Fundamental Rights of Shareholders

The current development clearly shows that capital markets law influences and parallels corporation law. Consequently, the shareholder`s position is reshaped and reduced towards the one of a mere monetary focused investor. The planned research project deals with an analysis of the outlined development and its legal consequences on both a national and a comparative perspective. The main impetus for this research project is the Constitutional Court`s recent jurisdiction on squeezing out minority shareholders. Hence, special attention will be given to the court`s decision form 6 June 2005, in which the court approves the shareholder`s fundamental rights protection for the first time. The analysis of the Constitutional Court`s jurisdiction promises to be rewarding because the Austrian legislator is reacting to the practices of squeezing out minority shareholders by an amendment to the Takeover Act 2006. The international dimension of the research project is necessary for three reasons: the present intensive discussion on the topic in Germany, the development of the issue in Anglo-American law and its links to European law. The project is divided into 2 phases: first of all the scope of fundamental rights` protection in relation to the ownership of shares will be addressed. The results of the first phase serve as a basis for the second phase dealing with questions and consequences in company law such as the necessity of a resolution at the shareholders` meeting, quorum, adequacy of termination pay and controlling its adequacy. The research project will have a dogmatic methodology to consider interdisciplinary components and comparative legal aspects. A multidisciplinary approach concentrating on both fundamental rights and corporation law will be characteristic of the project. Comparative law will be included since a reference to the Anglo-American legal systems is planned. Two doctoral students (one for fundamental right, one for corporation law) funded by the FWF for 18 months each will be employed for the implementation of the project. Their overall tasks will comprise of investigations into the relevant literature and its assessment. Finally, the results of the project shall be published. That serves as a scientific research contribution to close the loophole in research by combing aspects of constitutional and corporation law. The results of the project might also have an impact on the activities of the Austrian legislator due to the project`s multidisciplinary approach.

Ownership in shares and thus the rights of a holder of shares in a corporation are protected by fundamental rights. The prevailing fundamental right is the right to ownership. The shareholder is protected irrespective of his ownership proportion. Structuring the right of ownership in shares and the rights related to it the private law legislator is bound by fundamental rights. However, legislative leeway according to the proportionality principle is allowed. Direct third party effect regarding the relation among shareholders or the relation of a single shareholder to the corporation does not exist. An activity such as a shareholder resolution by the Annual General Meeting that deprives a shareholder of the proportionate ownership in shares does not constitute a dispossession of ownership in shares, nor is it considered to be an ownership restriction in the sense of fundamental rights. It lacks the therefore necessary sovereignty. In fact, the challenge is to materially structure interests which occasionally conflict, such as those of majority and minority shareholders. In search for a solution the legislator should create a proportionate balance of interests. Regarding shareholder exclusion the legislator complies with the proportionality principle if he establishes rules for adequate compensation and ensures judicial protection according to the European Convention on Human Rights. The shareholders` rights to information are protected by fundamental rights. Not only does it result from guarantees to ownership but it is also based on the fundamental right of assembly. The right to share- ownership protection is not a sufficient basis for a resolution by the Annual General Meeting for a delisting (withdrawal of listing on a stock exchange). It lacks the therefore necessary direct third party effect of the fundamental right to ownership.