Solve shareholder dispute

If differences arise between partners, the withdrawal of a partner can be the solution. Although the shareholders were still consensual at the start-up stage, different opinions may arise over time and there are disputes between the partners. As soon as customers and business partners are involved and the existence of society is threatened by the shareholder dispute, action is required.

The weak will also become powerful connected.

Friedrich Schiller

Company law provides for various ways of responding to such situations in order to end the shareholder dispute.

In order to terminate the position of the shareholder in a limited liability company (GmbH), different scenarios are offered. The retirement of the shareholder is subject to certain conditions.

Whether a shareholder gets rid of the GmbH through sale, termination, withdrawal, liquidation or resolution action is dependent on decisive factors.

Ideally, however, the shareholders should clarify the end of a managing director's office or a company creation by mutual agreement. If this does not work, it is necessary to examine which approach is optimal for the retirement of the shareholders, because each society is individually different.

Termination of a shareholder from the GmbH

We will show you 5 ways to leave a shareholder from a GmbH.

Scenario 1 – GmbH Selling shares

The shareholders remaining in the GmbH can take over the shares of the departing shareholder. The remaining shareholders have the possibility to buy the shares thus released.

Sale of shares to third parties

The shareholder may not sell his shares to arbitrary third parties at the time of exit. In order to transfer the shares to third parties, the consent of the shareholders is required.

The shares of a GmbH have been modified, which means that the right to transfer a share of a GmbH is subject to the approval of the shareholders.

Rechtsanwalt Andreas Friedlein

It is quite common for the co-owner to have a pre-purchase right if a shareholder wishes to sell his shares to third parties. This approach therefore requires many company contracts in complex clauses. If the remaining shareholders do not benefit from the law, the departing shareholder may sell the shares to third parties.

Scenario 2 – GmbH terminate

If the company contract provides for a contractually agreed right of termination, the withdrawing member shall have the possibility to terminate the company. It is essential that he observe the notice period.

However, the GmbH law itself does not provide for a statutory right of termination.

The usual procedure is as follows:

• the company is continued among the remaining shareholders
• the shares of the quitter are collected
• the quitter receives a compensation for the shares
• The shares will then be transferred, for example, to the GmbH, a co-owner or third parties.

Scenario 3 – Termination of shareholders

The withdrawal of the shareholder is almost the last resort. If there are no other options, such as termination or sale of shares, the shareholder may finally withdraw. 

The shareholders have an unwritten right to withdraw from a company. The legislator has recognized this. However, this requires an important reason.

Law on Limited Liability Companies

The reason should be the unacceptable continuation of membership for the partner. Whether the reason is important enough is individually different and should be examined. 

The outgoing shareholder is obliged to make a declaration to the GmbH. The GmbH is therefore faced with two possible paths. She can collect the shares and pay a severance fee to the quitter. Another way is that it transfers the shares to itself, co-owners or third parties.

It is necessary to comply with the principle of capital conservation.

Scenario 4 – Dissolve GmbH

If a three-quarter majority prevails, this majority of votes allows the shareholders to dissolve society. The decision liquidates the GmbH.

The members then compensate for all liabilities and sell the remaining assets. Then follows a lockout year. The shareholders then divide the remaining assets among themselves.

Finally, the GmbH will be deleted from the commercial register.

Scenario 5 – Dissolution action

The very last remedy is to sue on dissolution of the GmbH. This can be done by shareholders who are involved with at least 10%.

If the GmbH is no longer able to achieve its purpose, it may be dissolved by a court judgment. Other reasons may also require termination. They must, however, be in the conditions of society.

If two shareholders continue to argue with the same influence, this unfortunate state can block decisions and severely impede the continuation of society.

Only if no other solution is available will a winding-up action be considered.

Formalities of the exit from society

In order to withdraw from a limited liability company as a shareholder, the shareholder should terminate its creation. A managing partner should end the management office.

End Managing Director's Office

Ending the position of managing director is easy, but the managing director simply has to resign. The managing director should make a statement at the shareholders' meeting. The shareholders' meeting is, so to speak, in the function of the appointment body.

The removal of the Office should take place in writing for the purpose of providing evidence in the event of a dispute. In addition, the managing director should report to the commercial register the transfer of his office.

Employed manager 

Is the Managing Director in a position, the employment contract should ideally end at the same time as the termination of office. The best way to achieve this is by means of a friendly Derogation contract.

Compliance with the conditions of the employment contract

As soon as a consensual cancellation is not possible, it is absolutely necessary to observe terms and conditions of termination of the employment contract.

Reasons for withdrawing from a GmbH, for example, can be the desire for a professional reorientation or the failure of cooperation within the GmbH.

Rechtsanwalt Dipl.-Ing. Michael Horak, LL.M.