"While there is currently no clear and irrefutable evidence of wrongdoing by members of the management and supervisory boards in connection with the loan agreement, the conduct of the boards in the context of Vonovia's takeover raises legitimate concerns about potential conflicts of interest and breach of fiduciary responsibilities," ISS said in a research report.
Therefore, a vote for the special audit was considered warranted, the report said.
In 2021, Vonovia completed the takeover of rival Deutsche Wohnen to create a property group with more than 500,000 apartments. In January 2022, Deutsche Wohnen disclosed in a public filing that it would lend up to 2 billion euros ($2.20 billion) to its new main shareholder.
An investment vehicle owned by Elliott, wants shareholders to vote to install an independent investigator to examine the loan at the shareholder meeting slated for June 15 to examine whether the loan was in the best interest of investors, the AGM documents show.
Deutsche Wohnen's supervisory board has said that it did not see any need for an investigation.
It did not immediately respond to a request for comment on Tuesday.
($1 = 0.9084 euros)
(Reporting by Kirsti Knolle; Editing by Miranda Murray)
