Shareholder resolution

Shareholder resolution / Gesellschafterbeschluss

June 11, 2024

The important decisions of a German limited liability company (GmbH) are made jointly by the shareholders. Their will is the foundation of the company strategy, the company management and the company's orientation and thus the company itself. This will of the collective is derived and bundled by the shareholder resolution.

When is a shareholder resolution required?

The shareholders of a GmbH have to make the fundamental decisions of the company themselves. Among other things, they are mandatorily responsible for

Calling in additional contributions, Section 26 I of the Limited Liability Companies Act (GmbHG)
Exclusion of shareholders
Amendment of the shareholders' agreement, § 53 GmbHG
Dissolution and liquidation of the GmbH, § 60 I No. 2 GmbHG
Measures in accordance with the German Reorganisation Act (UmwG), § 13 I UmwG

The other competences are determined by the articles of association, § 45 I GmbHG and, in the absence of such a provision, by §§ 46, 45 II GmbHG. Section 46 GmbHG regulates

Adoption of the annual financial statements and appropriation of the result, No. 1
Disclosure and approval of the annual financial statements, No. 1a
Approval of consolidated financial statements, No. 1b
Calling in contributions and repayment of additional contributions, No. 2 and 3
Regulation of shares, No. 4
Appointment and dismissal of managing directors and their discharge, No. 5
Measures for auditing and monitoring the management, No. 6
Appointment of authorised signatories and authorised agents, No. 7
Assertion of claims for damages and legal representation, No. 8

Where is a shareholder resolution made?

Resolutions are generally passed at the shareholders' meeting. It is not necessary to hold the meeting if all shareholders agree in text form with the provision to be made or with the written submission of votes, Section 48 II GmbHG and the resolution does not have to be passed within the shareholders' meeting by law. The articles of association can also regulate combined resolutions where only some of the shareholders vote in text form or in writing.

How is a shareholder resolution adopted?

Proposed resolution

Logically, a resolution first requires a resolution proposal. This can be either positive or negative and must be able to be decided with a yes or no vote. The content of the proposed resolution must at least be covered by the agenda in order to enable the shareholders to prepare properly. Every shareholder present or represented is entitled to submit a motion. This follows from the right of every shareholder to participate. This applies regardless of voting rights and therefore also applies to those who are not authorised to vote on the specific resolution. The shareholders' meeting does not have to deal with motions from absentees unless the articles of association provide for this. It should be noted that, unless otherwise stipulated in the articles of association, only shareholders and representatives have the right to propose motions. This means that managing directors and chairpersons of meetings who are not also shareholders are not authorised to submit motions. The law does not stipulate a specific form. The right to submit motions does not entail a right to a substantive decision, meaning that an adjournment or a decision not to pass a resolution is generally possible. The right to participate also gives every shareholder the right to comment on the matter. However, there is no legal obligation to discuss the motion.

Voting

The law does not contain any provisions on the quorum of the shareholders' meeting, meaning that without a provision in the articles of association, a quorum is present even if only one shareholder is present. In order to prevent this, the articles of association can contain provisions on the quorum, such as a minimum number of shareholders or a minimum proportion of the share capital.

If a specific voting procedure is not regulated in the articles of association or the rules of procedure, the chairperson of the meeting or the shareholders present will decide on this. There are open and secret ballots. The order of voting is regularly specified in the agenda without being legally binding. If several motions for resolutions are factually related, it is permissible to summarise them and have them voted on together.

According to § 47 I GmbHG, the majority of votes cast is generally decisive. The shareholder's voting right is based on his participation in the share capital, whereby each euro of a share grants one vote, § 47 II GmbHG. However, the share capital can also be decoupled from the shareholding by the articles of association. For example, voting can be based on the number of shareholders (present) or individual shareholders can be granted multiple voting rights. A restriction to a maximum voting right is also permissible.

In simple terms, a majority is achieved if there is at least one more vote in favour than against, whereby abstentions and invalid votes are not counted. In the event of a tie, the motion is rejected unless the articles of association provide otherwise. It is possible to increase this simple majority for all or some resolutions by means of a clear provision in the articles of association in various ways. For example, absolute majorities can be regulated, whereby the total of all votes and not just the votes present are decisive. Qualified majorities such as two-thirds or three-quarters majorities and a unanimity requirement can also be stipulated. It is not possible to reduce a resolution to a majority of no votes.

