Читать книгу The Limited Liability Company under German Law (the GmbH) - Dr Alexander Schröder-Frerkes - Страница 10

V. Shareholders’ meeting

71. General

The meeting of the shareholders is the principal corporate body of a GmbH. As opposed to the case where a stock corporation is concerned, where the exact distribution of powers between the shareholders, the management and the supervisory board is prescribed by mandatory law, to a large extent, the Act on Limited Liability Companies entitles the shareholders themselves to determine and change the distribution of powers between the managing directors and the shareholders as prescribed by law, in the articles of association and accompanying by-laws.

For the purposes of legal certainty, however, the GmbH is mandatorily represented by the managing directors in dealings with third parties. Internally, the articles of association and the by-laws may either provide for strong managing directors practically subject to just a few of the mandatory provisions of the Act on Limited Liability Companies, or for a strong position in the shareholders’ favour, requiring prior consent from the shareholders for each (significant) action the managing directors take on behalf of the company. The flexibility of the Act on Limited Liability Companies has contributed to the GmbH being the most successful legal entity within Germany and, in its comparable legal forms, also in other European countries.

A. Statutory rights and obligations; transferral of rights and powers

72. Statutory rights and obligations of the shareholders’ meeting

The Act on Limited Liability Companies sets out an optional list of powers on the part of the shareholders in the event that the articles of association do not provide otherwise by either limiting this list, adding powers thereto, or transferring certain powers listed herein (to the extent legally permitted) to another corporate body. The powers in question are:

•approval of the annual financial statement and the allocation of the surplus;¹

•resolution on the publication of an individual annual financial statement according to international accounting standards and on the approval of the annual statement prepared by the managing directors;²

•approval of the group annual financial statement prepared by the managing directors;³

•calling in unpaid capital contributions;⁴

•repayment of supplementary contributions;⁵

•splitting, grouping and redemption of shares;⁶

•the appointment and removal of managing directors and the discharging thereof (Entlastung);⁷

•determining the guidelines for assessing and supervising the managing directors;⁸

•appointment of proxies and authorised signatories (Handlungsbevollmächtigte) for the whole business;⁹ and

•the enforcement of damage claims to which the company is entitled against the managing directors or the shareholders and relating to the establishment or the management of the company, and the representation of the company in court proceedings which the company conducts against the managing directors.¹⁰

In addition, the shareholders’ meeting has the competence to decide upon amendments to the articles of association, including amendments pertaining to the stated share capital,¹¹ and upon the liquidation of the GmbH.¹²

73. Transferring powers to other corporate bodies

As outlined above, the GmbH is very flexible where the distribution of powers amongst the respective corporate bodies is concerned. This means for instance that it is possible to transfer powers from the shareholders to an optional supervisory board, or that certain shareholders may be granted additional rights compared to other shareholders (subject to the consent of the affected shareholders). If, however, the articles of association transfer certain powers from the shareholders’ meeting to another corporate body (eg, the supervisory board), but this other corporate body is unable to act for whichever reason, the shareholders’ meeting is again responsible for taking the respective measures. In other words, the shareholders’ meeting, as the supreme corporate body, has unwritten subsidiary competence.

The shifting of responsibilities from one corporate body to another is, nevertheless, subject to certain limits. Transferring responsibilities from the shareholders’ meeting to another corporate body cannot result in a complete reversal of the position of the shareholders as the supreme corporate body. The law requires that the shareholders must retain certain core powers. These core powers generally relate to all measures which constitute a substantial intervention with regard to the economic or legal basis of the GmbH, such as for instance the sale of an essential portion of the assets of the company or a substantial change in the business activities of the company. These measures require the consent of the shareholders.¹³ Aside from this general principle, the Act on Limited Liability Companies mandatorily stipulates that a shareholders’ resolution is required in specific circumstances, these being, inter alia, amendments to the articles of association, including measures to increase or decrease the stated share capital;¹⁴ the calling in of additional contributions;¹⁵ the liquidation of the company and the appointment and removal of the liquidators;¹⁶ and changes in the corporate form (Umwandlung) based on the German Law Regulating the Transformation of Companies (Umwandlungsgesetz – UmwG). In all of these cases, a transferral of competence to another corporate body is not possible, or only under very limited circumstances.

