Enforcement of the dismissal of the GmbH managing director in interim legal protection

If the dismissal of a GmbH managing director is to be enforced by way of an interim injunction, strict conditions apply - especially in two-person GmbHs.

Background

The parties to the lawsuit were each 50 % shareholders of a German limited liability company (GmbH). The defendant was also the sole managing director of the GmbH. After a dispute arose between the parties, the plaintiff dismissed the defendant as managing director of the GmbH in a shareholders' meeting convened by himself. The defendant challenged this with an action for nullity. The plaintiff, on the other hand, took action against the defendant by way of interim injunction and applied for the latter to be prohibited from exercising its management powers. The plaintiff remained unsuccessful both in the first instance and in the appeal procedure before the Brandenburg Higher Regional Court (OLG).

The judgement of the OLG Brandenburg of December 19, 2018, case no. 7 U 152/18

The OLG Brandenburg dismissed the plaintiff's appeal because already the dismissal of the defendant was invalid due to the incorrect convocation of the shareholders' meeting and therefore could not be enforced in the way of interim injunction. Beyond that  the OLG Brandenburg also pointed out on the strict requirements for the enforcement of a dismissal of a managing director by interim injunction.

Note

The judgment shows the importance of interim injunction in connection with the dismissal of GmbH managing directors. If a managing director - as is often the case - opposes his/her dismissal, a legally binding clarification of the validity of the dismissal usually only takes place after a longer period of time. Prior to this, the GmbH concerned can only attempt to temporarily enforce the effects of the dismissal of the GmbH managing director within the framework of interim injunction. Vice versa, the managing director can try to secure the continuation of his/her activity as managing director by way of interim injunction.

For the issuance of a temporary injunction strict conditions must be fulfilled: Upon summary examination, the dismissal has to be formally effective and materially justified. If this is stipulated in the articles of association, the dismissal can, for example, only be declared for good cause. In addition, there must be a special urgency. Such urgency is only assumed in narrow exceptional cases (e.g. emergencies and predicaments as well as in cases where the existence of the company is endangered). Neither the interests of the managing director concerned nor those of the company alone may be given priority.

A temporary injunction can only be issued if these strict conditions are met. If so, however, the discretion of the court is very wide. For example, the powers of the managing director may be restricted (e.g. by reducing an individual power of representation to a joint power of representation) or even completely withdrawn. It is also possible to issue restrictions or prohibitions in regard to access or inspection rights of the managing director or to appoint an emergency managing director.