GER: BGH on GmbH Shareholders’ Statutory Voting Ban

Oct 20, 2023 Benn-Ibler Rechtsanwälte

Shareholders of a German limited liability company (GmbH) who together hold all the shares in the company are prohibited from voting on a resolution to initiate legal proceedings against another company. No one may be a judge in his own case, according to the Federal Court of Justice (Bundesgerichtshof, hereinafter BGH).

In the case at hand, one company had accused another of unlawful competition. The two companies were tightly interwoven. Two shareholders held shares as limited partners in a limited partnership (GmbH & Co KG) as well as half of the shares in the general partner (GmbH). The shareholders therefore refused to assert claims for damages against the GmbH and thus against themselves at a shareholders’ meeting. The plaintiff is a shareholder of the defendant GmbH and is now seeking the annulment of the resolution on the rejection of the claim for damages.

The BGH has now ruled as follows:

In the vote on the shareholders’ resolution, the shareholders would have been subject to a prohibition on voting pursuant to Section 47, Subsection 4, Sentence 2, Case 2, of the German GmbH Act. A shareholder who is to be discharged or released from a liability by the passing of a resolution does not have a voting right in this respect and is not entitled to exercise such a right on behalf of other shareholders. The same applies to a decision concerning the execution of a legal transaction or the commencement or settlement of a legal dispute against a member.

It was irrelevant whether the claim for damages was legally required, contrary to the opinion of the court of appeal. The principle that one cannot be a judge in one’s own case also affected the decision on the enforcement of any claims for damages arising from the anticompetitive behaviour, since the company was entirely in the hands of the shareholders with voting rights.

Votes cast contrary to the prohibition to vote were therefore invalid and not counted. An error in the determination of a resolution as a result of an incorrect counting of the votes is present if the error is causal for the determined result of the resolution. This was found to occur here. The negative resolution would not have been adopted if the votes had been counted correctly.

BGH, II ZR 13/22 (8 August 2023)