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Shareholder dispute and confiscation of a share

Shareholder disputes are very common in legal practice as a specialist lawyer for commercial and corporate law. Shareholders, who founded and successfully run a joint company as friends, find themselves in a fierce shareholder dispute and, out of sheer distrust, find no way to resolve a conflict. Mutual accusations, often emotionally charged, lead to a blockage in the company and violent legal disputes. If there is no longer a common path, one of the shareholders often becomes active and tries to bring about a separation by excluding another shareholder. A frequent case of implementing the exclusion is the confiscation of the share or shares held by a shareholder. Here I meet as Specialist lawyer for commercial and corporate law often mistakes, because often applicable corporate law and the interlocking of GmbH statutes and GmbHG are not sufficiently observed.

The exclusion of a shareholder through confiscation

The exclusion of a shareholder through confiscation of a share is linked to various requirements, all of which must be met if the confiscation is to stand up in court. Anyone who is not only involved at shareholder level but is also a managing director has advantages in a shareholder dispute.

regulations in the articles of association

The GmbHG and that in general corporate law contain very few regulations for resolving a shareholder dispute. Which actions are therefore open to a shareholder often results from the regulations of the GmbH articles of association. Courts therefore regularly look at the precautions taken by the company when making their decisions in shareholder disputes social contract meets.

The important reason

The exclusion of a shareholder by withdrawing his share is permissible if there is an important reason. What is an important reason is not defined in the GmbHG. An important reason exists according to the case law on company law if the continuation of the company with this shareholder is unreasonable for the other co-partners due to the person or the behavior of the shareholder concerned. Reasons for confiscation are often mentioned in the partnership agreement. These are regularly the insolvency of the shareholder, the attachment of his shares, the death of natural persons and breaches of duty. In a shareholder dispute, breaches of duty are regularly brought up - whether justified or not. In legal practice, breaches of non-competition clauses and acts of embezzlement, in particular “reaching the till”, are the grounds considered to be the most serious by the courts. Breaches of duty by a managing partner entitle to be dismissed as managing director for good cause, but not automatically to exclusion as a shareholder.

A special feature is the two-person company. There, special requirements are placed on the important reason. It may already be sufficient that the personal relationship between the two partners is irretrievably broken. However, the collection of a share is only permissible if the withdrawing shareholder has not also provided an important reason through his behavior or has not contributed to the quarrel to a large extent himself. If two shareholders are hopelessly at odds - which is regularly the case before legal advice is sought - it is difficult to clarify whether it was really only the shareholder to be excluded who had an important reason.

Collection by shareholder resolution

The articles of association or the articles of association of the GmbH regularly contain regulations on exclusion through confiscation. The exclusion requires a shareholder resolution in a shareholders' meeting is to grasp. Since the shareholder to be excluded will generally not agree to the confiscation of his shares, he will challenge and challenge the shareholders' resolution in court by means of a lawsuit. For a successful challenge, it is sufficient that the formalities, i.e. the form and deadline regulations of company law, have not been complied with. It is therefore advisable to obtain advice from a specialist lawyer for commercial and corporate law who is experienced in shareholder disputes when preparing for the shareholders' meeting.

Each general meeting is to be convened by the GmbH managing director. The summons deadlines and the correct form, e.g. by registered mail, must be observed. The invitation to the general meeting must contain the agenda; The agenda item on this must also contain exclusion or withdrawal for good cause with a comprehensible description of the good cause. All shareholders must be able to prepare for the shareholders' meeting. 

The shareholder to be excluded may take part in the shareholders' meeting and comment on the important reason. However, the affected shareholder may not participate in the resolution or the vote on the exclusion. Because according to the applicable company law of the GmbHG, no shareholder may be a "judge in his own right". When the confiscation is effective is regularly regulated in the articles of association. The confiscation is regularly regulated there as effective immediately, even if no severance payment has yet been paid. 

Other important points when collecting

The affected GmbH business share is destroyed by the confiscation. As a result, the sum of the remaining GmbH shares falls short of the number of share capital, often 25,000 euros. The articles of incorporation therefore regularly contain regulations as to whether remaining shares are topped up, i.e. increased in their amount. It should be noted here that according to the applicable company law, the existing GmbH shares are topped up in their previous ratio and must be denominated in full euros. When preparing for the shareholders' meeting, you have to do some calculations. If the calculation does not work out, the exclusive GmbH shareholders have to think about alternatives. 

Alternatives to confiscation and severance pay

The confiscation is just one of several ways to exclude a shareholder from a GmbH. Alternatively - depending on the provisions of the Articles of Association - it can also be decided that the share of the shareholder to be excluded is taken over by the company or is to be assigned to another person, including a co-shareholder. In each case of exclusion, the shareholder concerned is entitled to compensation. Here, too, the articles of incorporation regularly stipulate regulations, for example for “good leavers” and “bad leavers”. According to the GmbH law, it must be ensured that the compensation can be paid from uncommitted assets of the company when the company share is withdrawn. In the case of assignment, the third party who takes over the business share must pay the compensation. The termination of the company will only offer a solution in rare cases. It is true that every shareholder can terminate his participation and withdraw from the company. However, the disruptive partner then remains in the company.

