What should be the top agenda

Carrying out the shareholders' meeting in a legally secure manner: deadlines and regulations

1. What is a shareholders' meeting?

A shareholders' meeting is the gathering of all shareholders in a company with the aim of finding out about the company's economic situation and determining the company's business policy.

Regulations for legal forms

A shareholders' meeting is relevant for company forms if there are statutory regulations and if corresponding regulations are anchored in model articles of association or model articles of association. With which legal forms is this the case?

legal formRequired by lawProvided for in model articles of association
Partnerships (GbR, OHG, KG, GmbH & Co. KG)NoOnly at KG and GmbH & Co. KG
GmbH and UG (limited liability)YesYes
1-person GmbHNo, the sole shareholder is obliged to provide documentationNo, the documentation requirements are explained for this

It follows: Shareholder meetings are only actually relevant in practice for GmbH or UG (limited liability) or for KG or GmbH & Co. KG.Because only in the case of the GmbH and the UG (limited liability), gGmbH and gUG (limited liability) there are statutory regulations and only in the case of KG and GmbH & Co. KG can corresponding regulations be found in model statutes.

purpose

Typical tasks of a shareholders' meeting are:

  • Approval of the annual financial statements, appropriation of profits, discharge of the management
  • Voting on decisions of great importance: e.g. new managing directors, capital increase, large investments, property purchases, etc.
  • Control of the management, instructions to the management

In order to fulfill these tasks, the shareholders make resolutions.

Points in time

Typical times for holding the shareholders' meeting include:

  • Shareholders' meeting before the foundation
  • Annually: ordinary shareholders' meetings
  • Extraordinary shareholders' meetings in the event of a crisis or a special event.

2. The shareholders' meeting before the establishment

In the shareholders' meeting before the establishment of the company, the shareholders lay the foundations for a successful company establishment. It is equally important for all legal forms. The aim of this gathering is

  • confirm the business concept,
  • To appoint managing directors or to define their areas of responsibility and to discuss their employment contracts,
  • draw up the articles of association.

The distribution of tasks among the shareholders and the articles of association play a decisive role in this. Because a smart distribution of tasks among the managing directors is one way to avoid disputes. A cleverly designed social contract ensures clear rules in the relationship between the shareholders.

There are no statutory rules as to how this founding meeting should look and be carried out. Because the legal rules that apply to the shareholders' meeting of a GmbH only come into force when the GmbH exists as such. Of course, the shareholders of a GmbH should be familiar with the important rules for establishing a GmbH, including the liability-related provisions for a GmbH being established. A proper implementation and recording of this founding meeting makes sense in any case.

Does the shareholders' meeting take place at the notary's before the establishment?

This is basically possible because a notary certifies the appointment of the managing directors and the articles of association with the GmbH. As part of this certification, notaries also offer legal advice on the articles of association. Alternatively, the shareholders coordinate before the notary's visit, discuss strategic issues and make a decision about managing directors. They have the articles of association drawn up by a lawyer or tax advisor and then go to the notary.

3. Rules in the articles of association

The articles of association are the foundation of a partnership or corporation. How solid this foundation is and whether the articles of association can take on the function of a solution-oriented set of rules in the event of a quarreling shareholders' meeting depends on the regulations. It is therefore important to check the following points in the articles of association before founding the company.

  • How often should the shareholders' meeting take place?
  • What are the reasons for calling an extraordinary shareholders' meeting?
  • Who can convene the shareholders' meeting? Can only the managing director do this or should the shareholders be allowed to do so too?
  • Which formal requirements apply to the convocation? Create clear rules here so that a later resolution does not fail due to formal deficiencies in the convocation.
  • Who can take part? Can the partner call in lawyers, tax consultants or auditors as companions or be represented by them?
  • Who should chair the shareholders' meeting? Who takes the minutes?
  • Who can name items on the agenda? From which majority ratios are shareholders allowed to put items on the agenda?
  • From what number of votes does the shareholders' meeting have a quorum? Or does the quorum already apply when the meeting is properly convened?
  • What should happen in the event of culpable failure to attend the shareholders' meeting if this undermines the quorum?
  • Which majorities apply to which type of resolution: When is a simple majority sufficient, when is a 3/4 majority required?
  • What are the rules for severance payments for departing shareholders?

It is therefore worth considering not always relying on standard articles of association when setting up a company, but rather investing in advice on individual articles of association.

