 179a (Ger.).Google Scholar

¹⁷⁹ Rock, Davies, Kanda, & Kraakman, supra note 29, at 207 n. 117.Google Scholar

¹⁸⁰ Aktiengesetz [AktG] [Stock Corporation Act], Sept. 6, 1965, BGBl. i at § 304 (Ger.).Google Scholar

¹⁸¹ Id. § 308.Google Scholar

¹⁸² Körperschaftssteuergesetz [KStG] [Corporation Tax Act], Oct. 15, 2002, BGBl. I at 1444, § 14 (Ger.).Google Scholar

¹⁸³ See infra Part E.I.1.Google Scholar

¹⁸⁴ Compare, on the one hand, the somewhat reserved comments of several members of Parliament in the Bundestag regarding the 90% threshold in Bundestag Plenarprotokoll 17/111, 12754, and on the other hand the judgment of Oberlandesgericht München infra, note 186.Google Scholar

¹⁸⁵ Drittes Gesetz zur Änderung des Umwandlungsgesetzes [3. UmwGÄndG], BGBl. I 2011, 1138 [Third Act Amending the Transformation Act], July 11, 2011, BGBl. I at 1138 (Ger.).Google Scholar

¹⁸⁶ As a precursor during the financial crisis a squeeze out procedure for holders of 90% of the share capital of a company was established by Finanzmarktstabilisierungsbeschleunigungsgesetz [FMStBG] [The Financial Market Stabilization Acceleration Act], Oct. 17, 2008, BGBl. I at 1982, §§ 12(3) no.1, 12(4) (Ger.), in order to allow for the measures necessary to rescue or “stabilize” financial institutions. The – apparently – only time this procedure was used to date was in the case of the distressed Hypo Real Estate Holding AG. The squeeze-out was held valid and constitutional by the Oberlandesgericht München [OLG – Higher Regional Court], Sept. 28, 2011, 2011 NZG 1227 (2011) (Ger.).Google Scholar

¹⁸⁷ Directive 2009/109/EC of the European Parliament and of the Council of Sept. 16, 2009, amending Council Directives 77/91/EEC, 78/855/EEC and 82/891/EEC, and Directive 2005/56/EC in regards to reporting and documentation requirements in the case of mergers and divisions.Google Scholar

¹⁸⁸ Deutscher Bundestag: Drucksachen und Protokolle [BT] Begründung zum Regierungsentwurf [Legislator's Explanatory Notes], 17/3122 at 12 (Ger.). Reducing the threshold to 90% was necessary because the legislator was reluctant to introduce a sell-out right for minority shareholders, which would have been an alternative way to implement the directive.Google Scholar

¹⁸⁹ This procedure is considered not to be an abuse of a legal position by most German scholars. Cf. Stephan R. Göthel, Der verschmelzungsrechtliche Squeeze Out, Zeitschrift für Wirtschaftsrecht (ZIP) 1541, 1549 (2011) (Ger.), available at http://zip-online.de/b8c99a914d25a8e135632f4037ee771c (last visited 10 Aug. 2012).Google Scholar

¹⁹⁰ See e.g., Subramanian, supra note 1.Google Scholar

¹⁹¹ Ventoruzzo, supra note 1, at 61.Google Scholar

¹⁹² Id. at 62.Google Scholar