B. Calling of shareholders’ meetings

73a. Passing of resolutions at a shareholders’ meeting

Shareholder resolutions may be passed during formally called shareholders’ meetings or outside of shareholders’ meetings (see Section 88a for details). The following sections outline the formalities which must be observed for a shareholders’ resolution to be passed during a (physical) meeting of the shareholders and when a shareholders’ meeting has to be called.

74. Responsibility for convening the shareholders’ meeting

The managing directors are responsible for convening the shareholders’ meeting.¹⁷ If the company has several managing directors, each managing director is individually entitled to call a shareholders’ meeting. In companies which are subject to one of the Co-Determination Acts,¹⁸ or which have an optional supervisory board according to the statutory regulations contained in the Act on Limited Liability Companies,¹⁹ a shareholders’ meeting may also be called by the supervisory board if the shareholders’ meeting is deemed necessary for the benefit of the company.²⁰ Shareholders holding at least 10% of the stated share capital may request the managing directors to call a shareholders’ meeting.²¹ If the managing directors refuse to call a shareholders’ meeting upon such a request, the (minority) shareholders may call the shareholders’ meeting themselves by stating the purpose and the agenda of the meeting.²²

The right to call a meeting of the shareholders may also be transferred to another corporate body by the articles of association. Typically, the right to call a shareholders’ meeting is assigned to the supervisory board or another advisory board. It may, however, also be transferred to a single shareholder or even a third person. However, according to the prevailing opinion, the right of shareholders holding at least 10% of the share capital to call a shareholders’ meeting in the event that the managing directors refuse to do so may not be excluded by the articles of association.

75. Reasons for convening a shareholders’ meeting

A shareholders’ meeting may be convened by the persons named in Section 74 for any reasonable cause which necessitates consultation between the shareholders or a subsequent resolution. It is not a prerequisite that the calling of the shareholders’ meeting is absolutely necessary or in the best interests of the GmbH. There must, however, be grounds of some kind for a meeting. As regards how often the meetings are convened, the number of shareholders and the distance from the place where the meeting is to take place must be taken into consideration. The meetings usually take place at the place of business of the GmbH. However, the articles or the shareholders may provide for convening at any other place they deem appropriate.

76. Reasons for convening the shareholders’ meeting: explicitly defined cases

The Act on Limited Liability Companies stipulates that a shareholders’ meeting must be convened in the cases explicitly defined therein.²³ Explicitly defined cases are those stipulated in the articles of association or those which apply when it is necessary to pass a resolution in connection with any of the powers accorded as per the optional list of responsibilities of the shareholders outlined above (for details see Section 72). In larger GmbHs with more than one shareholder, at least one shareholders’ meeting per year is good practice, as is the case in a stock corporation.

77. Reasons for convening a shareholders’ meeting: interests of the company

A shareholders’ meeting must be convened by the competent corporate body if such a meeting appears necessary in terms of the interests of the company.²⁴ Such a necessity is deemed present if the GmbH is in danger of suffering significant damage without the shareholders’ meeting or if the managing directors must reasonably assume that the shareholders of the company wish to pass a resolution prior to the managing directors entering into a risky or costly transaction. Generally, a shareholders’ meeting appears to be in the interest of a company if the managing directors or the competent corporate body must have reasonable grounds to believe that the shareholders would not allow the implementation of the respective matter without their prior consent. Whether this is the case depends on various factors such as the size of the company compared with the risk associated with the business in question, and the personal relationship between the managing directors and the shareholders.

78. Reasons for convening a shareholders’ meeting: loss of half of the stated share capital

A shareholders’ meeting must be convened mandatorily if the annual balance sheet or a balance sheet drawn up during the course of the business year shows that half of the stated share capital of the GmbH has been lost.²⁵ An obligation to call a shareholders’ meeting also arises if, based on their reasonable judgement, the managing directors have grounds to believe that half of the share capital has been lost. If the managing directors assume that this is the case, they may be obliged to draw up a balance sheet to evaluate whether or not their assumption is correct, unless it is obvious that this is the case.

