Expert Corporate Governance Service (ECGS)
EUR 492.40 For Business Accounts Only

Etude de l'AG du 10/05/2017

Items 3 and 4: DSW recommends opposing the discharge of both Management and Supervisory Board.

On 20 December 2016, Linde AG and Praxair Inc. announced that the companies intend to combine in a merger of equals under a new holding company through an all-stock transaction. Employee representatives have already announced their opposition to this agreement. For further information on this business combination, see section 3.1 of this report.

DSW, the German partner of ECGS has requested to add a vote on the merger to the agenda of this year's AGM on behalf of various shareholders. Specifically, DSW demanded that the following items be added to the agenda:

1. The Management Board shall be authorised to enter into discussions with Praxair Inc. regarding the proposed combination and to undertake all actions necessary to complete the transaction.

2. If the Business Combination Agreement is already executed: the Business Combination Agreement shall be approved.

3. If the Business Combination Agreement will be executed at a later date: the Business Combination Agreement shall be explicitly subject to an approval by the Linde shareholders' meeting.

DSW argued that a vote of Linde shareholders is necessary because the character of the entire Company is changed to a drastic extent for the shareholders and the decision therefore could no longer be taken by the Management and the Supervisory Board of the Company alone. According to the case law of the Federal High Court of Justice (BGH) a shareholders’ approval at the general meeting must already be obtained for a structure-changing measure if the decision on this measure is no longer covered by sec. 119 AktG, as it entails a very intensive change and its effects approximate a situation which can be brought about only by an amendment of the Articles of Association of the Company. The measure here is no longer covered by sec.119 AktG. According to DSW, this is made clear by the parameters of the proposed Business Combination Agreement that have already been published.

The request of DSW has been rejected by the Boards of Linde stating that they do not see any legal basis requiring a shareholder approval to initiate or continue discussions with Praxair or to conclude the Business Combination Agreement mapping out the way towards such a combination.

We consider that shareholder approval for such a significant business combination is required and that the Boards shall not deny their shareholders the right to vote. We therefore recommend opposing the discharge of both Boards.

Item 5: KPMG, Berlin, is proposed as auditor for the current financial year. We have no concerns over the ratio of non-audit/audit fees. However we note that KPMG has audited the Company since the financial year 1984 which exceeds our maximum acceptable term of office of 10 years or 20 years in case an audit tender has taken place after the initial engagement period. We consider a longer term of office may impair the auditor's independence. We therefore recommend opposing the re-election of KPMG as auditor.


Linde is a gases and engineering company based in Germany. Co. operates through two divisions. The Gases division provides a range of compressed and liquefied gases as well as chemicals. Co.'s gases are used in the energy sector, in steel production, chemical processing, environmental protection, and welding, as well as in food processing, glass production and electronics. The Engineering division is engaged in industrial plants construction globally, focusing on market segments such as plants for the production of hydrogen and synthesis gas, air separation and olefins as well as plants for natural gas treatment.


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