OGH on the admissibility of compensation clauses of a public company in the course of a reorganization

Jan 13, 2021 Benn-Ibler Rechtsanwälte

In the course of the conversion of a limited partnership (Kommanditgesellschaft, KG) into a public limited company (Aktiengesellschaft, AG), two partners left the KG. The Austrian Supreme Court (Oberster Gerichtshof, OGH) ruled on the question of what the wording "reasonable compensation" stipulated in the articles of association actually meant.

The shareholders' meeting of the KG, which was run as a family business, decided by a large majority to convert the KG into an AG. The plaintiffs, who did not agree with the change of legal form, subsequently left the company and received a severance payment which corresponded to 4.1 times the nominal value of their shareholdings in the KG. According to the defendant, this method of calculation had been used as a basis for the previous transactions in the family association.

However, since the articles of association stipulated that departing shareholders should receive an "appropriate compensation", the former shareholders sued for the difference between the compensation actually received and the market value of the shares at the time.

The OGH ruled that it was contrary to public policy to determine the appropriate compensation with the price that was achieved when the shares were sold to other family members. In the case of the KG, the articles of association had to be interpreted objectively - as in the case of corporations. Accordingly, the interpretation of the term "reasonable compensation" must be based on the wording. The true will of the shareholders does not play a role.

However, the limitation of the compensation to 4.1 times the nominal amount, as advocated by the defendant, was not even close to being apparent from the wording of the articles of association. Moreover, it would have been easy to formulate the clause accordingly so that it would have been clear to all shareholders how the amount of the settlement was calculated.

Since the OGH considers the defendant's interpretation (4.1 times the nominal amount) to be contrary to public policy because it is not covered by the wording of the articles of association, the plaintiffs are entitled to an increased settlement amount.

OGH 6 Ob 96/20s (25.11.2020)