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Duties of Directors under German Law – M&A /Buyer’s perspective

Duties of Directors under German Law – M&A /Buyer’s perspective. DAJV-Fachgruppentag : Fachgruppe M&A - Session I Rechtsanwalt Dr. Nikolaos Paschos, LL.M . Linklaters LLP , Düsseldorf 1 March 2012. Duties of Directors under German Law – M&A /Buyer’s perspective (Overview).

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Duties of Directors under German Law – M&A /Buyer’s perspective

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  1. Duties of Directors under German Law – M&A/Buyer’s perspective DAJV-Fachgruppentag: FachgruppeM&A - Session I Rechtsanwalt Dr. Nikolaos Paschos, LL.M. Linklaters LLP, Düsseldorf 1 March 2012

  2. Duties of Directors under German Law – M&A/Buyer’s perspective (Overview) • No specific legal provisions for directors’ duties in M&A context • Exceptions: Listed Acquiror/Target(Securities Trading Act), Listed Target (Securities Acquisition and Takeover Act), Transformational M&A (Transformation Act) • General obligations of corporate directors apply • Duty to comply with the laws • Duty of care: To apply „the diligence of a prudent and conscientious businessman“ • Duty of loyalty • Safe harbour: Business Judgment Rule (BJR) • Directors shall not be deemed to have violated duty of care if, at the time of taking an (1) entrepreneurial decision, they had good reason to assume that they were acting on the basis of (2) adequate information(3) for the benefit of the company(and (4) without any conflicts of interest)

  3. Duties of Directors under German Law – M&A/Buyer’s perspective (General/Specific Duties) • Derivation of general duties of corporate directors‘ in the context of an acquisition from general obligations, e.g. • Acquisition has to be covered by the purpose clause in the articles of association (no ultra-vires transaction) • Necessary corporate bodies have to be involved (supervisory board, shareholders’ meeting) • Duty to diligently structure and execute transaction: As to transaction type, acquisition financing, documentation, post-acquisition integration, etc. • Specific duty: Due diligence review • Even though no strict obligation, in any transaction that is „of some importance“, BJR may only be invoked if prior due diligence review was conducted • Scope and depth depend on importance and economical consequences for the buyer, complexity of target/transaction and available timeframe, etc.

  4. Duties of Directors under German Law – M&A/Buyer’s perspective (General/Specific Duties) • Due diligencereview – Expert advice(BGHNZG 2007, 545 and NZG 2011, 1271 – ISION) • Duty to obtain (external) expert advice: Directors have to compensate for missing expertise through expert advice – Guiding principles: • Professional qualification of expert (internal vs. external, complexity of matter) • Independence of expert (internal vs. external, prior involvement of expert) • Reliance on expert advice • Duty to properly brief expert • Plausibility check: Directors have to conduct a plausibility check of the expert’s advice (generally requires expert advice in written or permanently established form)

  5. Linklaters LLP Dr. Nikolaos Paschos, LL.M. Königsallee 49-51 40212 Düsseldorf Postfach 10 35 41 40026 Düsseldorf Tel: (+49) 211 22977-0 Fax: (+49) 211 22977-435 Linklaters ist seit dem 1. Mai 2007 eine Limited Liability Partnership (LLP) englischen Rechts. Die Bezugnahme auf Linklaters in diesem Dokument meint Linklaters LLP und ggf. verbundene Gesellschaften weltweit. Linklaters LLP ist eine in England und Wales unter OC326345 registrierte Limited Liability Partnership, die als Anwaltskanzlei durch die Solicitors Regulation Authority zugelassen ist und deren Bestimmungen unterliegt. Der Begriff "Partner" bezeichnet in Bezug auf die Linklaters LLP Gesellschafter sowie Mitarbeiter der LLP oder der mit ihr verbundenen Kanzleien oder sonstigen Gesellschaften mit entsprechender Position und Qualifikation. Eine Liste der Namen der Gesellschafter der Linklaters LLP und der Personen, die zwar nicht Gesellschafter sind, aber als Partner bezeichnet werden, sowie ihrer jeweiligen fachlichen Qualifikation steht am eingetragenen Sitz der Firma in One Silk Street, London EC2Y 8HQ, England, oder unter www.linklaters.com zur Verfügung. Bei diesen Personen handelt es sich um deutsche oder ausländische Rechtsanwälte, die an ihrem jeweiligen Standort als nationale, europäische oder ausländische Anwälte registriert sind. Wichtige Informationen bezüglich unserer aufsichtsrechtlichen Stellung finden Sie unter www.linklaters.com/regulation. Bitte beachten Sie, dass die in diesem Dokument enthaltenen Angaben zu Honorarvereinbarungen, Mandanten und Referenzen sowie die Beschreibungen der Beratungstätigkeit vertrauliche Informationen von Linklaters sind und es für einen Zeitraum von vier Jahren ab dem Datum dieses Dokumentes bleiben.

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