I. Introduction and background

According to the legal concept of Section 38 (1) GmbHG (German Act on limited liability companies), a managing director of a GmbH can generally be dismissed at any time and without special reasons. With regard to shareholder managing directors, the admissibility of dismissal is often restricted by provisions in the articles of association of the GmbH to cases in which there is “good cause”. If the shareholders decide to dismiss a managing director in such a case, there may be a dispute as to whether there is actually good cause justifying the dismissal and whether the dismissal resolution has the corresponding legal effect. However, some of the managing directors concerned continue to act as managing directors of the company in legal transactions and represent the company externally regardless of such a dismissal resolution. Due to the legal effect of Section 15 HGB, there is a risk that the company will have to accept this vis-à-vis third parties as long as the dismissal of the managing director concerned has not been entered in the company’s commercial register. In order to protect the company, it is possible in this context to obtain an interim injunction prohibiting the activity and the exercise of board duties. In such interim injunction proceedings, the company must demonstrate to the court that there were good cause for the immediate dismissal of the managing director, the facts from which these arise and that the dismissal was effectively decided.

II. Existence of a good cause

Pursuant to Section 38 (2) sentence 2 GmbHG, good cause exists in particular if the GmbH managing director grossly violates the duties incumbent on him personally as managing director or is to be regarded as incapable of proper management. The articles of association of the GmbH may in principle provide for further good cause. According to the case law of the BGH (judgment of 28.1.1985 – II ZR 79/84), good cause is given if the managing director can no longer be reasonably expected to remain in office and continue to act on behalf of the company after a comprehensive assessment of all circumstances of the individual case and consideration of the interests of the company and the shareholders concerned. In the case of a two-person company, however, strict requirements must be met in order to avoid one shareholder being able to terminate the other shareholder’s management activities at will. Accordingly, the mere loss of trust on the part of the co-shareholder is not sufficient for the existence of good cause; rather, there must be justified doubts as to the proper conduct of the business. These doubts must be so significant that an objective observer, weighing up all the circumstances that speak for and against dismissal, comes to the conclusion that the company and in particular the co-shareholder cannot reasonably be expected to leave the managing director in his position. The interests of the company in proper and economically successful management on the one hand and the interests of the managing director in his position on the management board on the other must be weighed up.
The position as a corporate body as such is independent of the existing employment relationship, meaning that the dismissal of a managing director for good cause generally has no effect on his/her employment relationship. The existence of good cause pursuant to Section 38 (2) GmbHG therefore does not necessarily mean that there is also good cause for extraordinary termination of the employment contract pursuant to Section 626 (1) BGB (German Civil Code). Conversely, however, it is assumed that the existence of good cause within the meaning of Section 626 (1) BGB always also constitutes good cause in accordance with Section 38 (2) GmbHG.

