Squeeze-out

As of January 1, 2002, the squeeze-out regulation (§§ 327a-327f AktG) came into force in Germany. This regulation gives the majority shareholder, for the first time, the opportunity to force minority shareholders out of the target company against their will and in a straightforward manner, in order to obtain all shares for the parent company. The aim of this work is to clarify the economically significant question of whether the squeeze-out regulation represents a suitable and practical instrument that adequately balances the interests of the majority shareholder and the minority shareholders of the target company. After establishing the formal legal foundations in German law, which also addresses the appraisal procedure, §§ 327a-327f AktG can be evaluated in the context of other European and U.S. regulations. In addition, the case study provides initial practical experiences with the new corporate law regulation. It becomes apparent that the ideal solution derived from the evaluation only applies to publicly listed companies as target companies, includes a mirror-image exit right, and is particularly time-limited in connection with takeover law. §§ 327a-327f AktG contradict this ideal solution in all characteristics. A key conclusion is that the still young squeeze-out regulation will need to be fundamentally revised in the near future and aligned as a capital market instrument.