Deposit voting rights

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Voting in custody accounts or proxy voting is a voting right that is exercised by credit institutions as authorized representatives of the shareholders at the general meeting of a stock corporation or limited partnership .



The voting rights for securities accounts developed in Germany between 1922 and 1931 and was first enshrined in law in 1937. The banks made provisions for voting rights representation for their depository customers in their general terms and conditions . According to this, the banks were authorized to exercise voting rights for the securities account shares they held in custody, unless otherwise instructed by the shareholder. The banks' voting rights for custody accounts resulted from the fact that banks predominantly manage the shares of their customers in securities accounts. This means that voting rights for custody accounts are one of the services provided by a bank in the context of custody business.

Credit institutions take on the task of forwarding the company's information material about the upcoming general meeting to the shareholder, because the stock corporation only has an overview of its shareholders through the share register for registered shares . In the case of bearer shares , only credit institutions are able to identify affected shareholders on the basis of their portfolio holdings. The information material also includes a request to shareholders to grant the bank a proxy and to issue instructions on the individual items on the agenda or to follow the bank's proposals.

Conflicts of Interest

If credit institutions submit their own proposals to the shareholder as to how voting should take place at the general meeting, this can result in conflicts of interest . On the one hand, credit institutions themselves - in some cases significantly - have a stake in stock corporations and limited partnerships on shares and / or are involved as lenders , on the other hand, representatives of the credit institution can hold a supervisory board mandate in the company. The resulting risk of a conflict of interests can be realized by the fact that credit institutions submit proposals for voting to their custodian customers within the framework of the custody account voting rights, to vote for the shareholders in the "sense of administration" as proposed by the stock corporation. This can be associated with an attempt to have the custodian vote in accordance with the credit institution's own interests.

For this reason, the law on control and transparency in the corporate sector (KonTraGesetz) restricted the deposit voting rights of banks in May 1998. The law placed information obligations and transparency towards shareholders in the foreground. The banks had to inform about personnel obligations of board members and other employees as well as about their own investments in the company. Furthermore, the shareholder had to be informed about alternative means of representation such as authorized representatives who are not dependent on banks. Should the bank manage more than 5% of the shares in a company, it could no longer exercise its voting rights without restriction, but required specific instructions on the individual items on the agenda, unless it did not exercise its own voting rights.

Reformed legal situation

The voting rights for custody accounts have been comprehensively reformed and upgraded since September 2009 by the Act to Implement the Shareholder Rights Directive (ARUG) . The banks have extended options for obtaining a written power of attorney - which can be revoked at any time - to cast votes ( Section 135 AktG ). By means of a written instruction in accordance with Section 128 AktG, the shareholder authorizes the bank to exercise the voting right in his place and on his behalf during the general meeting.

The banks are now allowed to submit their own proposals for exercising voting rights on the individual agenda items, but must be guided by the interests of the shareholders and take organizational precautions to ensure that their own interests from other business areas do not flow into this ( Section 135 (2) AktG). The bank may only exercise voting rights according to its own proposals if it does not receive any other instructions from the shareholder. This also applies if the bank itself has a stake in the stock corporation within the scope of Section 21 WpHG (holds at least 3% of the share capital) or was part of an issuing syndicate that took over the stock corporation's last issue within the last five years .

The motives applicable to the Internet presence of the Annual General Meeting ( Section 124a AktG) also apply to the voting rights for securities accounts. The liberalization of voting rights for custody accounts prevents random majorities in a general meeting, especially if the shareholders are scattered around the world and it is too difficult or too expensive for them to attend in person.

Deposit voting rights and presence

Presence is the number of voting shares reported to the company on the day of the Annual General Meeting, expressed as a percentage of the total voting share capital. Empirical studies show that the banks' voting rights in custody accounts increase attendance at general meetings. The reason is that many shareholders do not use existing power of attorney and Internet alternatives and thus contribute to the deterioration of the presence. The higher the attendance, the lower the risk of random majorities, which can lead to unexpected or inexpedient voting results.