The important function of the list of shareholders

Company law clearly stipulates that only the shareholder named in the list of shareholders is a shareholder. And as long as someone is named in the list of shareholders, they are also legally shareholders. If there is a change in the number of shareholders, it is crucial to submit an updated list of shareholders to the commercial register. The withdrawal of a share must therefore be changed in a further step by changing the list of shareholders in the commercial register. The managing directors are responsible for submitting an amended list of shareholders to the registry court where the commercial register is located. Exclusive shareholders must therefore instruct the managing directors to submit an amended list of shareholders to the commercial register via a notary's office.

The exclusion through confiscation or assignment is only completed on the basis of the list of shareholders included in the commercial register. The submission of a new list of shareholders is therefore essential, but has a "boomerang" effect. Because the affected GmbH shareholder can take countermeasures.

Countermeasures by the affected shareholder

The shareholder affected by a confiscation naturally has the opportunity to defend himself against his exclusion as a GmbH shareholder. 

Complaint against confiscation order

If the affected shareholder wants to defend himself against the confiscation, he must file a lawsuit against this in court. He must file a complaint with the competent court within one month of the GmbHG or within the appeal period specified in the articles of association after he has become aware of the confiscation order. This is aimed at determining the ineffectiveness or nullity of the shareholders' resolution. The defendant company bears the burden of proof for the important reason. However, it can take a very long time, sometimes several months, before there is an oral hearing and a judgment in the dispute in these main proceedings. The shareholder dispute smolders in this phase; no shareholder knows how the shareholder dispute will be decided. Even in the first oral hearing, a decision is often not reached. "Momentum" comes into the shareholder dispute, however, if the GmbH managing director has submitted an amended list of shareholders to the commercial register.

Preliminary injunction against the change in the list of shareholders

The affected shareholder must therefore also take action against the change in the list of shareholders. Because once this has been published in the commercial register after it has been submitted, the shareholder is no longer legally a shareholder, even if the shareholder dispute in the main proceedings about the contestation of the confiscation resolution has not yet been decided. As a result, there may be further changes in the number of shareholders, for example through targeted transfers of shares or restructuring. The shareholder will then not get his shares back, even if he wins the rescission proceedings in court under company law and GmbHG!

Furthermore, the register court does not check whether the list of shareholders according to GmbHG and company law is correct. If an application for the publication of a new list of shareholders is received by the register court, it is only checked whether it is formally correct. If the list of shareholders is consistent, it is filed in the commercial register. There is therefore no possibility for the departing shareholder to file an application against this with the registry court. 

The affected shareholder must therefore also apply to the court for an injunction. With this injunction, the court prohibits the company from submitting an amended list of shareholders to the commercial register. In this procedure, the shareholder as the applicant must demonstrate that it is more than likely that he will win the action for rescission. With such an overriding probability, the court will usually issue an injunction against the GmbH as the opponent, precisely to avoid the negative consequences of a changed list of shareholders. 

An injunction only temporarily regulates the current situation. The departing applicant can usually receive it within a few days, even if the company must have an opportunity to comment before it is issued. However, the time limits within which the company can argue against an application for an injunction are quite short. An oral hearing does not usually take place in the case of an injunction. As a specialist lawyer for commercial and corporate law, quick action on several levels is therefore required.

If an amended list of shareholders has already been submitted to the commercial register, according to current case law, in particular that of the Munich Higher Regional Court, the shareholder concerned can even request that the amendment to the list of shareholders be withdrawn. The GmbHG gives the list of shareholders a very strong effect, which also serves to protect the departing shareholder.

Special constellation in the two-person society

In the two-person society, the legal situation becomes even more complicated. Because the other shareholder, if he is a GmbH managing director, can also invite to a shareholders' meeting and also effect the confiscation of the shares of the shareholder who excluded first. The above statements therefore apply to each of the two companies. Everyone must defend themselves against the confiscation of their participation with an action for rescission and at the same time apply for an injunction against the change in the list of shareholders. Consequently, four court cases are pending. If the dismissal as managing director is pursued at the same time, an action against the shareholder resolution must be filed again and an application for an injunction must be made that the dismissal as managing director is not entered in the commercial register.


Shareholder disputes are very complex in terms of company law, because measures are required at different levels and thus a uniform strategy that includes the countermeasures of the other side. 

Anwalt Gesellschaftsrecht und Handelsrecht

dr Andrelang, LL. M

Specialist lawyer for international business law

Specialist lawyer for commercial and corporate law


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