4. The ordinary shareholders' meeting: Convening until minutes

The regulations for the shareholders' meeting of the GmbH also apply to the UG (limited liability) and the non-profit variants, as there are gGmbH and the gUG (limited liability). The legal regulations can be found in the GmbH Act from § 48. As a rule, the ordinary shareholders' meeting takes place once a year. The shareholders' meeting is the supreme body of a GmbH. This is where the business policy of a GmbH is determined.

tasks

The main tasks of the annual shareholders' meeting are:

  • Determine the annual financial statements
  • Decide on the use of profits: pay out or withhold profits
  • Relieve the manager (s)

In addition, the annual shareholders 'meeting decides on all strategic decisions that arise at the time of the shareholders' meeting. For example: when a new branch is to be opened or when major financing is pending.

Resolutions and quorum

The shareholders 'meeting fulfills its tasks by means of a shareholders' resolution. For a shareholders 'resolution to be effective, the shareholders' meeting must have a quorum.

Quorum means that the shareholders' meeting can effectively pass resolutions without these resolutions being contested afterwards. In principle, a shareholders' meeting has a quorum if it has been properly convened. Often it is stipulated in articles of association that at least 50% of the votes must be present for the shareholders' meeting to have a quorum.

Resolution and voting rights

The right to vote on resolutions depends on the size of the business share. As a rule, 1 vote corresponds to 1 euro share.

  • The majority shareholder is someone who has over 50% of the votes.
  • Anyone who has more than 25% of the votes has a blocking minority. Its votes are decisive for resolutions that require a 3/4 majority.
  • Anyone who has more than 10% of the votes can, for example, bring topics for the shareholders' meeting.

When are shareholder resolutions void?

There are important formal requirements for the GmbH and its variants. These formal requirements relate in particular to the convening and the procedure. Violations of formal requirements lead to resolutions being void. A partner can take legal action against a void decision.

Convening the shareholders' meeting

Here you will find the most important regulations on how a shareholders' meeting is to be convened in a timely and formal manner.

  • In principle, the managing director calls the shareholders' meeting. The deadline for calling a meeting by the partner can be regulated in the articles of association.
  • The invitation takes place in writing, by registered letter, at least 1 week before the planned appointment.
  • All shareholders will receive the agenda at least 3 days before the scheduled date.

Rules for the agenda items

The agenda includes all matters that are to be decided on by shareholders' resolution. The agenda items are set in advance of the shareholders' meeting. This is usually the manager's job.

  • Shareholders may introduce items on the agenda if they have a sufficient majority of over 10% of the votes.
  • Shareholders should have sufficient time to prepare for the items on the agenda. Hence the regulation with the period of 3 days.
  • On the day of the meeting, new items on the agenda will only be discussed if all shareholders present agree to a new item on the agenda.

Here, too, the articles of association can regulate matters separately. The determination of the agenda items is an important formal requirement.

Conducting the shareholders' meeting: chairing the meeting and minutes

It makes sense to moderate the shareholders' meeting by a meeting leader. It is similar with keeping minutes. It is strongly recommended for reasons of evidence. The chairman of the meeting is determined by the companies with a simple majority.

The quorum is determined at the beginning of the meeting. The chairman then leads the shareholders through the shareholders' meeting and processes each item on the agenda. A resolution is passed at the end of each item on the agenda. This decision is recorded in the minutes. How the minutes should look like is left to the shareholders' meeting. In any case, the majority ratios should be documented for each resolution.

If the shareholders sign the resolution at the end of the meeting, they agree to the minutes and the resolution documented therein. Subsequent objections are then no longer possible. If the shareholders do not sign the minutes, the shareholders have one month to raise objections to the minutes. After the one-month period has expired, the protocol is considered confirmed.

Participation in the shareholders' meeting

The general meeting is basically a closed society. If strangers, in particular lawyers, tax consultants or auditors, take part as companions, this should be regulated in the articles of association. The same applies to representation regulations if a partner cannot keep the appointment and sends his lawyer.

Majorities: When is a resolution valid?

In principle, a simple majority applies to resolutions. In the case of particularly serious resolutions, the law provides for a 3/4 majority. These serious decisions concern:

  • Appointment and dismissal of managing directors
  • Capital increases
  • Transformation of the company into another legal form
  • Amendments to the statutes

Here, too, entrepreneurs should make appropriate provisions in the articles of association. For example, the shareholders can provide in the articles of association that a 3/4 majority is required for investments or financing above a certain size.

