OGH: No Removal of Managing Director by Liquidator

Feb 23, 2024 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has clarified that an insolvency administrator does not have the power to dismiss a managing director in the insolvency of a shareholder of a limited liability company (GmbH).

The original case was about the opening of insolvency proceedings in respect of the assets of the sole shareholder and sole director of a GmbH. The insolvency administrator who had been appointed for this purpose then decided to remove the previous managing director from office and to appoint a new managing director. The new managing director filed an application for his appointment to be entered in the company registry.

The Commercial Register Court, however, refused to register him, stating that appointing and dismissing managing directors are not legal acts concerning a company’s assets, i.e., such actions are to be carried out by the debtor and not by the insolvency administrator. Therefore, this invalid action made by the administrator did not constitute a basis for registering.

The OGH used this case to clarify the tension between two decisions (1 Ob 255/36 = SZ 18/55 and 6 Ob 188/99m) and decided the following:

A debtor’s share in a GmbH belongs to the bankruptcy estate, but he remains a shareholder until the realisation of his share. His rights as a shareholder, in particular his right to vote, are exercised by the insolvency administrator in matters relating to the assets. According to case law, dismissing the managing director is a purely internal organisational measure which in itself does not affect the financial situation of the company. It does not constitute a disposal of the debtor’s assets. Therefore, the insolvency administrator cannot carry out such a dismissal. Possible practical effects of the managing director on cooperation with the insolvency administrator are also irrelevant.

The contrary view expressed in the earlier decision 1 Ob 255/36 was justified by the fact that any exercise of voting rights is to be carried out by the insolvency administrator as an administrative measure. However, the OGH expressly rejected this decision because such a decision does not sufficiently consider the fact that the shareholder is only excluded from acts affecting the insolvency estate.

OGH 6 Ob 62/23w (17 January 2024)