10. Jan 17

OLG München on a GmbH shareholder’s fiduciary duty

Even the best of families has arguments, and the same is true for shareholders of a GmbH. Having said that, a ruling of the Oberlandesgericht (OLG) München [Higher Regional Court of Munich] demonstrates that a shareholder’s fiduciary duty does not apply in every case.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: Shareholders can exercise their voting rights as they please. However, in the case of a Gesellschaft mit beschränkter Haftung (GmbH), a type of German private limited company, this is subject to the restrictions laid out in sec 47(4) of the GmbHG [Act regulating GmbHs] as well as the fiduciary duty under company law. The latter frequently becomes relevant within the scope of disputes arising among the shareholders of a GmbH. A ruling of the Oberlandesgericht München from June 23, 2016 shows that this is not always the case (Az.: 23 U 4531/15).

The case in question before the OLG München concerned a dispute that emerged between two families within a GmbH over the managing director’s successor. Due to the fact that the former managing director had already been removed from his post, there was an urgent need to take appropriate action. However, the two families were not able to reach a consensus regarding a successor, with the result that one side suggested involving a recruitment agency. It being necessary to find a new managing director as a matter of urgency, they argued that the shareholders were required to approve this resolution because of their fiduciary duty, but the other side rejected the resolution.

The OLG München took the view that the shareholders were not obliged to approve the resolution. The fact that a measure or course of action is in the interests of the company, facilitates the company’s objectives and it is reasonable to expect the approval of the shareholders is not enough to justify imposing an obligation on shareholders to approve or view a decision to cast a conflicting vote as invalid. The Court went on to say that inasmuch as shareholders are not obligated to approve as a result of the fiduciary duty, they can reject a proposed measure even if their reasons for doing so seem inappropriate or incomprehensible. According to the case law of the Bundesgerichtshof (BGH), Germany’s Federal Court of Justice, there is only a requirement to vote in a certain way owing to the fiduciary duty if this would mean preserving fundamental values or avoiding substantial losses and the measure to this end is objectively essential and reasonable from the perspective of the shareholders. That being said, the Court clarified that the fiduciary duty does not give rise to an obligation to involve a recruitment agency when urgently searching for a managing director.

To prevent disputes from arising among the shareholders at a later stage, agreements ought to be drafted as precisely as possible. Lawyers who are versed in the field of company law can offer advice in this context.

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