When does a ban on voting rights apply?

A voting right prohibition means that a partner may not exercise voting rights on a resolution. These are resolutions that are directed against the person of the partner himself.

Example: A managing director who is to be removed from office is also a partner. Then this partner-managing director is not allowed to vote.

How does the shareholders' meeting at 1-Personen GmbH work?

At 1-Personen GmbH, a shareholders' meeting is not necessary because it is not possible. However, the GmbH Act provides that important decisions are documented in writing. A shareholders' meeting can take place if several managing directors run the 1-Personen GmbH.

Sample of a shareholders' resolution

There are also templates for shareholders' resolutions. Such a template contains the following points:

  • Headline: Shareholder resolution of XY GmbH
  • Place and date:
  • List of shareholders present
  • Commercial register, HRB number
  • List of resolutions
  • Free space for the signatures of the shareholders

Sample resolutions serve as a formulation aid for the managing director of a 1-person GmbH or as a template for a unanimous resolution by all shareholders outside of shareholders' meetings.

5. The extraordinary shareholders' meeting

The extraordinary shareholders' meeting is called on special occasions. These occasions are for example:

  • Adoption of the annual plan
  • Loss of half of the share capital (Section 49 (3) GmbHG)
  • Impending bankruptcy and other corporate crises
  • Death of a partner
  • Changes in Business Purpose
  • Termination of a managing director

Entrepreneurs can individually specify the reasons for an extraordinary shareholders' meeting in the articles of association. In principle, the extraordinary shareholders' meeting deals with unusual issues that require joint action or decisions by all shareholders.

Formal requirements and samples

In principle, the same formal requirements apply as for the ordinary annual shareholders' meeting. The deadlines can be shortened by the articles of association if the shareholders so want. The managing director calls the extraordinary shareholders' meeting. The most important contents:

  • State the reason for the convocation
  • Include attachments explaining the facts. For example, a liquidity plan that clarifies the fact of an impending insolvency.
  • Mention the date and make it clear how urgent it is

The implementation of the extraordinary shareholders 'meeting is identical to the procedure for the ordinary shareholders' meeting. Feel free to download the following template for convening an extraordinary shareholders' meeting.

Template for the invitation to an extraordinary shareholders' meeting

Download now

6. 10 tips for quarreling shareholders

Disputes within the group of shareholders are always possible in partnerships and corporations. We provide you with solid practical knowledge on how to prevent shareholder conflicts and deal constructively with conflicts.

  1. Create clear rules in the social contract: The social contract is a solution-oriented set of rules that channels a conflict with a good setup.
  2. Choose an advisory board as a neutral controlling body for your GmbH.
  3. As a partner, bring the topics that are important to you on the agenda. For this you need at least 10% of the shares (§50.2 GmbHG). Putting items on the agenda on the day of the meeting is very likely to fail in the case of a divided society.
  4. Do not make any formal mistakes with the invitation. If resolutions of the shareholders' meeting are challenged afterwards, the mood heats up even more.
  5. In any case, keep records in order to preserve evidence. Use the process log, which documents the complete process of a shareholders' meeting. Use our checklist for this.
  6. Choose someone who is as neutral as possible to lead the meeting. You should have good skills as a moderator, know the majority situation exactly and be able to sound out scenarios for how a conflict can develop.
  7. The chairman of the meeting should identify each decision taken. Once the decision has been made, it applies. The losing shareholder must then contest the decision.
  8. Prepare carefully for each item on the agenda.
  9. Announce the accompaniment or representation by lawyers in advance.
  10. Check any voting rights bans on individual items on the agenda.

Can a shareholder hinder the decision-making process by deliberately not attending the shareholders' meeting?

This is basically conceivable if the quorum depends on the votes of the absent shareholder.However, the other shareholders can take legal action against this, because this can be viewed as an unfaithful cause of a quorum. Otherwise, the articles of association can provide for the statutory provision according to which a shareholders' meeting has a quorum if it has been properly convened.

Can a troubled partner be expelled from society?

That is also basically conceivable. If the company share of a company is withdrawn, an entitlement to compensation arises. The amount and payment of a severance payment can be regulated in the partnership agreement. For example, it can be agreed that a severance payment will be paid in installments in order to preserve the company's liquidity. A shareholder dispute that leads to the exclusion of a shareholder will not work without legal help. Often the compensation claim is then offset by claims for damages by the company.

