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Invalidity of a shareholder resolution if the shareholders' meeting is convened by an “unauthorized” person

Shareholder resolutions passed at a meeting convened by an unauthorized person are null and void. This was decided by the Federal Court of Justice (“BGH”) for a partnership company.

Facts of the case

The ruling of the BGH was based on the following facts:

The plaintiff was a partner (i.e. shareholder) of a partnership company based in Frankfurt. In addition to the plaintiff, four other partners belonged to the partnership. In the absence of the plaintiff, the other partners passed a resolution that the plaintiff should be excluded from the partnership with immediate effect. The corresponding meeting was not convened by the managing partner - contrary to the partnership agreement - but by other partners.

The plaintiff then raised a claim to the Frankfurt Regional Court for a declaration of nullity against the resolution passed, which dismissed the claim. The appeal against the dismissal was unsuccessful, with the result that the plaintiff pursued his objective with an appeal to the BGH.

The decision of the BGH of July 16, 2024 - II ZR 100/23

The appeal was successful. The BGH overturned the judgment with reference to the following legal explanations:

In partnership law (to which the partnership company is subject), it is generally recognized that violations of form, deadline and content only lead to the nullity of resolutions passed in a shareholders' meeting if the purpose pursued by the violated company agreement or statutory regulation related to participation in and voting at the shareholders' meeting and this purpose was thwarted by the violation. However, this principle is not applicable if the shareholders' meeting is convened by an unauthorized person. If an unauthorized person convenes the meeting, there is already a lack of a minimum requirement for a shareholders' meeting, which would be equivalent to a non-invitation. As a result, the individual shareholder's indispensable right to participate in the meeting, including the opportunity to influence the decision-making process, is violated. Such a violation results in the nullity of the resolutions passed at this meeting - not only in the case of partnerships, but across all legal forms.

Practical tip

In good times, provisions of the articles of association regarding the shareholders' meeting and the passing of resolutions are often ignored and resolutions are passed on the fly. This phenomenon is particularly evident in partnerships (especially partnerships under civil law, "GbRs"), as less importance is attached to the statutory and partnership agreement provisions. The motto is “we've always done it this way”.

What remains without consequences in times of mutual agreement (and thus establishes itself all the more) quickly becomes a problem when the unity of the shareholders crumbles: as soon as a shareholder dispute arises, faults regarding invitation and resolution are a popular opportunity to overturn unwelcome resolutions. If the resolution is null and void, the damage is already done, as the resolution cannot be rectified. If the resolution was then time-critical, as deadlines may be about to expire, the carelessness that occurred during the invitation and resolution can quickly become costly.

Even if the resolution is not void, but only unlawful - i.e. effective but contestable - it is essential that all formalities are complied with in the case of important resolutions. A subsequent shareholder dispute about the validity of a resolution is not only laborious, but also time-consuming and cost-intensive and will ultimately lead to a complete breakdown between the shareholders.

Particularly “popular” mistakes, apart from the rather exotic convening of a meeting by an incompetent body, are

  • failure to convene individual shareholders,
  • violation of the deadlines stipulated in the articles of association due to incorrect calculation,
  • formal errors in convening the meeting (e.g. e-mail instead of registered letter),
  • invitation at the “wrong” place to prevent the participation of individual co-shareholders,
  • deficiencies in the agenda attached to the invitation (e.g. insufficient information on the content of a desired amendment to the articles of association) and
  • inadmissible exclusion of voting rights during the meeting.

Preparing and conducting the shareholders' meeting properly and in accordance with the law and the articles of association should therefore not be dismissed as a formality, but should be followed scrupulously, especially in cases of “tension”. The decision of the BGH shows that even experienced professionals are not immune to careless mistakes in this regard: The partnership company in the present case was a law firm.

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