(No) objection to the list of shareholders when shares are redeemed

If shares in a limited liability company ("GmbH") are redeemed, the shareholder concerned must protect himself against the loss of his shares and voting rights. A current decision by the Berlin Court of Appeal ("KG Berlin") reminds of that.

Facts of the case: Redemption of shares

The decision of the KG Berlin is based on the following facts: In a GmbH, the shares of one shareholder were redeemed by shareholder resolution. At the same time, the nominal amounts of the remaining shares were increased so that they still corresponded in total to the amount of the share capital. The shareholder concerned filed an action against this withdrawal of his shares with the Berlin Regional Court. He applied for an objection to the redemption to be noted in the list of shareholders.

The decision of the KG Berlin of September 7, 2023 (case no. 23 U 41/23)

The KG Berlin dismissed the appeal. Prior to this, it had already made it clear in an advisory decision that it did not consider the entry of an objection against the redemption of shares in the list of shareholders to be permissible in the present case. As, so the court, an objection to the list of shareholders serves to prevent the acquisition of shares in good faith, and there is no such risk when shares are redeemed (as they are deleted from the list), there is no need for an objection in such cases.

Practical tip: Act quickly when shares are redeemed

The judgment of the KG Berlin reminds that swift action is required against the redemption of shares. After all, only those persons registered in the list of shareholders are considered shareholders of a GmbH (so-called legitimation effect of the list of shareholders).

If affected shareholders want to protect their rights after a redemption of shares, they therefore often must take interim legal protection measures as actions for rescission or annulment are only to be expected after several months or years. If the shareholder does not act quickly, he or she therefore might not be able to exercise shareholder rights for a long time - regardless of whether the redemption of their shares was justified. In addition, an objection can be assigned to the incorrect list of shareholders (also by way of interim legal protection) in order to prevent third parties from acquiring shares in good faith.

An incorrect list of shareholders following an invalid redemption can have unpleasant consequences for a purchaser, too. Although he or she might acquire the remaining shares in good faith, if the redemption later turns out to be ineffective, he or she may find himself facing a "resurrected" co-shareholder he did not know (and did not want) until then. This makes it all the more important for the purchaser to carry out careful due diligence before acquiring shares.