As a specialist lawyer for commercial and corporate law, every shareholder dispute presents a special challenge. Every shareholder dispute is a complex problem in GmbH law, which often has a significant impact on the stability and success of a company. conflicts between shareholders can have various causes, including differences of opinion about the strategic direction, unclear provisions in the articles of association or personal differences. GmbH foundation few shareholders think that a heated dispute can arise between them. This article looks at the solution of a potential dispute and various strategies that can be used to deal with shareholder disputes and that can be taken into account by the shareholders' meeting in the articles of association when the company is founded. This is especially true for a dispute that frequently occurs in two-person companies. In particular, mediation procedures in which all aspects of a shareholder dispute such as dismissal as managing director, the withdrawal of a share, the calculation and payment of a compensation can be clarified among the co-shareholders in compliance with tax law, regularly proves its worth in a shareholder dispute.
prevention of shareholder disputes
In order to prevent or at least minimize such conflicts, preventive legal measures are crucial. The best strategy for dealing with shareholder disputes is therefore prevention. This can be achieved through clear and comprehensive regulations in the social contract can be achieved when the GmbH is founded. The partnership agreement should not only clearly define the rights and obligations of the partners, but especially for rights related to management, decisions and resolution majorities, the distribution of profits and the withdrawal of a partner.
Clear regulations in the partnership agreement
The clearer a regulation is in the partnership agreement, the less disputes arise over its interpretation and scope. The exclusion of a partner or the withdrawal of his shares is only permissible if there is an important reason that makes it unreasonable for the other partners to continue with the partner. When this is the case is decided in each specific situation according to case law. What is acceptable under company law in one GmbH may justify exclusion in another GmbH. It is therefore advisable to give examples of important reasons in the partnership agreement. Important reasons include breach of trust, violation of a non-competition clause or the thwarting of a business opportunity.
Voting rights, which are usually based on the participation of a GmbH shareholder in the GmbH's share capital, can be weighted differently for certain regulatory areas. Likewise, different majority requirements can be specified in the articles of association for different resolutions at a shareholders' meeting. In order to prevent uncontrolled transfers of GmbH shares, restrictions on the assignment of shares can be set out in the articles of association. Giving the other shareholders a say in share transfers can promote the stability of the company. This prevents strangers from suddenly joining the company's shareholders' table when the GmbH is founded.
A clear organizational structure that regulates the authority and responsibilities of the management and establishes reporting obligations for the management minimizes the risk of differences of opinion about company management. Regular shareholders' meetings and transparent information flows promote understanding among shareholders. Regular review and evaluation of potential points of conflict within the company makes it possible to take preventive measures at an early stage and nip conflicts in the bud.
If regulations to avoid a dispute between shareholders were overlooked when the limited liability company was founded, these can be added subsequently by a resolution of the shareholders' meeting by way of an amendment to the articles of association. However, this requires notarization and the entry of the amendment to the articles of association in the commercial register. The newly drafted partnership agreement must also be filed in the commercial register.
conflict resolution clauses
The partnership agreement can provide for mechanisms for resolving conflicts, such as the involvement of a mediator. Mediation is a structured, confidential and voluntary process that divides the settlement of a partnership dispute into different phases. As a lawyer, specialist in commercial and corporate law and specialist in international business law, I regularly deal with partnership disputes and their resolution through mediation.
In the case of a mediation clause for shareholder disputes, the shareholders concerned agree to first conduct a mediation procedure before taking legal action. If mediation does not lead to an agreement, the involvement of a lawyer should be considered. Mediation can be carried out out of court and as part of a legal dispute. However, caution is advised here: If the shareholders' meeting has decided to exclude a shareholder, dismiss a shareholder manager or withdraw shares, such a shareholders' resolution must usually be challenged in court within one month. This deadline is not suspended by a mediation procedure. Even if the GmbH shareholders decide on mediation, the legal procedure to challenge the resolution must at least be initiated in parallel in order to protect the legal position.
Legal dispute in shareholder disputes: The process
If alternative methods of conflict resolution are unsuccessful, the legal dispute as a last resort. This requires a precise analysis of the legal basis and the specific points of dispute by an experienced specialist lawyer for commercial and corporate law. Corporate law provisions, including the GmbH Act or the Stock Corporation Act, play an important role here. Court decisions can help to create clarity and protect the interests of the shareholders, but the associated costs and time duration must be taken into account. In the event of shareholder disputes within a GmbH, you as the affected shareholder must be prepared for the following in order to clarify the legal positions of the shareholders and resolve the conflict.
The shareholders' resolution on the exclusion of the shareholder
If a shareholder no longer appears acceptable to the other shareholders, the other shareholders can resolve on exclusion for good cause. In the event of exclusion, the excluded shareholder's share in the company remains. The shareholder must be paid compensation. The effectiveness of the exclusion does not depend on the shareholder being paid compensation. When preparing to exclude a shareholder, the provisions of the partnership agreement and other agreements between the shareholders must always be checked. Because of the lack of detailed regulations in German GmbH law, important legal aspects of exclusion are regulated in the articles of association, such as what should happen to the "shareholderless" share. This can be taken over by the GmbH itself under certain conditions - the prerequisite is that the share is fully paid and the GmbH can pay the compensation from free reserves. Or one or more shareholders or a third party, a new GmbH shareholder, takes over the share. The transferee must also pay the compensation.
