Shareholders' Meeting: Is a power of attorney to vote in Chinese sufficient?

A power of attorney to vote in Chinese language is also sufficient for a lawfully representation of a shareholder of a German GmbH if a present certified interpreter translates the power of attorney and the translation itself is also notarized.

Background

A limited liability company (GmbH) applied for registration of an amendment to the articles of association. The shareholders’ meeting had previously decided upon the amendment in a meeting held before a notary public, which is mandatory under German law for an amendment to the articles of association of a GmbH. Two of the three shareholders attended the shareholders' meeting in person, while the third shareholder was represented by one of the other shareholders present. For this purpose, the representative shareholder provided a power of attorney of the absent shareholder in Chinese. The power of attorney was translated by a certified and duly sworn interpreter attending the shareholders’ meeting which was also part of the notarization of this meeting.

The registration court refused the registration of the amendment and demanded a translated German written power of attorney of the represented shareholder.

The appeal against this decision of the registration court before the Higher Regional Court of Bremen was successful.

The decision of the Higher Regional Court Bremen of February 14, 2019, Case No. 2 W 66/18

The Higher Regional Court of Bremen clarified that the registration court had to examine whether the shareholders’ resolution on which the application for registration was based had been validly passed. The registration must be refused if there are any reasons for invalidity or ineffectiveness with regard to the shareholders’ resolution. This, however, did not apply to the present case. In particular, there was no evidence of invalidity. All shareholders had been present at the meeting, even though one of them was represented by another shareholder, so that any deficiencies in convening the meeting are out of the question. In particular, a power of attorney to vote does not have to be submitted when announcing for the shareholders’ meeting. In addition, the entire meeting and thereby also the translation and reading of the power of attorney had been subject to the notarization. This ensures that the power of attorney was established properly with a sufficiently comprehensible content.

Note

Central decisions are made by shareholders of a German GmbH at the shareholders' meeting. A shareholder may also be represented by a representative. The representative does not have an own right to participate, but exercises the right to participate of the represented shareholder. Articles of association often contain provisions with regard to the representation of shareholders, which may concern the number of representatives or also certain characteristics of the representatives (e.g. expertise, confidentiality, representation only by other partners). For simplification and clarity, it is also often provided that certain groups of shareholders (e.g. a family trunk) have to agree in advance to the representation and may only be represented by a joint representative in the shareholders' meeting. However, caution is required: Such so-called group representation clauses restrict the participation rights of the group members. Therefore, these clauses are only permissible under narrow conditions.