I. The provision of § 179a AktG

Pursuant to § 179 para. 1 sentence 1 AktG, any amendment to the Articles of Association of a stock corporation (Aktiengesellschaft – AG) requires a resolution of the General Meeting which, pursuant to § 179 para. 2 sentence 1 AktG, requires a majority of at least three quarters of the share capital represented when the resolution is adopted. Pursuant to § 179a AktG, an agreement by which an AG undertakes to transfer all of its corporate assets without the transfer being subject to the provisions of the German Transformation Act (Umwandlungsgesetz – UmwG) requires a resolution of the General Meeting pursuant to § 179 AktG even if it does not involve a change in the purpose of the company. The Articles of Association can only provide for a larger capital majority.

According to previous case law (ruling dated 9 January 1995 – II ZR 24/94), the BGH extended the legal concept of § 179a AktG accordingly to the limited partnership (Kommanditgesellschaft – KG) which sells the business it operates (representing its entire assets). In its ruling of 8 January 2019 (BGH, ruling dated 8 January 2019 – II ZR 364/18), the BGH had already decided that § 179a AktG is in any case not (or no longer) applicable to the limited liability company (Gesellschaft mit beschränkter Haftung – GmbH).

II. Facts of the case

The facts of the case are complex, but ultimately the issue was the extent to which the shareholders’ meeting must be involved in the sale of all the assets of a limited partnership with a limited liability company as general partner (GmbH & Co KG) (§ 179a AktG by analogy).

The parties disputed, among other things, the validity of the transfer of a limited partner’s share. The claimant is a limited partnership in liquidation in which several limited partners and a GmbH as general partner hold shares. The defendant is also a limited partnership in which the claimant held a limited partner’s share in the amount of DM 15,600. A so-called printing contract was concluded between the claimant and the defendant (parties), by which the defendant commissioned the claimant to produce and distribute a local newspaper. Later on, the claimant founded a V GmbH & Co. KG (V KG), in which it held the sole limited partner’s share. At the same time, the claimant was also the sole shareholder of the GmbH general partner of V KG (V GmbH). The claimant subsequently used V KG to fulfill its obligations to the defendant under the printing contract.

At the claimant’s shareholders’ meeting – against the vote of one of its limited partners – a resolution on reorganization was adopted, which read in part as follows:

“A reorganization (…) is to be effected by the management of the claimant (…) selling assets as a whole or individually on the basis of the present offers:

• (…) sale of the shares in the defendant.”

In a court settlement, the limited partner of the claimant who objected to the resolution also agreed to the shareholders’ resolution. Subsequently, the parties concluded a purchase and transfer agreement in which, among other things, the claimant’s limited partner’s share in the defendant was sold to the defendant, the limited partner’s share in V KG was sold and assigned to the defendant, the share in V GmbH was sold to the defendant, and it was agreed that V KG would enter into all rights and obligations under the printing contract in place of the claimant.

In its action, the claimant essentially sought a declaration of the continued existence of the transferred shares or their retransfer. The Regional Court of Ravensburg dismissed the action. The appeal against this decision was unsuccessful. The Court of Appeal stated that, although the consent of the shareholders’ meeting required under § 179a AktG was lacking, as this had to relate to the complete written draft agreement, which had not been available at the time the reorganization resolution was adopted, this was not relevant, as an analogous application of the provision to the limited partnership had to be rejected. In its appeal, the claimant continued to pursue its most recent claims.

III. Decision and justification

The previous case law of the BGH affirmed an analogous application of § 179a AktG to the GmbH and the limited partnership, which has the consequence that the contract to be concluded must be submitted to the shareholders’ meeting for a resolution, the required majority of the resolution is 75% and a sale made without such a proper resolution is invalid. As a result, this is one of the rare cases in which the management cannot unrestrictedly represent the company.

In the opinion of the BGH, the purchase and transfer agreement is not invalid due to the lack of a resolution by the shareholders’ meeting analogous to § 179a para. 1 sentence 1 AktG, as § 179a AktG does not apply analogously to limited partnerships.

First of all, contrary to the opinion of the Court of Appeal, the BGH clarifies that its previous case law, according to which the legal concept of § 179a AktG also extends to the limited partnership, was not already abandoned in its ruling of 8 January 2019 (BGH, ruling dated 8 January 2019 – II ZR 364/18), as this decision only dealt with the applicability to the GmbH. Immediately thereafter, however, the BGH states that it is no longer adhering to its previous case law and that § 179a AktG is (also) no longer applicable by analogy to the limited partnership.

In justification, the BGH states that the legislative history of § 179a AktG does not provide any indications for an analogous application to the limited partnership or merely shows a protective purpose directed at shareholders.

In addition, the requirements for an analogy are not met. There is no unplanned regulatory gap or, in any case, no comparable situation of interest, since the protective purpose of § 179a AktG, i.e. to ensure internal control of the management of the company in the case of transactions involving all assets through the participation of the partners, is taken into account in the case of the limited partnership by means of a statutory reservation of the right to adopt resolutions, even without corresponding application of the standard.