Alternative: Withdrawal of the share
As an alternative to excluding a shareholder for good cause, the shares of the shareholder in question can be confiscated. In this case, the shares are destroyed. Confiscation is only permitted if this is provided for in the partnership agreement. This is another point that must be taken into account when establishing the limited liability company. When carrying out the confiscation, it must also be noted that the destroyed share must be "replaced" so that the sum of all shares corresponds to the GmbH's share capital. This can be done either by increasing existing shares or by creating a new share. Since statutory company law does not contain any clear regulations in this regard, the specialist lawyer for commercial and company law recommends taking this into account when establishing the GmbH and notarizing it.
Calculation of the severance payment
There are also no regulations in the GmbHG for calculating the amount of the compensation. Only case law has developed important principles in this regard, which from the perspective of the lawyer and specialist lawyer for commercial and corporate law should be taken into account in the case of a multi-person GmbH. The compensation corresponds to the market value of the GmbH share. In practice, however, there is a lot of dispute about determining the market value, as there are various methods of calculating the market value. Unfortunately, case law on corporate law has not established any clear rules as to which calculation method can be included in the partnership agreement when a limited liability company is founded, so that the partners have legal certainty.
Challenge of shareholder resolutions
If a shareholder does not agree with his exclusion or the withdrawal of his GmbH shares - as is regularly the case in the practice of a lawyer - he must defend himself against this. In the event of a shareholder dispute about the justification of his exclusion, the affected shareholder must contest such shareholder resolutions - and usually within one month. This deadline must be observed at all costs, as otherwise the shareholder resolution remains valid. The only exception to this is if the shareholder resolution in question is void from the outset. However, this will usually only be the case if the shareholder in question was not invited to the shareholders' meeting.
Interim legal protection is also an important component of a shareholder dispute. With the exclusion or withdrawal, the other shareholders can instruct the managing director to submit a new list of shareholders to the commercial register. Once this is published, the structure of the shareholders shown there is considered correct. In this way, the other shareholders can also accept new shareholders who become shareholders if they act in good faith. The departing shareholder can then only demand compensation, but can no longer take action against his own exclusion. This significantly reduces his legal position. The shareholder must therefore take action quickly against an amended list of shareholders or against any changes to it.
two-person GmbH
All of this also applies to a two-person GmbH. However, the special feature here is that the partners regularly exclude each other. If both partners are also managing directors, they will also remove each other as managing directors. The respective measure can also be challenged by interim legal protection, and an action for annulment must also be brought. At the same time, the employment contract of the respective managing director will also usually have to be terminated. In some cases, claims for damages against the other partner are also necessary due to their liability in the event of breaches of duty, so that up to twelve proceedings may have to be conducted. This is an expensive, complex and stressful situation. Early conflict advice in compliance with the provisions of company law and GmbH law can therefore be very efficient.
The role of the specialist lawyer for commercial and corporate law in shareholder disputes
The specialist lawyer for commercial and corporate law plays a crucial role in providing legal advice to companies, particularly when it comes to shareholder disputes. His tasks range from legal advice on the establishment of companies, such as start-ups, to contract drafting and litigation. In the case of shareholder disputes, he plays a key role, as he ideally has many years of experience and is able to understand the complex legal structures of companies and develop solutions. Shareholder disputes are typically a focus of the client work of a specialist lawyer for commercial and corporate law.
A central task of the specialist lawyer for commercial and corporate law is therefore the legally secure drafting of partnership agreements. Through clear regulations and precise wording, he can help to avoid potential conflicts from the outset. Preventive advice and contract drafting are therefore essential instruments for preventing shareholder disputes or at least reducing their intensity. Despite all preventive measures, shareholder disputes cannot always be avoided. In such cases, the Specialist lawyer for commercial and corporate law asked to effectively defend the interests of his client. This may include enforcing shareholder rights, challenging resolutions or conducting legal disputes. In addition to legal proceedings, the specialist lawyer can also recommend alternative dispute resolution mechanisms such as mediation in order to reach an out-of-court settlement.
Conclusion
Shareholder disputes are complex legal disputes that touch on many facets of commercial and corporate law. Shareholder disputes can have various causes, including differences of opinion about company management, the distribution of profits or strategic decisions. In the case of shareholder disputes, alternative dispute resolution methods such as mediation or arbitration often offer efficient solutions. These methods enable the parties to reach an agreement out of court, thereby reducing time and costs compared to legal disputes. The mediator or arbitrator can help to understand the interests of the shareholders and find a solution that is acceptable to all parties. It is advisable to include mediation clauses or other alternative dispute resolution methods in the articles of association when the GmbH is founded.
In shareholder disputes, the specialist lawyer for commercial and corporate law plays a crucial role in solving complex legal challenges. His comprehensive knowledge of commercial and corporate law, combined with preventive contract drafting and effective litigation, make him an indispensable partner for companies that are confronted with such disputes. The legal expertise and the ability to resolve shareholder disputes contribute significantly to the stability and successful development of companies.
