Porsche Holding SE (‘Porsche’) is a listed company with a majority stake (~52,2%) in Volkswagen AG’s (‘VW’) ordinary shares. As a consequence, Porsche’s listed preferred shares dropped by more than 30% in value when VW admitted it had installed defeat devices, which were designed to cheat emissions tests in certain car models.
At the end of December 2018, a group of investors advised and assisted by Deminor Recovery Services registered their claims against Porsche with the model case proceeding (‘KapMuG’) before the Higher Regional Court of Braunschweig in which VW and Porsche are both model defendants. Deminor advised claimants to register their claims rather than issuing proceedings given that several key procedural and substantial issues remain uncertain.
The Braunschweig court will decide on the liability of VW and Porsche in terms of aspects which are common to both defendants, but will exclude Porsche-specific questions from its considerations. This includes whether a holding company such as Porsche has an obligation to disclose information to the market concerning a company in which it holds shares, such as VW, and whether Martin Winterkorn’s knowledge of the use of defeat devices as CEO of VW also affected his duties as CEO and board member of Porsche despite his having confidentiality obligations towards VW. These questions will then be addressed in a second Porsche-specific model case proceeding before the Higher Regional Court of Stuttgart once the Braunschweig KapMuG has ended. The German Federal Supreme Court will very likely decide on whether this “double proceeding” is in line with German procedural law as there is no precedent.
The registration of claims has had the effect of tolling the statute of limitations. Investors can issue proceedings against Porsche once the uncertainties are resolved.