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May the sole member of a German stock corporation’s management board resign from office?

Dec 28, 16 • Corporate LawNo Comments

Basically, the managing director of a German limited liability company (GmbH) and a member of the management board of a German stock corporation (AG) may resign from office at any time without notice and without giving reasons. However, the managing director of a GmbH is prohibited from resigning if the resignation constitutes an abuse of rights. This may be the case, for instance, if the resigning managing director is not only the sole managing director but also the sole shareholder, and if no successor has been appointed at the time of resignation. The managing director represents and acts for the GmbH. Without a managing director a GmbH is, hence, unable to act.

Sole member of the management board resigns from office

The Higher Regional Court (OLG) of Hamburg recently decided on a case where the commercial register refused to register the resignation of the sole member of the management board of a German stock corporation. The register justified its decision by reasoning that previously two members of the supervisory board had also resigned from office so that the supervisory board was unable to act and could not appoint a new member of the management board.

Supervisory board without a quorum

For understanding the case: In the same way as a managing director of a GmbH is appointed by the shareholders’ meeting, the members of the management board of a German stock corporation are appointed by the supervisory board. The supervisory board of a German stock corporation must have no less than three members to have the required quorum, for instance, to appoint a member of the management board.

Preconditions for inability to act

In the quoted case, the Higher Regional Court held that the requirements for a German stock corporation’s inability to act needed to be high. In the case at hand, for instance, the remaining member of the supervisory board, just as any stockholder, could have made an application for judicial completion of the supervisory board (Section 104 of the German Stock Corporation Act). In view of this option, the resignation of the sole member of the management board did not constitute an abuse of rights.

If you have any further questions regarding German corporate law, please do not hesitate to contact our specialized attorneys.

Continue reading:
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Company registration in Germany: How to avoid pitfalls

Thomas Schwab

Attorney Thomas Schwab mainly handles general contract, corporate, civil, commercial, inheritance and international business law matters.

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