According to §§ 116 para. 2, 119 para. 1, 161 para. 2, 164 German Commercial Code (Handelsgesetzbuch – HGB), the management must obtain the consent of all partners to undertake a transaction that goes beyond the ordinary operation of the commercial business of a limited partnership, unless the partnership agreement permits a majority decision to the contrary. The obligation to transfer the entire assets of a limited partnership generally constitutes an extraordinary transaction within the meaning of § 116 para. 1 and 2 HGB which, in terms of its content and purpose or significance and the risks associated with it, goes beyond the ordinary scope of the partnership’s business operations. The same applies if the total assets transaction is to be classified as a so-called fundamental transaction (Grundlagengeschäft). This requirement for a resolution not only ensures internal company control but also protects the minority shareholders concerned.

Even if only secondary to the answer to the question of analogy, a corresponding application of § 179a AktG to the limited partnership is also ruled out due to the structurally considerable possibilities of influence of the shareholders of a limited partnership and the resulting lower need for protection in contrast to shareholders of an AG. Thus, shareholders can only exert a very limited influence on the statutory allocation of competences with regard to the performance of management and supervisory duties; in particular, the General Meeting of an AG can only make binding decisions on management issues for the management board pursuant to § 119 para. 2 AktG if the management board requests this – at its own free discretion. In contrast, the general partner of a limited partnership is always obliged to obtain the consent of the partners in accordance with § 116 para. 2 HGB for management issues that go beyond the ordinary operation of the commercial business. In addition, the partnership agreement of a limited partnership may provide for an authority of the partners’ meeting to issue instructions to the management.

Ultimately, the argument against analogous application of § 179a AktG to the limited partnership is that, without a direct legal basis, this would jeopardize the fundamental principle of the unlimited and unrestricted nature of the managing director’s power of representation in external relationships. For a third party who concludes legal transactions with a commercial partnership or accepts declarations, it would be, if not already practically impracticable, then at least unreasonable to inform him/herself in advance in each individual case about the scope of the power of representation of the representative acting for the commercial partnership. This is of particular importance in the case of limited partnerships, as the respective contractual partner is generally unable to reliably assess the existence of a total asset transaction – also due to the low level of balance sheet publicity.

IV. Consequences for the practice

With this decision, the BGH consistently continues its case law, which has already been amended for the GmbH, for the limited partnership as well and creates welcome legal certainty for the practice.

The BGH correctly justifies the rejection of an analogous application of § 179a AktG to the limited partnership with the absence of an unplanned regulatory gap or a comparable situation of interest. In particular, the limited partnership – as well as the GmbH – does not have a comparable need for protection of the shareholders as the AG due to the considerable possibilities of influence.

In the internal relationship, however, there is a reservation of consent, because at the management level, the management of a partnership must obtain a consenting resolution of all partners for the undertaking of a transaction that goes beyond the ordinary operation of the partnership’s commercial business, unless a majority decision is permitted under the partnership agreement. The obligation to transfer the total assets of the limited partnership is usually considered to be such a transaction. In practice, therefore, a resolution of approval by the shareholders’ meeting will generally also be required in the future for transactions involving the total assets of limited partnerships, but the presentation and effectiveness of this resolution does not have any effect, nor does the question of whether the agreement to be concluded had been presented to the shareholders’ meeting for approval.

Likewise, the previously disputed question of whether a qualified three-quarters majority is mandatory in the event of deviations from the principle of unanimity by the partnership agreement in this case on the basis of § 179a AktG (analogously) is likely to be settled. In itself, a (sufficiently specific) simple majority clause is sufficient for this, provided that the partnership agreement explicitly provide for this. Due to the scope of such a decision, it is nevertheless likely to be in the interests of the shareholders in most cases to subject overall asset transactions to the approval of a qualified majority of the shareholders’ meeting.

In the absence of analogous applicability of § 179a AktG, a lack of a consent resolution therefore does not (or no longer) lead to the invalidity of the overall asset transaction in the external relationship, but only has an effect in the internal relationship. Something else applies solely in accordance with the principles of abuse of the power of representation („Missbrauch der Vertretungsmacht“), i.e. if this must be virtually imposed on the contractual partner or if the contractual partner colludes with the representative.

As a result of the total asset transfer, however, the limited partnership will often no longer be able to maintain its corporate purpose. The sale of all assets then creates a factual situation which requires an amendment to the partnership agreement, for which the resolution requirements regulated therein, without any regulation on unanimity, must be complied with. If lower requirements were placed on the resolution modalities of the overall asset disposal than on the amendment to the partnership agreement required as a consequence, there would be a risk that the amendment to the partnership agreement would fail in the event of different majority requirements, with the result that a situation contrary to the partnership agreement would arise on a permanent basis.

The BGH explicitly kept open the questions (i) whether an overall asset transaction always constitutes a fundamental transaction and (ii) whether the exclusion of the analogous applicability of § 179a AktG also applies to the public partnership (Publikumspersonengesellschaft) – which is similar to the AG.