No entry in the commercial register in the event of incorrect notification

An effective shareholder resolution requires that all shareholders have been duly invited to the shareholders' meeting. If a shareholder is absent from the meeting (not a full shareholder meeting with all shareholders be apparent), proof of proper invitation must be provided. A mere statement in the shareholders´ meeting resolution that all shareholders were duly invited is not sufficient. This follows from a decision of the Berlin Court of Appeal (KG Berlin).

Facts of the case

The decision of the KG Berlin was based on the following facts: Following the death of the managing director of an limited liability company, one of the two shareholders convened a shareholders' meeting. Only he himself appeared at the meeting; the co-shareholder did not. In the resolution, the shareholder who appeared confirmed that the meeting had been duly convened and appointed two new managing directors. The registry court refused to register the two new managing directors in the commercial register. In the opinion of the KG Berlin the proof of proper notification of the second shareholder, who was not present, had to be provided.

The decision of the KG Berlin of 18 February 2025 – 22 W 4/25

The appeal against this decision was unsuccessful. The registration of a new managing director in the commercial register requires a valid shareholder resolution. If there is no shareholder meeting with all shareholders are present, all shareholders must at least have been duly invited. In the opinion of the KG berlin, there was no such correct invitation in this case. Without a correct invitation of all shareholders, the resolution is null and void. In the opinion of the court, the mere statement in the resolution that the co-shareholder who did not appear had been duly invited is not sufficient. Rather, sufficient proof of invitation is required.

Practical note

Every limited liability company has two necessary corporate bodies: the shareholders' meeting and managing directors (one or more). The managing director is responsible for managing the business and represents the company to third parties. As the fundamental decision-making body of the limited liability company, resolutions are passed by the shareholders at the shareholders' meeting. The shareholders' meeting is the primary medium for shareholders to exercise their rights, in particular the right to participate, the right to vote, the right to speak, and the right to information/ask questions. This corresponds to the right to challenge resolutions in the event of a violation of their rights.

When making resolutions, it is important to observe the legal and statutory requirements. Outside of general meetings, mistakes can easily be made, which must be avoided due to the strict legal consequences regime.

1. Avoiding errors in the invitation

• Question to be answered (at least in mind): Was the invitation send out in time?
  
  The invitation to the shareholders' meeting must be sent at least one week before the meeting. The articles of association may provide for different periods (shorter or longer).

• Question to be answered (at least in mind): Form observed?
  
  The law requires for the invitation to the shareholders’ meeting a registered letter. A letter sent by registered mail is more practical here than a letter delivered by hand. The articles of association may also stipulate other forms (e.g., email, fax, or even SMS and messenger systems).
  Regardless of the specific form, the invitation must contain details of the place, date, and time of the meeting as well as the agenda.
  The decision of the KG Berlin shows that in cases of doubt (e.g., because one of a few shareholders (in this case: two) did not appear), the registry courts require documentary evidence of proper invitation. Such proof can be provided by posting the registered letter in good time or sending the email in good time.

• Question to be answered (at least in mind): All shareholders duly invited?
  
  All shareholders must be duly invited. All reasonable efforts may be required in this regard, including informing shareholders who are known to be difficult to reach about the meeting.

2. Implementation errors

The implementation of a shareholders' meeting also raises issues that can lead to resolutions being invalidated. In particular, violations of participation, speaking, or voting rights must be avoided. 

• Do not restrict the right to participate in an impermissible manner
  
  The right of each shareholder to participate in a shareholders' meeting may only be restricted to a very limited extent for objective reasons (e.g., repeated serious disruptions) and not without observing a strict procedure. It is important to note that even shareholders who are excluded from a single voting item (e.g., resolutions concerning their own affairs) must still be invited and allowed to participate.

• Voting rights:
  
  Voting rights are determined by the value of the share. Voting exclusions must be observed. If a shareholder wants to have a stronger position, this can be regulated in the articles of association (e.g., veto rights, higher voting weighting, etc.) and must be observed.

In practice, there are numerous sources of error in connection with shareholders' meetings. In the worst case, these can lead to shareholders' resolutions being null and void or contestable. Shareholders' meetings should therefore be prepared and conducted with the utmost care. Optimized articles of association are a first step in this direction.Sorgfalt vorbereitet und durchgeführt werden. Optimierte Satzungsgestaltungen sind hierbei ein erster Ansatz.