79. Reasons for convening a shareholders’ meeting: request submitted by minority shareholders

Minority shareholders holding at least 10% of the stated share capital may also call a shareholders’ meeting if the managing directors refuse to do so upon their prior request.²⁶ When convening the shareholders’ meeting, the minority shareholders must state the facts which entitle them to call the shareholders’ meeting and communicate the topics of such a meeting.

80. Formal requirements for calling a shareholders’ meeting

According to the applicable law in this regard, shareholders’ meetings must be convened by way of registered letter to all shareholders. The invitation must be issued at least one week prior to the date on which the meeting is due to take place.²⁷ The invitation must be sent to all shareholders at their last known address.

The invitation must set forth the place and date, including the exact hour, where and when the shareholders’ meeting is to take place. The meeting date and time and the venue must be commensurate to and customary for the type and size of the company, wherein the interests of the shareholders must be taken into account, in particular the distance of the shareholders from the venue of the shareholders’ meeting and conflicting appointments. Usually, the articles stipulate the place where meetings are held (eg, the place of business of the GmbH). Additionally, the invitation must set forth the purpose of the shareholders’ meeting, in particular the issues to be discussed among the shareholders.²⁸ The shareholders must be given sufficient time to prepare themselves for the discussion and to make up their mind as to how they wish to vote on the respective topics. The topics may be amended and additional topics may be set forth on the agenda of the shareholders’ meeting at the latest three days prior to it taking place.²⁹

These formal requirements may be freely amended in the articles of association. The articles may stipulate more or less stringent requirements as regards the convening of the shareholders’ meeting. In practice, notice may not only be given by registered letter but also via facsimile or other means of communication (eg, email). The notice period is usually more than one week (typically two weeks) for ordinary meetings and a shorter notice period applies in the case of extraordinary meetings.

In the event of a violation of the provisions prescribed by statutory law or set forth in the articles of association regarding the convening of a shareholders’ meeting, the resulting shareholders’ resolution may either be contestable or void. However, if all the shareholders of the company are present at the shareholders’ meeting, either personally or by means of sending an agent (Universalversammlung), if none of the shareholders issues an objection regarding the mistakes relating to the invitation, and if the shareholders pass resolutions on the topics of the agenda, the corresponding shareholders’ resolutions are considered valid.³⁰ In other words, if claims are not asserted regarding the formal mistakes associated with the invitation and if all shareholders participate in the voting, the errors in connection with the invitation are considered remedied.

81. Formal requirements for a shareholders’ meeting

The Act on Limited Liability Companies does not establish many formal requirements with regard to the process of obtaining a shareholders’ resolution, which means that most issues must be addressed in the articles.

Each shareholder has an inalienable right to actively and passively participate in the shareholders’ meeting. This also applies in the event that a shareholder is excluded from voting on a particular topic.³¹ Additionally, a shareholder may be represented by a proxy based on a written power of attorney.³² Third parties are only entitled to participate in the shareholders’ meeting if the shareholders explicitly consent to this. Managing directors themselves have no intrinsic right to participate in a shareholders’ meeting. They are, however, obliged to appear at the shareholders’ meeting upon the request of the shareholders, which is usually the case. If a mandatory supervisory board exists, the members of the supervisory board are entitled to participate in the shareholders’ meeting.³³ In the case of an optional supervisory board, the participation right of the respective members must be established by the articles of association.

Even though not required by law, it is recommended that the articles of association of a multi-shareholder GmbH determine that each shareholders’ meeting has a chairperson and define how the chairperson is to be nominated (either by way of resolution, by way of function (eg, chair of supervisory board) or by way of other criteria (eg, age, participation in the GmbH or another way)). The chairperson is responsible for directing the shareholders’ meeting. In particular, he or she needs to ensure that all of the issues on the agenda are properly discussed and that resolutions are passed in accordance with the applicable laws.

Unlike the Stock Corporation Act, the Act on Limited Liability Companies does not generally require that minutes are taken at shareholders’ meetings unless this is mandatorily prescribed by law. In particular, this is the case when the articles of association are amended or when resolutions are passed regarding the transformation of the company’s corporate structure.³⁴ Apart from these cases, where a notarial deed must be issued, the taking of minutes at a shareholders’ meeting is nevertheless usual and standard practice. The appropriate content of these minutes is often specified in the articles of association, and usually comprises the place, time and date of the meeting, when it begins and ends, confirmation that the meeting has been properly convened, the persons present, the petitions put forward by the shareholders, the topics to be resolved, the manner and results of the voting on the respective topics and the signature of the chairperson. The articles may, however, also stipulate other formal details which must be recorded.

