Contingent liability of shareholders if GmbH shares are redeemed

Shareholders’ agreements of limited liability companies (GmbH) often include regulations that facilitate the redemption by shareholder resolution of shares of shareholders who establish a compelling reason without its consent.

With its judgment dated 24 January 2012, the Federal High Court of Justice (BGH) decided in the then controversial matter that the redemption resolution already takes effect with the notification of the resolution to the affected shareholder and not only with the payment of the settlement balance.

With this decision, the BGH takes account of the principle that the company is not burdened with the further membership of the shareholder to be excluded (the troublemaker) until the payment of the settlement balance. In return, the leaving shareholder – according to the BGH – must be protected from the remaining shareholders acquiring the economic value of the leaving shareholder with the continuation of the company and leaving the excluded shareholder with nothing of its settlement claim due to the creditor-protecting capital maintenance obligation governed in Section 30 (1) Limited Liability Companies Act (GmbHG) – the settlement balance may only be paid if the share capital is not impaired by this payment.

In order to protect the leaving shareholder in this regard, the BGH has ruled that the remaining shareholders shall be liable to the leaving shareholder on a pro rata basis with regard to its settlement balance, unless they make sure that the settlement can be paid from the non-committed assets of the company or unless they dissolve the company.

In a current decision dated 10 May 2016, the BGH further specified this liability of the remaining shareholders established in the judgement dated 24 January 2012. The BGH clarifies that the liability of the shareholders established by it in its judgement dated 24 January 2012

  • does not already arise with the passing of the redemption resolution;
  • does not already arise merely due to the circumstance that the company is prevented from the payment of the settlement later at the time the settlement payment becomes due according to Sections 34 (3), 30 (1) GmbHG;
  • or the company refuses the payment with reference to this obstacle.

Furthermore, a liability of the remaining shareholders does generally not arise either if insolvency proceedings are opened for the assets of the company at the time the settlement becomes due or thereafter or if the company is on the brink of insolvency so that an application for the opening of insolvency proceedings must be filed according to Section 15 a Insolvency Statute (InsO) and the filing of this application is not delayed contrary to good faith, as, in these two cases, a continuation of the company contrary to good faith by the remaining shareholders can be excluded by the mere fact that the opening of the insolvency proceedings leads to the dissolution of the company, Section 60 (1) no. 4 GmbHG.

The outlined liability of the shareholders shall rather occur only at the time from which the continuation of the company by waiving measures to satisfy the settlement claim of the leaving shareholder is to be regarded as contrary to good faith. In particular, this requirement shall not be readily met if sufficient assets for the settlement payment by the company are objectively available, but the company has a different opinion in this regard. To this extent, the risk that the company does not pay the settlement voluntarily lies with the leaving shareholder. Where required, the leaving shareholder would have to enforce its claim with the help of a court ruling. – The leaving shareholder bears the burden of proof for the continuation of the company contrary to good faith, which is required to substantiate its claim. Against this backdrop, an enforcement of the outlined claim of the leaving shareholder is connected with significant efforts, if it can be realised at all.

Due to its immediate resignation, the leaving shareholder does not have any influence on the continuation of the company as from the notification of the redemption resolution and it does not have any rights to receive information according to Section 51 a GmbHG. However, without information from within the company, the leaving shareholder will hardly be able to present and prove when a potentially at first honest continuation of the company changes to behaviour contrary to good faith.

After the decision of the BGH dated 10 May 2016, the liability of the remaining shareholders newly established by the judgement dated 24 January 2012 for the settlement balance of the leaving shareholder should be limited. Nonetheless, also in consideration of the decision of the BGH dated 10 May 2016, there remains some uncertainty about the scenarios where the BGH will assume a business continuation contrary to good faith. Although the BGH clarified with its decision dated 10 May 2016 that neither the mere non-payment of the settlement nor a deterioration of the financial situation of the company alone can speak in favour of the assumption of behaviour contrary to good faith, final residual risks remain in the answer to the question when behaviour contrary to good faith must definitely be assumed. To this extent, the developments in case law must be awaited.