Exclusion of the Controlling Company's Voting Rights in Cases of Conflicts of Interest in the De Facto Group

In the de facto group (faktischer Konzern), the controlling company is excluded from voting on resolutions in the general meeting of the dependent company where the matter concerns a breach of duty instigated by and for the benefit of the controlling company.

In the de facto group, there is a relationship of dependence of a factual nature between the controlling and the dependent company. When exercising the rights arising from the majority shareholding, the corporate interest of the controlling company and the possibly conflicting interest of the dependent company may collide.

In order to prevent abuse of the controlling position, the law provides for protective mechanisms in favour of the minority shareholders of the dependent company. Thus, an exclusion of the controlling company's voting rights by analogy with § 136(1) sentence 1 of the German Stock Corporation Act (AktG) may also apply in cases in which the extent of the respective conflict of interest is equivalent to the case regulated by statute.