If one shareholder holds all the shares in the company, mandatory law requires that he or she must approve and sign the minutes immediately after passing a resolution.³⁵

C. Passing of resolutions

82. Classes of voting rights

According to statutory law, each euro of the nominal amount of a share grants one vote at the shareholders’ meeting.³⁶ The articles of association may provide for a different distribution of voting rights amongst the shareholders. It is possible to exclude or reduce the voting rights of a shareholder, or give the shareholder additional voting rights within the articles of association. In the event of such a deviation from statutory law, the consent of all shareholders whose rights will be negatively affected by such a provision is required. This consent may be given when the articles of association are drawn up or at any later point in time in connection with a change of the voting rights.

83. Proxy voting

As outlined above,³⁷ a shareholder is not required to appear personally at a shareholders’ meeting, but may send a proxy in his or her place. Unless otherwise stipulated by the articles, this form of representation requires a written power of attorney.³⁸ The articles may also set forth more stringent criteria for the participation rights and stipulate that only a personal appearance of the shareholders at the shareholders’ meeting is allowed, that is, that proxy voting is excluded. A common regulation is that a shareholder may only be represented by other shareholders or by persons practising certain professions where they are subject to a professional duty of confidentiality, such as legal or tax advisers. A written power of attorney granted to a proxy for participation in the shareholders’ meeting can, in principle, be revoked at any time. It will not prevent the shareholder issuing the power of attorney from being able to appear in person at the shareholders’ meeting and exercise his or her participation rights. If an irrevocable power of attorney were to be granted, this would be very similar to a situation in which the voting right is separated from the shareholding, which is not acceptable under German law. It would have to be considered in each individual case in question whether or not a failure to observe the restrictions in this regard is present.

84. Voting agreements and pools

Within the limits prescribed by mandatory statutory law³⁹ and standards of morality,⁴⁰ shareholders are entitled to commit themselves to exercising their voting rights in a shareholders’ meeting in a certain way. The typical situation would be when a shareholder enters into a voting agreement with another person (this person being a shareholder or a third party), thereby committing him- or herself to exercising his or her voting rights according to the instructions of such a person. Such an arrangement is often found in the form of a supplementary provision attached to a pledge or lien agreement in which the pledgee is granted the right to instruct the shareholder as to how to execute his or her voting right relating to the pledged share. The pledging of the shares does not in itself grant or transfer the voting rights in these shares.⁴¹

Also not untypical are voting arrangements between the shareholders themselves whereby the shareholders promise to exercise their voting rights in a certain uniform way. The way in which the voting right is exercised is either determined by a majority vote of the ‘pooling shareholders’, by instructions given by one shareholder, or by any other way stipulated in the pooling agreement between the shareholders. By entering into such a pooling agreement, the shareholders establish a civil law partnership (Gesellschaft bürgerlichen Rechts). A valid voting arrangement may be enforced before the courts. It is, however, highly disputed among legal scholars and the courts whether an arrangement stipulated in such a voting agreement may also be enforced by way of injunctive relief.

Apart from the limits prescribed by statutory law and standards of morality, voting arrangements or voting pools may not be used to circumvent the exclusion of the voting right of one shareholder with regard to a certain resolution.⁴²

85. Fiduciary duties to vote in a certain way

All shareholders are in principle entitled to exercise their voting rights at the shareholders’ meeting at their sole and unlimited discretion. In certain individual cases, shareholders may, however, be restricted in terms of the way they exercise their voting right, in particular on the basis of their fiduciary duties (also called duty of loyalty) towards their fellow shareholders and the GmbH.⁴³ The fiduciary duties may even result in the consequence that a shareholder is obliged to exercise his or her voting rights in a certain way in order to prevent damages occurring to the company or other shareholders. If a shareholder votes contrary to his fiduciary duty, the respective vote is considered void. It will not be taken into account when establishing the outcome of the specific shareholders’ resolution. If the vote is taken into account and plays a decisive role as regards the outcome, the resolution is contestable.