III. Decision of the OLG Munich

The decision of the OLG Munich (judgment of 25.05.2023 – 23 W 354/23e) was based on the following facts: The parties disputed in interim injunction proceedings the validity of a shareholders’ resolution on the dismissal of the defendant as managing director of the GmbH for good cause. The plaintiff and the defendant were the sole shareholders of the GmbH in question and each held 51.00% and 49.00% of the shares respectively. The defendant was the sole managing director of the GmbH. At an extraordinary shareholders’ meeting of the GmbH chaired by a representative of the plaintiff, the defendant was dismissed as managing director of the GmbH for cause with immediate effect and, in the alternative, with due notice. The plaintiff argued that the defendant had manipulated the company’s cash register system and had not properly accounted for three sales transactions, contrary to the principles of proper accounting and Section 146 (1) AO (German Fiscal Code). The defendant continued to conduct the company’s business even after receiving the notice of dismissal and acted on its behalf externally. The plaintiff applied for interim relief, inter alia, to order the defendant to refrain from conducting the business of the GmbH and representing the company. In procedural terms, the parties disputed the possibility of the plaintiff to assert its legal protection objective by way of a so-called actio pro socio, i.e. an action by a shareholder on behalf of the company. The Munich I Regional Court initially rejected this application at first instance.
At second instance, the plaintiff’s application was successful. The Munich Higher Regional Court ruled that the plaintiff in the present constellation – in deviation from Section 46 No. 8 GmbHG, according to which the company, which is generally represented by a representative appointed by the shareholders’ meeting in the context of the injunction proceedings, could exceptionally assert its interest in legal protection itself by way of actio pro socio. According to this, the plaintiff is entitled to assert claims of the company in its own name by way of (legal) representative action. This is the legal consequence of the right of membership of a shareholder. This is also not contradicted by the principle that an internal jurisdiction order of the company must be given priority and an actio pro socio can only be considered on a subsidiary basis. This is because a shareholder resolution in accordance with Section 46 No. 8 GmbHG would be a superfluous formality in the present constellation. There is no reason to fear a circumvention of the company’s internal competence regulations in the event of a dismissal dispute in a two-person GmbH, regardless of the majority situation, as the shareholder dismissed for good cause pursuant to Section 38 (2) GmbHG is excluded from such a vote pursuant to Section 47 (4) sentence 2 GmbHG. A referral to such a resolution and a subsequent corporate action would therefore be an unnecessary and unreasonable detour in interim legal protection proceedings. Likewise, in the opinion of the OLG – contrary to other voices in the literature – the company’s inability or unwillingness to act does not have to be specifically established for the admissibility of the actio pro socio in this constellation.
In the opinion of the OLG, there was also a claim for an injunction. The company had a claim to refrain from further management activities after the effective dismissal of the defendant for good cause. In the case of a shareholder-managing director, this follows primarily and retroactively from his appointment as a member of a corporate body and his fiduciary duties as a shareholder. The prerequisite is the effective dismissal for good cause, which must be substantiated in the interim injunction proceedings. It is sufficient for the prima facie case that the conclusion based on auxiliary facts appears predominantly probable, without all other possibilities having to be practically excluded. In an overall assessment after hearing witnesses and inspecting the company’s IT system, the OLG considers the infringements by the defendant to be predominantly probable. Despite the lack of direct financial damage, the infringements were sufficient to justify the unreasonableness of the defendant’s continued activity as managing director of the company. These are central obligations of the managing director, which he has violated several times within a short period of time. The breaches demonstrate a carefree distance from the law and a risk of repetition.
In addition, there was a reason for the injunction, i.e. the urgency of the decision. The temporary prohibition of the exercise of management powers until the final decision on the merits on the validity of the dismissal was necessary and appropriate against the background of the prima facie case for good cause. The urgency arises from the fact that the defendant continues to act as managing director of the company and is supported by the legal effect of Section 15 HGB (German Trade Code). The resulting uncertainty for the company and the plaintiff is not acceptable until final clarification in the main proceedings. The interim injunction creates an appropriate transitional arrangement that does not inadmissibly anticipate the main proceedings.

IV. Outlook and consequences for practice

The decision of the Munich Higher Regional Court firstly confirms that the actio pro socio applies to a two-person GmbH in the context of dismissal disputes, without this being precluded by the priority of an internal jurisdiction order of the company. The existence of an inability or unwillingness to act is irrelevant. The unnecessary detour via a prior resolution in accordance with Section 46 No. 8 GmbHG is therefore not necessary for the issuance of an interim injunction. The Munich Higher Regional Court does not refer to a claim for injunctive relief under Section 823 (1) BGB in conjunction with Section 1004 (1) BGB analogously. Section 1004 (1) BGB by analogy due to interference with the established and exercised business operations, but to the subsequent effect of the appointment of the corporate body and the shareholder’s duty of loyalty. The occurrence of actual damage is not required for this, rather the reason for the injunction arises with the effective resolution on the dismissal. This makes it much easier to substantiate the grounds for the injunction.
In partnership law, the legislator codified the generally recognized institute of actio pro socio with the introduction of the new Section 715b BGB as part of the Act on the Modernization of Partnership Law (MoPeG) with effect from 1 January 2024. According to this, each shareholder is authorized to assert a claim of the company based on the corporate relationship against another shareholder in their own name in court if the shareholder authorized to manage the company fails to do so in breach of duty. This provision applies directly to the partnership under civil law (GbR) and by reference to the general partnership (OHG) and the limited partnership (KG). In the absence of a reference, Section 715b BGB does not apply directly to corporations (in particular UG (German entrepreneurial company), GmbH and AG (German stock corporation). Whether an analogous application of this provision can be considered for corporations in the future or whether the shareholder action of the actio pro socio should continue to apply as a general legal institution requires future clarification by the courts.