Status: 07/28/2021 6:40 a.m.
Were Porsche shareholders warned too late about the stock market repercussions of the diesel scandal? This question will be dealt with today by the Stuttgart Higher Regional Court in a test case.
The ancient philosopher Aristotle is said to have said that friends are a soul that lives in two bodies. It’s not quite as philosophical nowadays in business or in court, but the sentence could apply to Porsche Automobil Holding SE (short: Porsche SE) and the VW Group.
Because Porsche SE is a holding company which, as a major shareholder in Volkswagen AG, holds 53.3 percent of VW ordinary shares. Porsche SE and Volkswagen AG are also intertwined in terms of personnel, for example Hans Dieter Pötsch is both CEO of the holding company and supervisory board chairman of VW – both since 2015. That is the year in which Volkswagen AG admitted the installation of manipulation software and the The diesel affair had started – before that, Martin Winterkorn was CEO of both companies. So the assumption that Porsche SE and Volkswagen AG are two bodies but one soul shouldn’t be too far-fetched.
Porsche SE holds the majority of the VW voting rights
Important: Porsche SE is not to be confused with the sports car manufacturer Porsche. “As a listed holding company, Porsche SE holds around 32 percent of all shares in the VW Group and holds 53.3 percent of the voting rights – and thus the majority of the votes – in Volkswagen AG, which in turn unites twelve vehicle brands under one corporate umbrella,” explains Stefan Reindl from the Institute for Automotive Economics at the Nürtingen-Geislingen University of Applied Sciences in Baden-Württemberg. And only one of these twelve brands is the sports car manufacturer Porsche.
Has Porsche SE breached the notification obligations?
So it’s not about him, but about the holding of the same name when a trial begins on Wednesday in Stuttgart before the Higher Regional Court (OLG) Stuttgart, which is still dealing with the diesel affair. “It has been taking too long to deal with the diesel affair,” says Reindl. “This is not least due to the complex corporate structures.”
Specifically, it concerns the lawsuit brought by investors and the question of whether Porsche SE has violated its ad hoc disclosure obligations. According to the OLG Stuttgart, such a notification was issued on September 22, 2015: The group had announced that around eleven million vehicles with diesel engines of type EA 189 exhibited abnormal nitrogen oxide emissions in the third quarter of the current financial year and therefore around 6, 5 billion euros should be set aside. As a result, the share prices of both companies collapsed.
Was the ad hoc announcement too late?
“According to the law, stock corporations must inform in good time about all material things that can affect the value of the shares,” says ARDLegal expert Frank Bräutigam. “For example about unforeseen expenses of the company. If that did not happen in time, the AG has violated its duty.” This is what is being argued here. “The plaintiffs say that they would not have bought the shares or would have bought them at a lower price.”
The plaintiffs are represented by Klaus Nieding, specialist lawyer for banking and capital markets law. “We are demanding compensation from Porsche Automobil Holding SE for Porsche shareholders who were financially damaged by the fact that the Porsche shares fell drastically in value after the diesel scandal became known in September 2015,” he says. “If the capital market had been informed in good time by Volkswagen AG and Porsche Automobil Holding SE about the mass installation of impermissible disconnection devices in diesel vehicles of the Volkswagen group, the price fall and the resulting damage would not have occurred.”
Porsche SE sees it differently. “The lawsuits directed against Porsche Automobil Holding SE are obviously unfounded,” said a spokesman. After all, the company is a pure holding company. “Porsche SE is not a car manufacturer and was therefore not involved in the development, manufacture or sale of the diesel engine that had become conspicuous in the USA.”
Close ties could become a problem for Porsche
Nieding also admits that: Porsche SE does not have a vehicle business itself and is legally separate from Volkswagen AG. “However, Porsche Automobil Holding SE has its own duty to inform the capital market in good time.” And: “Due to the links between Porsche Automobil Holding SE and Volkswagen AG, the former must also acquire the knowledge of the members of the Board of Management of Volkswagen AG, who are or were also members of the Board of Management of Porsche Automobil Holding SE, from their work for the Allow Volkswagen AG to be attributed. ”
This is exactly what Porsche SE sees differently – and feels confirmed by the highest court: “Any knowledge of board members of Porsche Automobil Holding SE who were also members of the board of Volkswagen AG cannot be attributed to Porsche SE longstanding case law of the Federal Court of Justice. ” Incidentally, they will “continue to vigorously defend themselves against the unjustified complaints.”
Model proceedings begin after years of dispute
Porsche SE has also done this so far. Both parties have already had to travel a considerable distance before the courts before the trial could begin. It is namely a so-called “investor model procedure”. ARD-Legal expert Bridegroom explains this complicated term: “In cases like these, a lot of shareholders complain. So that the central questions do not have to be examined individually in each procedure, there is the investor model procedure. This then clarifies the crux of the case, as it were, on behalf of all pending Complain.”
It was only decided after a lengthy legal process up to the Federal Court of Justice that this model case exists. Last year, this made possible a test case against Porsche SE, which is now starting before the Stuttgart Higher Regional Court. Background: As early as 2017, the Stuttgart Regional Court affirmed the possibility of such a model decision – entirely in the interests of the plaintiff and attorney Nieding, “because clients can get their rights that way faster.”
But the OLG Stuttgart conceded the decision and considered a model case to be inadmissible. Reason: There is already a test case against Volkswagen AG before the OLG Braunschweig, in which comparable allegations are clarified. This decided that lawsuits against Porsche SE also depended on the outcome of the Braunschweig test case. But the plaintiffs did not want to accept this and went to the Federal Court of Justice, which found them to be right. Nieding: “We made the model case possible through our approach to the BGH and represent the model plaintiff.”
Two test cases in Braunschweig and Stuttgart
ARD-Legal expert Groom explains the decision: “There is already a model case against VW at the OLG Braunschweig. The Stuttgart court initially did not want to conduct a second case with reference to this. But the Federal Court of Justice in Karlsruhe saw it differently. In Braunschweig it is going about VW, in Stuttgart about Porsche. The fact that the processes at VW are important in both processes is not decisive. ”
So now there are two test cases: against Volkswagen in Braunschweig and against Porsche SE in Stuttgart. Two bodies, one soul. A spokeswoman for the Higher Regional Court Stuttgart: “I can’t say anything about the mutual influence of the proceedings at the moment. This question may be interesting in the event of a possible evidence being taken in Braunschweig on the attribution of knowledge by the then chairman of the VW subsidiary, whether this can also be attributed to Porsche SE.”
Automotive expert Reindl also suspects this: “Volkswagen AG and Porsche SE are intertwined with one another through shareholdings and voting rights. In this respect, the individual decisions are likely to influence the other side.” However, the outcome of both proceedings – and the associated effects on both companies – cannot currently be forecast.
Wolverhampton City Council as model plaintiff
The Stuttgart model plaintiff is a British fund, said the court spokeswoman. Lawyer Nieding is more specific: “First of all, we represent the model plaintiff Wolverhampton City Council, which the model case is about,” he says. “Otherwise we represent a large number of institutional investors from Germany and abroad, as well as private investors who have been harmed by Porsche Automobil Holding SE, in pending legal proceedings, some of which have already been suspended.” He puts the total damage – all in all – at a total of 900 million euros.