86. Exclusion of voting rights

Under certain circumstances, a shareholder might not be entitled to make use of his or her voting right in a shareholders’ meeting with regard to a specific resolution to be passed. If a case such as this applies, the shareholder, or his or her agent or proxy, may not participate in the respective voting process. The same applies if solely the agent but not the shareholder is subject to exclusion rights of this nature. The reason for the exclusion of the voting right is to avoid an obvious collision of interests between the interests of the shareholder in question on the one hand and those of the company and the other shareholders on the other. No person is entitled to decide whether the company should enter into business with him or her or be a judge in his or her own case. The exclusion of the voting right, however, does not exclude the right of the shareholder to participate in the shareholders’ meeting and to speak on the issue. The shareholder is only excluded from casting his or her vote.

The first scenario in which a shareholder is excluded from taking part in the voting process is when a resolution is to be passed on whether he or she should be discharged (Entlastung).⁴⁴ This scenario comprises situations in which a shareholder additionally holds an office as managing director or as a member of the supervisory board, liquidator, etc. The shareholder will not only be excluded from voting if the shareholders’ meeting is to reach a resolution on the discharging of an individual member of the corresponding corporate body (which it is entitled to do), but also if the respective corporate body to which the shareholder belongs is to be discharged in its entirety. Whether or not the exclusion also applies if the shareholders’ meeting reaches a resolution on discharging a fellow member of the respective corporate body is a matter of controversy.

Secondly, shareholders are not entitled to exercise their voting rights if this results in them being exempted from liability.⁴⁵ The term ‘exemption’ must be interpreted broadly and includes any and all measures by means of which the shareholder is even partly relieved of such liability (also deferral of payment). The word ‘liability’ must equally be interpreted broadly and means any and all liabilities which may arise in the relationship between the company and a shareholder, irrespective of its legal basis. The exclusion of the voting right also applies to security grantors who are also shareholders and who provide security for a shareholder liability from which the respective shareholder in question would be exempted.

Thirdly, the voting right may not be exercised if the resolution relates to a legal transaction (Rechtsgeschäft) to be entered into between the GmbH and a shareholder.⁴⁶ A legal transaction comprises agreements of all kinds as well as unilateral declarations (such as, eg, revocation, rescission, declaration of termination, etc) and the retroactive approval of legal transactions into which the company and the shareholder have entered.

In the last scenario in this regard, a shareholder is prohibited from casting his or her vote if the shareholders decide to initiate or settle a legal dispute with this shareholder.⁴⁷ A legal dispute comprises proceedings of any kind, not only court proceedings but also arbitration proceedings and any other extrajudicial proceedings or proceedings preparatory to trial in court (eg, foreclosure or injunctive relief). In the same way, the initiation of a legal dispute not only comprises measures leading to a court trial but also other measures prior to such proceedings, such as the request of payment, threatening court proceedings etc. Finally, the settlement of a legal dispute comprises any and all measures leading to the conclusive termination thereof (eg, settlement or waiver).

In addition to the cases cited above, a shareholder who at the same time acts as a managing director is also excluded from taking part in the voting process if a resolution is to be reached regarding his or her removal as managing director ‘for cause’. The typical example for such a resolution is the aforementioned removal of a managing director for cause or the termination of his or her service agreement for cause. In these cases, the shareholder in question is not entitled to vote, as this would mean that he or she would be a judge in his or her own case.

Nevertheless, shareholders may always exercise their voting rights when the shareholders’ meeting votes on a ‘social act’ (Sozialakt). Social acts are measures which relate to internal company relations between the shareholders and the legal transactions relating thereto. Social acts are, in particular, the appointment and removal of managing directors (unless removed for cause, see previous paragraph) and members of the supervisory board, the forfeiture of a share, resolutions on the liquidation of the company, amendments to the articles of association, entering into control or profit and loss pooling agreements, transformation agreements, approval of the transfer of shares etc. This means, in particular, that a shareholder may vote in his or her own favour to become a managing director of the GmbH.

