I. Legal Classification

The purpose of the provision of sec. 16 para. 1 sentence 1 German Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – GmbHG) is – as emphasized by the Federal Court of Justice (Bundesgerichtshof – BGH) – to create transparency with regard to the shareholders on the one hand, especially in terms of combating abuse and money laundering, and legal clarity and legal certainty within the company on the other hand. This is accompanied by a rigid application of the provision: despite the material entitlement of the person who is not (or no longer) entered in the commercial register, this person can in principle no longer assert his membership rights from the point in time at which the list of shareholders no longer listing him is submitted to the commercial register. The same also applies vice versa: the person who is not materially entitled but is registered is to be treated by the company as a shareholder.

II. Facts

The subject of the decision of 26 January 2021 was the action of a (former) managing shareholder against the redemption of his share, his dismissal as managing director, the termination of his managing director service agreement and the assertion of (substitute) claims against him. He also defended himself against the rejection of his own proposed resolutions with which he requested the opposite, namely that the shares of his managing co-shareholder be withdrawn and that they be dismissed as managing directors and that claims for damages be asserted against them.
The contested resolutions were passed at several shareholders’ meetings. In particular, the (first) resolution on the redemption of the share was passed before the list of shareholders, which no longer included the claimant, was submitted to the commercial register. This resolution, like the other resolutions, was confirmed in subsequent shareholders’ meetings after submission of the “updated” list.
In order to pursue his legal action, the claimant brought an action for a declaration of nullity, an action for rescission and an action for a positive resolution, i.e. legal remedies under limited liability company law where the right to bring an action results from membership.
These actions were partially successful in the lower courts.

III. The Decision of the BGH

The BGH dismissed most of the claimant’s actions. Thereby, the BGH essentially differentiated as follows:
The claimant can always challenge the redemption resolution or its subsequent confirmations in court. This applies irrespective of whether the list of shareholders at the commercial register already shows him as no longer being a shareholder prior to the passing of the redemption resolution or whether the “updated” list is only submitted to the commercial register after the passing of the redemption resolution.
The BGH justified this by stating that otherwise the constitutionally required possibility of legal protection with regard to (share) ownership would not be enforced.
The claimant’s action against these resolutions was also successful, as they were null and void. In this respect, it was also irrelevant that the redemption resolution was later confirmed (several times) analogously to sec. 244 sentence 1 German Stock Corporation Act (Aktiengesetz – AktG), because only resolutions that can be challenged, but not null and void resolutions, can be confirmed. In this case, the nullity resulted from a corresponding application of sec. 241 no. 3 AktG in conjunction with sec. 30 para. 1 sentence 1 and sec. 34 para. 3 GmbHG, as the company did not have the free assets required for payment of the settlement owed when the resolution was adopted.
The action against the other resolutions of the (later) shareholders’ meetings, on the other hand, was not successful. In any case, the claimant did not have the right to contest the resolutions adopted after being removed from the list of shareholders submitted to the commercial register and which did not relate to the confirmation of his exclusion from the company. This follows – according to the BGH – from the negative legitimation effect of sec. 16 para. 1 sentence 1 GmbHG, which applies irrespective of the claimant’s substantive entitlement.
This is because from the point in time when a list of shareholders no longer listing the shareholder is entered in the commercial register, the shareholder can in principle no longer exercise his membership rights and the right to contest follows from the membership administrative law. Exceptions to this principle exist only if the company is prevented in good faith from invoking the negative legitimation effect or in order to grant the shareholder effective legal protection with regard to his (share) ownership.
However, such exceptions had not existed in this respect. In particular, neither the claimant’s service as managing director nor the authorization to assert claims for compensation against him had any effect on the claimant’s shareholding. Furthermore, the claimant was also not prevented from directly pursuing his claims for compensation in court.
Furthermore, the BGH clarified that a right of rescission cannot result from the fact that the company continues to treat the “shareholder” who is no longer on the list of shareholders as a shareholder, for example by inviting him to the shareholders’ meeting and allowing him to participate in the corresponding votes. This is because the purpose of sec. 16 para. 1 sentence 1 GmbHG (combating abuse and legal certainty and clarity) already prohibits the company from granting shareholder rights to a person who is not (or no longer) on the list of shareholders.
Also with regard to the resolutions adopted at a time when the claimant was still listed in the list of shareholders and not concerning the confirmation of his exclusion from the company, the BGH ruled that the actions directed against this cannot succeed. This is due to the fact that these resolutions were all subsequently confirmed in accordance with sec. 244 sentence 1 AktG after the claimant had been removed from the list of shareholders, with the consequence that – once the confirming resolutions have become effective – a challenge to the original resolution can no longer be asserted. In this respect, it was also not necessary for the confirmation resolution to be adopted by the same shareholders as the original resolution, but by the shareholders’ meeting in the respective composition.
With regard to the assertion of the positive determination of the resolution, the BGH merely stated that in the absence of the right to challenge, the substantive right to assert the positive determination of the resolution is also lacking.

IV. Consequences for the practice

The decision represents a consistent continuation of the case law of the highest courts. At the same time, it impressively shows that utmost caution is required with regard to the negative legitimation effect: The shareholder who is no longer registered (but who is still materially entitled) can still take legal action under company law against the resolution excluding him, but not against other shareholder resolutions.
This can have drastic consequences for the formally excluded party: The fact that, according to the BGH, the list of shareholders is authoritative leads to legal clarity, but in individual cases to the not “fair” result that, although the withdrawal is obviously void, after being removed from the list the remaining shareholders can reshape the GmbH to a considerable extent without the “removed” person being able to prevent this.
Notwithstanding the criticism sometimes voiced against the decision discussed, that it leads to untenable results, the BGH has clearly continued its line of the far-reaching effect of the contents of the list of shareholders. Consequently, an excluded shareholder is well advised to (provisionally) prevent his removal from the list of shareholders as soon as possible by means of interim legal protection in order to continue to be considered a shareholder in relation to the company. The person affected by the exclusion can only in this way (fully) preserve influence in the shareholders’ meeting and its right to challenge resolutions of the shareholders’ meeting.