A checklist for the chairman of the meeting can be found in our collection of texts for the shareholders' meeting

Download the checklist

7. Frequently asked questions about the shareholders' meeting

Can a shareholders' meeting be dispensed with?

Yes, by a unanimous written resolution of all shareholders. This decision should contain the following content:

  • Name of the company, address of the company headquarters, number of the commercial register
  • Headline: Shareholders' resolution
  • Text:
    "Company XY resolves the following without observing any form or deadline:
  • Date and signatures of all shareholders

Our sample texts for the shareholders' meeting offer a template for a unanimous resolution.

Can resolutions also be passed by email?

That is basically possible. Here, too, unanimity is required. The emails are sent in turn. For documentation purposes, it makes sense to print out the completed resolution to all shareholders and send it by registered mail.

How often can a shareholders' meeting be called?

As often as the articles of association provide. An ordinary shareholders' meeting to determine the annual financial statements and to decide on the appropriation of profits is provided by law at the GmbH.

Can a partner be accompanied?

It is advisable to regulate this point in the articles of association. Even if legal experts are of the opinion that lawyers, tax consultants or auditors by virtue of their office are in principle allowed to accompany a partner at a shareholders' meeting, it can cause a dispute if a partner appears at the meeting with his lawyer.

Can a partner be represented?

This is also possible in principle, but should also be regulated in the articles of association.

What is important in a decision that has to be notarized?

The decision must be made in writing. In the case of resolutions that have not been reached unanimously, some notaries also request the minutes of the meeting.

How many voting rights does a shareholder have?

As a rule, a partner has voting rights in the amount of his business share. A partnership agreement can also fundamentally change that, which is then referred to as an asymmetrical distribution of voting rights. However, such a regulation can lead to difficult legal waters and should therefore be clarified with good legal advice.

When does a shareholder lose their voting rights?

When an item on the agenda is directed against him. This is the case when shares of a partner are to be withdrawn. Another typical example is the dismissal of a managing director who is also a partner.

What is the blocking minority?

The blocking minority describes the number of votes above which serious decisions can be prevented by a minority shareholder. If the articles of association provide for a 3/4 majority for resolutions such as a capital increase, then the shareholder has a blocking minority who holds more than 25% of the votes.

Do the rules on shareholders' meetings in the GmbH also apply to partnerships.

Of course, the legal rules from the GmbHG do not apply. But rules that are in the social contract. For proper implementation, partnerships can therefore follow the example of the GmbH.

What is important at the general meeting of the GbR or the OHG?

In the GbR or the OHG, a shareholders' meeting is not provided for by law. Then all shareholders are active in management and coordinate the operative business. Shareholders' meetings are nevertheless sensible with GbR and OHG and are also carried out regularly. Here, too, a good regulation in the partnership agreement makes sense, especially for the catalog of transactions requiring approval.

What is important at the shareholders' meeting of the KG and GmbH & Co. KG?

A shareholders' meeting is also not provided for by law in the KG. They still exist because these meetings are also the forum for the limited partners, who of course have no management authority. There, limited partners decide on strategic issues and are informed about the company's economic situation. Here, too, the social contract is important because it defines the rights of the limited partners. Without corresponding regulations on the rights of the limited partners and their rights in the shareholders' meeting, probably no one would invest as a limited partner in a KG.

8. Conclusion: It depends on the articles of association

  • A shareholders' meeting determines the corporate policy of a company.
  • There are only statutory regulations for the GmbH or the UG (limited liability).
  • In addition to legal rules, the articles of association play a decisive role. A well-designed social contract will help avoid arguments.
  • The law and the articles of association regulate the procedure of a shareholders' meeting: convening, voting rights, quorum, procedure and minutes. Use our templates and sample texts for the shareholders' meeting.
  • By law, partnerships do not require a shareholders' meeting. Nevertheless, it makes sense and here too the articles of association should regulate the formation of will and resolutions.
  • Find out about our foundation packages for GbR, GmbH, UG (limited liability) and GmbH & Co. KG, which each also contain sample articles.

To the GmbH start-up package

Author: Für-Gründer.de editors

As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Gründer.de for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Gründer.de, he advised listed companies in the field of financial market communication.