The statutory regulations on the exclusion of the voting right may be freely amended in the articles of association if the reasons for an exclusion are specified in detail. On the other hand, a limitation or even exclusion is only possible to a very limited extent. The details in this regard remain an issue of great contention in jurisprudence and amongst scholars. It is, however, recognised that in the case of discharge, of exemption from a liability and with regard to all measures taken for cause against a shareholder, the exclusion of the voting right is mandatory law which may not be amended by the articles of association.

87. Majority requirements

Unless otherwise stipulated by law or the articles of association, the resolutions in a shareholders’ meeting are passed with a simple majority of the votes cast.⁴⁸ Votes are given with either a ‘yes’ or a ‘no’. Abstentions from voting are not taken into account. Each one euro of the nominal amount of a share grants one vote.⁴⁹

A qualified majority of three quarters of the votes cast is required for the passing of important resolutions such as, for example, amendments to the articles of association (including capital increase or decrease),⁵⁰ the liquidation of the company,⁵¹ measures under the Law Regulating the Transformation of Companies (Umwandlungsgesetz), the conclusion of domination or profit and loss transfer agreements, the exclusion of a shareholder, etc.

The articles of association may stipulate other majority requirements. In cases where mandatory law requires (at least) three quarters of the votes cast, the articles may increase, but not decrease, the percentage of the votes required for a resolution to be passed. In all other cases, where a simple majority is sufficient, the articles of association may provide for an increase of the votes cast for the passing of resolutions. It is, however, recognised that it is not possible to reduce the threshold for the passing of resolutions to a level below the minimum requirement for a simple majority.

88. Formal declaration and announcement of resolutions

Under German stock corporation law, a resolution passed by the shareholders’ meeting only becomes valid if it has been formerly declared (Feststellung) and announced (Verkündung).⁵² The Act on Limited Liability Companies does not require this kind of formal declaration and announcement in order for shareholders’ resolutions to become valid. The articles of association may, however, provide otherwise. If a formal declaration of a resolution is announced at a shareholders’ meeting and accordingly recorded in the minutes, the resolution passed with the content as described in the minutes is binding on the shareholders even if the content of such a declaration deviates from what has actually been resolved. If the declaration deviates from the resolution passed, the resolution must be challenged or reversed by a corresponding reverse resolution in order to render null and void the shareholders’ resolution underlying the declaration.

88a. Passing of resolutions outside of shareholders’ meetings

Shareholders’ resolutions may also be passed outside of a shareholders’ meeting. In this regard, the Act on Limited Liability Companies requires that all shareholders either agree in writing upon the content of the resolution to be passed or agree in writing to a resolution being passed outside the shareholders’ meeting.⁵³ The written form requirement is also deemed satisfied if a vote is cast by way of facsimile or if a circular has been signed by all shareholders.

Typically, the articles of association further define whether and how a shareholders’ resolution may be passed outside of a shareholders’ meeting which takes place in person. In this context, other means of communication for the passing of resolutions are permitted and stipulated, for example, telephone, email or video-conference. A resolution may also be passed by way of circular resolution (Umlaufbeschluss). In some cases, however, the passing of a resolution outside of a shareholders’ meeting is not allowed and a physical meeting of all shareholders or their proxies is required. In particular, this is the case with resolutions to be passed under the Law Regulating the Transformation of Companies or otherwise requiring the participation of a notary public (ie, amendments to the articles of association). Resolutions passed outside of a shareholders’ meeting should subsequently be recorded in the minutes of the meeting.

D. Defective shareholders’ resolutions

89. General

The Act on Limited Liability Companies does not contain any particular provisions regarding defective shareholders’ resolutions and their consequences. It also does not contain regulations on how to challenge such resolutions. In the jurisprudence and amongst scholars this gap has been filled by applying the regulations contained in the Stock Corporation Act⁵⁴ accordingly and adapting them to suit the particular characteristics of the GmbH where necessary.

Both in a GmbH and in a stock corporation, a distinction can usually be drawn between four different types of resolution: non resolutions or mock resolutions (Nichtbeschlüsse and Scheinbeschlüsse), invalid resolutions, void resolutions and contestable resolutions.

