Development of German and Russian Corporate Law in the Hostile Take- over Environment

Abstract

Introduction. Speculative behavior is common for modern stock markets. It leads to corporate short-termism and therefore has negative systemic implications for the states’ economies. In an attempt to mitigate this trend, the German lawmaker developed national legislation aiming, inter alia, to provide company management with additional powers it could potentially use to prevent hostile takeovers. This experience needs to be critically studied in terms of both German and Russian doctrine and legal practice.Materials and methods. This paper uses the following general and specifc scientifc methods: structure-function analysis, comparative law method, Aristotelian method, statistical method, historical method, systemic method and hermeneutic method.Results of the research. Reacting towards a number of transactions affecting the German corporate landscape, the German legislature developed the Law on Acquisition of Securities and Change of Corporate Control. This Law contains protectionist provisions potentially entitling the board of directors of a joint-stock company to undertake measures to prevent hostile takeovers either subject to consent of the supervisory board or in cases where it is authorized to do so according to the corporate charter. Nevertheless, the impact these powers have in practice is very limited, which can be mostly attributed to practical considerations of the German judiciary and legislature.Discussion and conclusions. The article contains analysis of the German and Russian legal doctrine and court practice pertaining to joint-stock companies, as well as the scope of authorities of their management, analysis of the basic advantages and disadvantages of the German regulatory approach, conclusions as to applicability of the German approach in Russia.