A German court recently ruled that a shareholder of a German limited liability company may be represented by a freely appointed substitute during a shareholders’ meeting and a voting process as long as in the partnership agreement of the company this is not expressly regulated otherwise. Often, there are regulations that only allow a shareholder to be represented by other shareholders or by a lawyer or tax accountant.
Rejection under certain circumstances
The shareholders’ meeting may reject a representative only under particular circumstances. The requirements for a rejection are higher when the shareholder is represented by a person who is legally bound to secrecy such as a lawyer. If a shareholder appoints a representative, he is usually not entitled to additionally attend the meeting himself.
Participation of consultants regulated in the partnership agreement
If a shareholder himself exercises the right to participate and to vote, he may only be accompanied by another person as consultant or witness (e.g. by an expert, an auditor or a lawyer) when this is specified in the partnership agreement or authorized by the majority of the shareholders’ meeting. The court followed the previous jurisdiction and ruled that a shareholder may be exceptionally accompanied by a consultant when the shareholder lacks important knowledge that is necessary to take serious decisions.
Legally secure partnership agreements
In practice, this means that a shareholder may have the right to be accompanied by a lawyer when important decisions are taken during a shareholders’ meeting. If, for reasons of confidentiality, the shareholders prefer only lawyers as representatives, this has to be clearly stated in the partnership agreement. Our experienced lawyers would be happy to assist you with any related issues in Germany.
The German Limited Liability Company