The Federal Court of Justice [BGH] deals in its decision dated 28 January 2019 (file no. II ZR 364/18) with the issue, whether in analogous application of section 179 German Stock Corporation Act [AktG] the transfer of all company assets of a limited liability company [GmbH] within the framework of a sale and purchase agreement is ineffective towards the buyer without an approving resolution of the shareholders’ meeting. The BGH extensively comments on the structural differences between a GmbH and a stock corporation and rejects an analogous application of section 179 AktG to a GmbH. Nevertheless, the BGH considers an approving shareholders’ resolution internally necessary. According to the BGH, the contracting party may only rely on the unrestricted power of representation of the managing director if he was unaware of the abuse of the representative power and if this abuse was not obvious to him.
In our newsletter 2018 | Q3, we have already addressed the planned Real Estate Transfer Tax (RETT) reform, with which it is intended to “plug loopholes” for structures identified as abusive in the context of a transfer of company shares. The reform’s key points are the lowering of the threshold, the extension of retention periods and the creation of a new taxation situation for share transfers of corporations. These reform plans have caused considerable uncertainties within transactions, not least because there has been much speculation about a retrospective application of these new regulations. In the meantime, the first legislative draft has been presented.
The “proportionate default liability of the other shareholders” for uncollectible contribution debts of co-shareholders which was significantly expanded most recently by the German Federal Court of Justice [BGH] has considerably increased their risk of becoming liable beyond the amount of their original capital contribution. Acquirers of limited liability company’s [GmbH] shares should always be aware of these liability risks.
A non-competition clause for shareholders is intended to prevent the success of the joint company from being jeopardized by competitive activities of one or more shareholders. Since there is no statutory non-competition clause for the limited liability company [GmbH], it is all the more important to take precautions against potential conflicts of interest in the articles of association of the GmbH. Therefore, it is necessary to take into account antitrust regulations and general considerations of reasonableness.
In its decision dated 24 August 2018 (file no. 4 Wx 4/18), the Cologne Higher Regional Court [OLG] had to deal with the effectiveness of shareholders’ resolutions breaking through the Articles of Association at the limited liability company [GmbH]. The decision is an occasion to shed light on the consequences of shareholder resolutions that have a permanent effect under consideration of the provisions of sections 53, 54 German Limited Liability Companies Act [GmbHG].
In its judgment of 14 May 2019 (case C-55/18) the ECJ ruled that the working time directive (Directive 2003/88/EC) required every employer to record the working time of employees and obliged each member state to ensure that each employer would set up an objective, reliable and accessible system measuring the duration of time worked each day by each employee.