The most important bodies of a German limited liability company are the shareholders’ meeting and the managing director. If you don’t want these two bodies to be solely governed by generally applicable statutory regulations, the articles of association must contain corresponding provisions.
The articles of association can also include provisions for other bodies, e.g. a supervisory board, to which tasks of the shareholders’ meeting can be assigned. Such tasks include, for example, the appointment and dismissal of managing directors.
Establishing a supervisory board by shareholders’ resolution
It has not yet been clarified at the highest judicial level whether such a supervisory board can be established by a simple shareholder resolution and if so, what conditions apply. For decades, it was common practice to provide the shareholders’ meeting with the opportunity to appoint such a supervisory board by simple resolution, i.e. without a notary needing to be involved and without amending the articles of association.
However, this practice was never and is still not a completely uncontroversial one, as it ultimately contradicts the principle of disclosure because the structural features of the company are no longer clearly evident from the commercial register following such a resolution.
Opening clause for the appointment of the supervisory board
The German Federal High Court of Justice (BGH July 02, 2019, II ZR 406/17) has now approved the current practice. However, it is important that the articles of association contain an opening clause:
- either a simple clause stipulating that the shareholders’ meeting may appoint a supervisory board and stating its responsibilities;
- or a twofold opening clause which, firstly, stipulates that the shareholders’ meeting may appoint a supervisory board and, secondly, stipulates that this meeting may also decide on the responsibilities of the new supervisory board.
Our attorneys specializing in corporate law will be happy to assist you in drawing up legally binding opening clauses.
Non-competition clauses unproblematic as opening clauses
Opening clauses which authorize the shareholders’ meeting to issue an approval catalogue for the management or to declare non-competition clauses were and are relatively straightforward. If you have any questions, please do not hesitate to contact us.
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