In exceptional cases, in particular when amending the articles of association, the law stipulates a qualified majority of three quarters of the votes cast:

Increase and reduction of the share capital, § 53 II GmbHG
Dissolution of the company, § 60 I No. 2 GmbHG
Conversion of the company into another legal form in accordance with the UmwG
Transfer of the total assets
Exclusion of a shareholder

Here too, an increase is generally possible. According to prevailing opinion, an exception should apply to the dismissal of a managing director for good cause. A reduction of the statutory qualified majority is only possible in exceptional cases if this does not conflict with the protection of minorities.

The effectiveness of a shareholder resolution may also be dependent on the consent of all, individual or certain groups of shareholders or may be made dependent by the articles of association. For example, the consent of all shareholders is required to change the purpose of the company, to conclude a domination and profit transfer agreement and in the case of personal liability following reorganisation. The consent of the individual shareholder concerned to protect their individual interests, for example in the event of the subsequent imposition of obligations or the curtailment of special rights.

Further formal requirements

Resolutions amending the articles of association require notarisation, § 53 III 1 GmbHG. All other shareholder resolutions are not subject to any formal requirements unless otherwise stipulated in the articles of association. Minutes are only required for a one-person GmbH, a company with only one shareholder. This serves as evidence and is therefore generally recommended for all shareholder resolutions. In contrast to the German Stock Corporation Act (AktG), Section 103 II of the GmbHG does not require the result of the resolution to be formally recorded. However, it is the rule that the chairman of the meeting formally determines and announces the result within the shareholders' meeting. This means that the resolution is provisionally binding with the content adopted (acceptance or rejection of a proposed resolution). Without such a resolution being adopted, the result of the resolution may be unclear. The shareholders can then have the result of the resolution determined by the court by means of an action to determine the resolution in accordance with Section 256 of the Code of Civil Procedure. An entry in the commercial register is only necessary in exceptional cases, such as for resolutions amending the articles of association, § 54 III GmbHG.

Incorrect shareholder resolutions

The GmbHG does not contain any provisions on the legal consequences of a defective shareholder resolution. Therefore, the rules of the stock corporation on the nullity and contestability of resolutions of the general meeting (the equivalent of the shareholders' meeting at the stock corporation) are applied in accordance with Sections 241 et seq. of the German Stock Corporation Act (AktG), insofar as the structural characteristics of the GmbH do not prevent this. A distinction must be made between an action for annulment and an action for rescission in this context.

Action for annulment

The nullity of a shareholder resolution is asserted by filing an action for annulment. In the case of resolutions not to be entered in the commercial register, the action is not subject to a time limit. In the case of facts subject to registration, a three-year period applies after registration in accordance with § 242 II 1 GmbHG. After the deadline has expired, the situation is cured. Any shareholder can be the plaintiff, irrespective of whether they attended the shareholders' meeting. The defendant is the GmbH itself, meaning that the action must be addressed to it as the opposing party. A shareholder resolution is null and void if there are particularly serious deficiencies in the resolution. These include, in particular, the convening of a meeting by an unauthorised person, failure to invite individual shareholders, serious formal defects in the invitation letter and failure to comply with a prescribed notarial certification.

Action for cancellation

In practice, defective shareholder resolutions can only be contested. Grounds for avoidance are all violations of the law and the articles of association that do not already lead to nullity. In particular, less serious defects in the convening of the meeting, a factually incorrect determination of results and the violation of the shareholder's right to information. There are also differences to the action for annulment with regard to the time limit for bringing an action. This is based on the model of the one-month period in Section 246 I AktG. The period begins when the shareholder becomes aware of the content of the resolution passed. Care must be taken to introduce grounds for contestation in their essential factual core into the legal dispute within the deadline. Rules in the articles of association regarding the time limit are permissible, but must not lead to a shortening of the shareholder's right of avoidance.

*If we use the generic feminine or the generic masculine in the future for better readability, this expressly includes all genders.