Interim relief from an incorrect list of shareholders after a resolution

The rule of effective legal protection requires that a shareholder must be able to obtain interim relief for the registration of an (almost certainly) incorrect list of shareholders even after the adoption of a resolution. It would otherwise not be possible to obtain effective legal protection solely due to the chronological sequence of events.

JUDGMENT OF THE COURT OF APPEAL OF BERLIN OF 17 MAY 2023 IN CASE NO. 23 U 14/23

Facts of the case

At a meeting of shareholders, to which the majority shareholder concerned was not properly invited, the remaining shareholders adopted a resolution to withdraw the shares of the majority shareholder. In a subsequent shareholder meeting, it was decided the remaining shareholdings should be increased. Following these shareholder meetings, the company submitted a new list of shareholders to the register court: it only listed the remaining shareholders.

According to § 16 (1) of the Act on Limited Liability Companies (Gesetz betreffend die Gesellschaften mit beschränkter Haftung, GmbHG), the entry of the new shareholder list in the commercial register effectively executes the resolution of shareholders because only the shareholder list in the commercial register acts as a (de facto) appointment of shareholders who can exercise certain rights (legitimisation effect).

The District Court of Berlin (Landgericht) granted the requested interim relief and required the respondent company to continue to treat the (excluded) majority shareholder as a shareholder. Further, the company was required to generate a shareholder list which showed the status quo without the withdrawal of shares and to submit this list to the register court.

The District Court of Berlin (judgment of 21 December 2022 in Case No. 96 O 30/22) and the Court of Appeal (Kammergericht, KG, judgment of 17 May 2023 in Case No. 23 U 14/23) confirmed the interim measures.

Background

Considering the duration of proceedings for an action for annulment or positive declarative, interim measures can have enormous significance, especially for defective resolutions. Without the option of granting an interim injunction, particularly after the adoption of a resolution (such as on a dismissal), the challenged resolution would have to be treated as effective, at least for a preliminary period. On average, many years pass before a judgment on the organisation will be effective. Nevertheless, the interim injunction will not mean that the resolution is declared void, it will just suspend the implementation of the resolution.

Fundamentally, the interim injunction should only preliminarily review the shareholder list. To the extent that the company attempts to deliberately undermine the shareholder’s possible legal protections by immediately submitting a new shareholder list to the responsible register court, there will be, in exceptional cases, a claim for the register of the corrected shareholder list, which shows the status quo without the (suspected unlawful) resolution, in addition to the ban on the submission of a changed shareholder list. This claim for abatement or removal is the extension of preventative injunctive relief against the registration of a newly configured shareholder list.

In this respect, the interim relief is more wide-reaching than the registration of an appeal. An appeal against registration in the commercial register will only protect against the bona fide acquisition of shares under § 16 (3) of the GmbHG, but not against the treatment as a non-shareholder. If the respondent is ordered to continue to treat the applicant as a shareholder and to submit a corrected shareholder list, the former shareholder list will effectively continue to apply until the final judgment of the Court.

According to the judgment of the Court of Appeal, the registration of the shareholder list with the ousted shareholder will constitute the necessary grounds for the grant of an interim injunction under §§ 935 and 940 of the Code of Civil Procedure (Zivilprozessordnung, ZPO). The fact that the shareholder can no longer exercise their shareholder rights due to the deletion constitutes a significant disadvantage that must be averted, within the meaning of § 940 of the ZPO. The remaining shareholders could otherwise use the duration of the main proceedings to generate advantages for themselves due to the legitimation effect of § 16 (1) of the GmbHG and to restructure the company as they see fit. All resolutions adopted while the judgment in the main proceeding is pending would remain effective even if the shareholder wins. Resolutions amending the articles of association or the corporate structure, adopted under the changed power structures, can either no longer be reversed or can only be reversed with disproportionate effort from the majority shareholder.

Where the requirements are met, the shareholder may be entitled to damages from their fellow shareholders. In the case of unlawful removal from the company and the immediate submission of a new shareholder list to the register court, such a claim could arise under § 826 of the Civil Code (BGB). Use of a formal legal position conveyed by the newly registered shareholder list should be viewed as damage inflicted in a manner offending common decency (see Judgment of the Federal Court of Justice (Bürgerliches Gesetzbuch, BGH) of 6 December 2022 in Case No. II ZR 187/21).

Comments

The judgment of the Court of Appeal represents a change to the jurisprudence of the higher courts on the question of interim protection against shareholder resolutions.

A shareholder, who fears that they might be removed from the company, can apply for an interim injunction in the run-up to the shareholder meeting. Where a shareholder meeting already took place, resulting in the (unlawful) removal of the shareholder, the shareholder can seek an interim injunction against the entry of the new shareholder list in the commercial register. Moreover, under the new case law of the Court of Appeal, the company may be ordered to submit a corrected shareholder list to the register court for registration in the commercial register.

Tassilo Klesen
Silke Ricken