Source: https://annualreport2018.volkswagenag.com/group-management-report/report-on-risks-and-opportunities/risks-and-opportunities/litigation.html
Timestamp: 2019-04-21 08:45:27+00:00

Document:
The Braunschweig Office of the Public Prosecutor is conducting another proceeding against three (current or former) members of the Board of Management for alleged market manipulation with respect to capital market disclosure obligations in connection with the diesel issue. In this context, the Office of the Public Prosecutor has been conducting a regulatory offense proceeding against Volkswagen AG under §30 OWiG (German Regulatory Offenses Act) since July 30, 2018. Volkswagen AG has since been permitted to inspect the public prosecutor's investigation files several times. The investigations are ongoing.
The Stuttgart Office of the Public Prosecutor has commenced a criminal investigation relating to the diesel issue against one board member, one employee, and one former employee of Dr. Ing. h.c. F. Porsche AG on suspicion of fraud and illegal advertising as well as an analogous regulatory offense proceeding against Dr. Ing. h.c. F. Porsche AG under §30 OWiG. Dr. Ing. h.c. F. Porsche AG has appointed two renowned major law firms to clarify the matter underlying the public prosecutor’s accusations. The Board of Management and Supervisory Board of Dr. Ing. h.c. F. Porsche AG are being regularly updated on the current state of affairs.
Whether the criminal and administrative proceedings will ultimately result in fines for the Company, and if so in what amount, is currently subject to estimation risks. According to Volkswagen’s estimates so far, the likelihood that a sanction will be imposed is 50% or less in the majority of these proceedings. Contingent liabilities have therefore been disclosed where the amount of such liabilities could be measured and the likelihood of a sanction being imposed was assessed at not lower than 10%. Provisions were recognized to a small extent.
Italian consumer protection law are being asserted in these proceedings. In the Codacons proceeding, the court dismissed the class action as inadmissible on December 18, 2018. In the Altroconsumo proceeding, the deadline for the filing of claims has passed and those filed are currently being tabulated by an appointed expert.
Several lawsuits filed by the Austrian consumer protection organization (VKI – Verein für Konsumentenschutz) and by the Cobin Claims platform are pending in Austria. In these actions, damage claims assigned for collection to VKI or to the Cobin Claims platform are being asserted on behalf of roughly 10 thousand customers.
Volkswagen estimates the likelihood that the plaintiffs will prevail to be 50% or less for the majority of the customer class actions and the complaints filed by consumer and/or environmental organizations. Contingent liabilities are disclosed for these proceedings where the amount of such liabilities can be measured and the chance that the plaintiff will prevail was assessed as not implausible. Since most of these proceedings are still in an early stage, it is in many cases not yet possible to quantify the realistic risk exposure. Provisions were recognized to a small extent.
Furthermore, individual lawsuits and similar proceedings are pending against Volkswagen AG and other Volkswagen Group companies in various countries, most of which are seeking damages or rescission of the purchase contract. In Germany, there are around 46 thousand such individual lawsuits. A total of approximately one thousand additional individual lawsuits are pending in other countries. According to Volkswagen’s estimates, the likelihood that the plaintiffs will prevail is 50% or less in the vast majority of the individual lawsuits. Contingent liabilities are disclosed for these actions where the amount of such liabilities can be measured and the chance that the plaintiff will prevail was assessed as not implausible. In addition, provisions were recognized to the extent necessary based on the current assessment.
The vast majority of these investor lawsuits are currently pending at the Regional Court in Braunschweig. On August 5, 2016, the Regional Court in Braunschweig ordered that common questions of law and fact relevant to the lawsuits pending at the Regional Court in Braunschweig be referred to the Higher Regional Court (Oberlandesgericht) in Braunschweig for binding declaratory rulings pursuant to the German Act on Model Case Proceedings in Disputes Regarding Capital Market Information (KapMuG – Kapitalanleger-Musterverfahrensgesetz). In this proceeding, common questions of law and fact relevant to these actions are to be adjudicated in a consolidated manner by the Higher Regional Court in Braunschweig (model case proceedings). All lawsuits at the Regional Court in Braunschweig will be stayed pending resolution of the common issues, unless the cases can be dismissed for reasons independent of the common issues that are to be adjudicated in the model case proceedings. The resolution in the model case proceedings of the common questions of law and fact will be binding for all pending cases that have been stayed in the described manner. In the model case action, hearing for oral argument before the Braunschweig Higher Regional Court began on September 10, 2018 and was continued in subsequent sessions. Tracking the objects of declaratory judgment, the Court gave indications as to its preliminary assessment. Oral argument is to continue in 2019.
In June 2013, the Annual General Meeting of MAN SE approved the conclusion of a control and profit and loss transfer agreement between MAN SE and TRATON SE (at that time Truck & Bus GmbH), a subsidiary of Volkswagen AG. In July 2013, an award proceeding was instituted to review the appropriateness of the cash settlement set out in the agreement in accordance with §305 of the Aktiengesetz (AktG – German Stock Corporation Act) and the cash compensation in accordance with §304 of the AktG. By ruling of June 26, 2018 (supplemented and amended by the rulings of July 30, 2018 and December 17, 2018), the Munich Higher Regional Court rendered a final decision increasing the annual compensation claim under §304 AktG to €5.47 gross per share (less any corporate income tax and any solidarity surcharge at the respective tax rate applicable to these taxes for the financial year in question). The cash settlement in the amount of €90.29 per share, increased in the first instance by the Munich I Regional Court, was affirmed. The decisions by the Munich Higher Regional Court are final and were published in the German Federal Gazette on August 6, 2018 and January 10, 2019.

References: §30
 §30
in fine
 §305
 §304
 §304