The presence has decreased significantly since 1998 as a result of the KonTraGesetz . While the average presence at DAX30 companies was 60.95% in 1998, it fell to 45.87% in 2005; it has increased again since 2007 (56.42%). The increase in the presence after 2005 is likely to be due in particular to the UMAG coming into force in November 2005, which, among other things, abolished the deposit requirements as a prerequisite for participation.


It was criticized that the deposit voting right was the decisive instrument in the de facto control of German stock corporations by the credit institutions. The decoupling of capital risk and potential for influence also harbors the risk that, in the event of doubt, the deposit voting rights would not be exercised in the interests of shareholders. This is all the more likely if the custodian bank also pursues its own interests in a company, which could result from its own shareholdings or loans. This close proximity to business is reinforced by the fact that bank directors or bank employees hold supervisory board mandates at the companies. The objection to this is that the custodian voting right guarantees high general meeting attendance, because many shareholders show a reluctance to personally attend the general meetings of stock corporations. A high general meeting attendance is necessary in order to rule out random majorities and thus the dominance of minorities and at the same time to ensure that the free float in the hands of small shareholders also gains weight in the general meeting of the stock corporation.

Shareholder Associations

Changes to the voting rights of the securities account had not silenced the criticism. Many corporations try to influence shareholders by asking them to appoint a representative to vote on behalf of management. These representatives usually act on behalf of the management board or supervisory board. Since 2005, the German stock corporation law with § 127a AktG has offered a possibility of bundling interests via the shareholders 'forum on the Internet, so that the participation of shareholders' associations has also been improved.

Spectacular cases of voting rights for securities accounts

In December 1993, at the request of a shareholder, the general meeting of Daimler-Benz AG had to decide to distribute the so-called EK-56 reserves of the group of around DM 11.8 billion (around DM 340 per share) to the shareholders. Then in 1993 the shareholders would have received the difference between the tax rate at that time and the 1993 rate for distributed profits of only 36 percent from the tax office. In order to ensure that the unusually high distribution would not burden Daimler-Benz AG financially too much, shareholders' representatives proposed that Daimler-Benz share capital be increased by the same amount as part of a “pour-out-get-back” procedure. Because the Daimler-Benz board of management was not convinced that the full return of capital was not certain, the Daimler administration had spoken out against such a procedure. The custodian banks sided with Daimler with their custodian voting rights and voted against the distribution of retained earnings, because the application was rejected with more than 99.7 percent of the votes.

Voting errors cannot be ruled out when it comes to voting rights. According to SPIEGEL, a bank representative at the general meeting of BASF AG in May 1958 had forgotten to register his almost 10 percent share of the share capital with “Yes”, which was counted as an abstention.


A custody account voting right in a similar form also exists in the context of the general works council .


The federal popular initiative “Against the rip-offs” of March 3, 2013 prohibited voting rights in custody accounts. Before that, four requirements had to be met:

  • Only banks that are subject to banking supervision or commercial asset managers are authorized to represent custodians (Art. 689d Paragraph 3 OR ).
  • Compliance with instructions is regulated in Art. 689b OR. Regarding the consequences of non-compliance, the relevant votes are still valid, even if the company knew about them.
  • The custodian representatives have to ask the shareholders for instructions (Art. 689d Paragraph 1 OR). If no instructions are given, any general instructions must be followed, otherwise the proposals of the Board of Directors .
  • There is no express obligation to exercise the rights, but an obligation must be assumed implicitly (Art. 689b OR).



Individual evidence

  1. Press release of the Federal Ministry of Justice of May 29, 2009: Bundestag adopts ARUG: Good times for online shareholders - bad times for professional plaintiffs
  2. A complete overview is provided by Daniel Matthias Brickwell, On the Influence Potentials of Big Banks , Diss. 2002
  3. Bundestag printed matter 16/6136, p. 4
  4. ↑ These were retained earnings that were formed between 1977 and 1989 and were subject to the corporate income tax rate of 56 percent at the time
  5. Friedrich-Ebert-Stiftung, Das Depotstimmrecht der Banken , January 2001, p. 38 ff.
  6. DER SPIEGEL 42/1958 of October 15, 1958, Banken / Depotstimmrecht, New Food , p. 28 ff.