220 5 Equity and Shareholders’ Capital
ity because the securities or the issuer no more fulfil the listing requirements or
because the issuer has breached its obligations.
Regular delisting. Regular delisting is governed by rules that regulate the inter-
nal decision-making of the company and rules which regulate the protection of in-
vestors.
Where delisting is part of a going private transaction, the rules governing public
offers, mandatory bids, the squeeze-out mechanisms, and other parts of the going
private transaction will require disclosure of information to shareholders and pos-
sibly the convening of a general meeting. Depending on the market, stock ex-
change rules and codes of conduct applicable to issuers will lay down further re-
quirements.
Typically, regular delisting is a management matter. The main rule therefore
should be that the consent of shareholders in general meeting is not required.
There can nevertheless be exceptions, because a delisting can reduce the value of
shares. A resolution by the general meeting is required under both English and
German law.
In England, an issuer that wants the FSA to cancel the listing of any of its equity shares
with a primary listing must: (1) send a circular to the holders of the securities; and (2) ob-
tain, at a general meeting, the prior approval of a resolution for the cancellation of the list-
ing by a qualified majority of not less than 75% of votes.^424 An issuer is not required to seek
the prior approval of the holders of the ordinary equity shares for which a cancellation is
being sought if the shares are admitted to trading on a regulated market in an EEA State
when the cancellation takes effect.^425 According to German company law, a regular delist-
ing restricts the transferability of shares and violates the ownership rights of non-
controlling shareholders. A regular delisting must therefore be decided on by the general
meeting with a simple majority of votes and requires the making of a mandatory bid. Mi-
nority shareholders must be entitled to the full value of their shares.^426
When a regular delisting is decided on by the general meeting, minority share-
holders will get access to remedies that protect them against resolutions that do
not comply with the applicable provisions of company law or the articles of asso-
cation.
In any case, regular delisting at the issuer’s request is constrained by other rules
protecting investors. Delisting typically requires the consent of the competent au-
thority that decided on admission to listing (or the operator of the regulated mar-
ket that decided on admission to trading, see section 5.9.2). An important condi-
tion is that delisting will not prejudice the interests of investors. Delisting would
prejudice their interests if normal dealings in the securities are possible before de-
listing.^427
(^424) LR 5.2.5 R.
(^425) LR 5.2.6 R.
(^426) BGH, judgment of 25.11.2002 – II ZR 133/01 (Ingram/Macrotron), referring to Article
14(1) of the German Grundgesetz.
(^427) Article 18(2) of Directive 2001/34/EC (Listing Directive). For German law, see § 39
BörsG (Börsengesetz, Stock Exchange Act). For English law, see LR 5.2.1 R.