90. Defective shareholder resolutions: non or mock resolutions

These kinds of ‘resolutions’ only appear to be shareholders’ resolutions. In fact they are so obviously defective that they are not even considered resolutions and no one must be bound by them. In other words, ‘resolutions’ of this nature are immediately recognisably invalid. By way of example, the courts have qualified the following situations as constituting resolutions which only have the appearance of being shareholders’ resolutions: the calling of a shareholders’ meeting by a person who has no power to do so (eg, a third party which does not hold any share in the GmbH) and the passing of resolutions by non-shareholders or by shareholders involving the participation of several non-shareholders. If such a non-resolution is passed, it does not have any legal effect and anyone affected by the resolution (ie, also third parties) is entitled to claim that it is invalid without having to file a motion in court.

91. Defective shareholder resolutions: invalid resolutions

Invalid resolutions are resolutions which fail to satisfy one or several conditions which must be fulfilled in order for the resolution to become valid. A condition of this nature could for instance be the necessary consent of certain shareholders or of third parties. Another example in this regard would be when an agent without proper authorisation participates in the resolution and the consent of the represented shareholder has not yet been given. Until this consent is granted, the resolution remains provisionally invalid (schwebend unwirksam). As soon as the requisite condition for the resolution has been satisfied, the resolution becomes valid. If, on the other hand, the unsatisfied condition is not going to be satisfied any more, the resolution becomes ultimately invalid and void.

92. Defective shareholder resolutions: void resolutions

The German stock corporation law sets out certain serious errors which may occur in connection with a shareholders’ resolution, making the resolution null and void.⁵⁵ It is recognised that a shareholders’ resolution of a GmbH may be null and void under the same circumstances. The grounds set out in the Stock Corporation Act leading to a shareholders’ resolution becoming null and void are mandatory law and may neither be extended nor limited by the articles of association.

First, a shareholders’ resolution is considered void if it has been passed in a meeting which has not been properly convened.⁵⁶ Examples for defective notices of meetings would be the convening of a shareholders’ meeting by a person who is not competent or when there is a failure to properly invite all shareholders. This consequence, namely the resolution being rendered null and void, will, however, not apply in the event that all of the shareholders appear at the shareholders’ meeting and none of the shareholders contradict the passing of resolutions during the meeting.

Secondly, a shareholders’ resolution is deemed void if a notarisation of the resolution is required by law and the notarisation has not been undertaken.⁵⁷ As opposed to the case where a stock corporation is concerned, where all shareholders’ resolutions must be notarised, the resolutions of a GmbH only need to be notarised if this is explicitly prescribed by mandatory law. Included among the important cases in which notarisation to this effect is required are amendments of the articles of association,⁵⁸ resolutions under the Law Regulating the Transformation of Companies (Umwandlungsgesetz) and resolutions regarding the issue of entering into domination, or profit and loss transfer agreements.

Thirdly, resolutions are considered void if they are not compatible with the character of a GmbH or if the content of a resolution violates regulations which are either exclusively or predominantly designed to protect the interests of the creditors of the company or if these have been adopted in the public interest.⁵⁹ Given the broad wording, it is difficult to establish general rules as to when a resolution will be void under this provision. It must be determined on a case-by-case basis whether a resolution violates regulations which are in force to protect the interests of creditors or of the general public. One example of a violation of regulations adopted in the interest of the creditors of the company would be shareholders’ resolutions which violate mandatory statutory rules on the raising and maintenance of the share capital.

A shareholders’ resolution may also be void if, by way of its content, it violates standards of morality (gute Sitten).⁶⁰ Again, given the extensive scope of this provision, it is necessary to examine on a case-by-case basis whether or not a resolution violates this standard. However, a violation of this nature will not occur often, since the requirements associated with this standard are rather high. Additionally, a shareholders’ resolution is considered void if it has been declared so by a court as a result of an action of opposition (Anfechtungsklage).⁶¹ A shareholders’ resolution is further void if the respective resolution has been deleted from the commercial register based on a final court decision.⁶²

In addition to these cases, the Stock Corporation Act sets out further grounds leading to the invalidity of a shareholders’ resolution which also apply accordingly in the case of a GmbH. These further grounds for the invalidity of a resolution include, for example, the election of members of the supervisory board subject to certain serious violations of statutory law,⁶³ resolutions on the use of the net profits for the financial year if the resolution on the approval of the annual financial statement is null and void,⁶⁴ and resolutions on the approval of the annual financial statement if this resolution is subject to major defects.⁶⁵