In a recent decision dated September 05, 2024 (case no. 27 W 73/24), the Hamm Higher Regional Court (OLG) rejected an association’s appeal against the court’s authorization to convene a general meeting. The case shows how important the rights of association members are and how these can be effectively enforced if the association’s board fails to act.
Minority request in the association
A German association was confronted with a minority request pursuant to Section 37 (1) of the German Civil Code (BGB). This provision gives a qualified minority of association members the right to demand that a general meeting be convened if the board fails to comply with this obligation.
The following requirements must be met in order to assert a request to convene a meeting:
- A minority of at least one tenth of the members or a smaller proportion of the members specified in the articles of association must assert the request.
- The request must be submitted to the management board in writing, stating the purpose and reasons.
- The management board must not have complied with the request.
In this specific case, the association’s board had not sent out an invitation to a requested general meeting, despite the announcement. A meeting originally scheduled for April 26, 2024, had been canceled without giving reasons, and no invitation had been sent for a later date either. The local court of Lemgo then issued a court authorization to convene the meeting at the request of the members.
The association objected to this, arguing that the requirements for such authorization were not met.
Qualified minority can demand the convening of a general meeting
The OLG Hamm dismissed the association’s complaint as unfounded: According to Section 37 (1) BGB, a qualified minority can demand the convening of a general meeting if the board does not comply with this obligation. The judicial authorization is intended to give the affected members the opportunity to assert their right to participate in association decisions.
In the present case, these rights were violated by the conduct of the management board, as neither the originally planned meeting was held nor a new invitation was sent out as announced. The members also had a legitimate interest in the meeting being held promptly, as important decisions – such as board elections – had to be made. As long as the board did not fulfill its obligation, the minority request was valid. The OLG Hamm stated that only an invitation actually issued by the management board could remove the basis for the minority request. The mere announcement of a convocation was not sufficient.
The court also clarified that resolutions of a meeting convened on the basis of a court authorization have the same validity as those of a properly convened general meeting.
Protecting members’ rights and avoiding conflicts with members
The Hamm Higher Regional Court’s decision underlines the importance of members’ rights in the association in Germany and shows that board members must always have the interests of members in mind. Management boards are therefore well advised not to lose sight of the interests of the members. They should call general meetings in good time and, in the event of cancellation or postponement, provide members with an appropriate explanation. A legal dispute can cause considerable costs and reputational damage, so conflicts should be resolved internally as early as possible.
Management boards must therefore be familiar with and observe the statutory and legal regulations for safeguarding members’ rights. The regulations should be tailored to the individual needs of the association and its members and should not paralyze the association’s work, e.g. through abusive motions. Minority rights should be designed in such a way that a balance is maintained between the protection of members and the board’s ability to act. Good articles of association are tailored to the individual needs of the association and designed in such a way that they make it difficult to abuse member and minority rights without undermining them.
Our experts for associations in Germany will be happy to support you in drafting your articles of association. We will advise you individually and help you to act in a legally compliant manner and in the interests of good association management.
Continue reading:
Special Representatives in German Associations: Delegation of Duties and Liability
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