Category Archives: Politics Law Society

Politics Law Society

Breach of duty by management – Special audit in cases involving a GmbH

Breach of duty by management – Special audit in cases involving a GmbH

Breach of duty by management - Special audit in cases involving a GmbH

If there is reason to suspect that management has breached its duties, the shareholders of a GmbH, a type of a German private limited company, can request that a special audit be carried out.

We at the commercial law firm GRP Rainer Rechtsanwälte note that the responsibilities of the shareholders of a GmbH include approving the annual financial statement as well as scrutinizing and monitoring management. In a judgment from December 14, 2017, the Oberlandesgericht (OLG) München, the Higher Regional Court of Munich, ruled that the right to scrutinize and monitor management also encompasses the right to appoint special auditors (Az.: 23 U 1481/17).

According to the OLG München“s ruling, a special audit is only impermissible if the application for its implementation is unlawful and constitutes a breach of a fiduciary duty by the shareholder filing the application. Moreover, the implicated shareholder has no voting rights in relation to the preparatory actions and decisions taken in respect of a special audit.

If shareholders of a GmbH are concerned that management has breached its duties, they can request a special audit. For the purposes of adopting a resolution, a simple majority is sufficient. In the case before the OLG München, two families with equal shares in a GmbH & Co. KG, a type of limited partnership with a GmbH as general partner, as well as a Komplementär-GmbH, a.k.a. a general partner GmbH, had fallen out. One of the families filed for a special audit and later voted in favour of this measure, whereas the other family voted against it. The managing director was not entitled to vote and the resolution concerning a special audit was passed.

The managing director then raised a legal complaint against this. However, the lawsuit was largely unsuccessful. The OLG München held that the shareholders of a GmbH are entitled to appoint special auditors. It ruled that in order for this to happen it is necessary for a tangible cause informed by the facts and circumstances to be presented to the general meeting of the shareholders. The Court noted that the suspicion of a breach of duty by management must follow from these facts and circumstances. Furthermore, the special audit must prove to be expedient in the form in which it was specifically requested. The Court went on to say that a special audit is only impermissible if the application is unlawful and constitutes a breach of a fiduciary duty by the shareholder filing the application.

Disputes among the shareholders of a GmbH are a regular occurrence. If these differences of opinion cannot be cleared up, lawyers who are experienced in the field of company law can offer advice and recommend targeted resolutions.

https://www.grprainer.com/en/legal-advice/company-law/gmbh-limited-liability-company.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

BGH – Abuse of superior market power is a violation of antitrust law

BGH – Abuse of superior market power is a violation of antitrust law

BGH - Abuse of superior market power is a violation of antitrust law

If a company abuses its market power, this constitutes a violation of antitrust law. In a ruling from January 23, 2018, the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court, has bolstered the Bundeskartellamt, Germany“s Federal Cartel Office (Az.: KVR 3/17).

Companies with superior market power are not allowed to put pressure on suppliers to obtain undue advantages for themselves. This kind of abuse of market power constitutes a violation of the Gesetz gegen Wettbewerbsbeschränkungen (GWB), the German Act Against Restraints of Competition. This so-called „Anzapfverbot“, i.e. prohibition on demanding unjustified benefits from suppliers, is applicable not only to businesses in a dominant market position; we at the commercial law firm GRP Rainer Rechtsanwälte note that it also applies in cases where small or medium-sized companies are dependent on a buyer and the latter therefore has superior market power.

The issue of when this kind of abuse can be said to have occurred has since come to the attention of the BGH. The case in question concerned a supermarket chain that had acquired a number of stores from a discount supermarket. Talks took place with the suppliers during the course of the acquisition with a view to obtaining favourable terms in the form of so-called „Hochzeitsrabatte“, i.e. wedding discounts. In addition to demanding the best possible terms in each case, other benefits, such as „Partnerschaftsvergütung“, a.k.a. partnership compensation, were also requested.

The Bundeskartellamt deemed this to be an abuse of market power by the supermarket chain and thus a violation of the GWB (Az.: B2-58/09). The Cartel Office“s decision was then overturned by the Oberlandesgericht (OLG) Düsseldorf, the Higher Regional Court of Düsseldorf. The OLG proceeded on the assumption that the negotiations involving the supermarket chain and the suppliers were between two parties in an equally strong position. The Court held that the supermarket chain had not abused its market power and that the discounts had been permissible.

The BGH has now overridden important aspects of the OLG Düsseldorf“s judgment in appeal proceedings. The former concluded that the supermarket chain had violated the prohibition on demanding unjustified benefits from suppliers, stating that the supermarket chain had not been allowed to choose dates as deadlines for the comparison of terms that came significantly before the discounter“s acquisition. Moreover, payments such as the aforementioned partnership compensation in relation to which there is no consideration cannot be requested.

Violations of competition law or antitrust law can give rise to severe penalties. That being said, these violations are by no means always obvious. Even individual contractual clauses can be in violation of applicable law. Lawyers who are experienced in the fields of antitrust law and competition law can advise businesses as well as enforce or fend off claims in the event of violations of either antitrust law or competition law.

https://www.grprainer.com/en/legal-advice/antitrust-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

Commercial agent“s right to claim compensation in the case of past clients

Commercial agent“s right to claim compensation in the case of past clients

Commercial agent"s right to claim compensation in the case of past clients

The commercial agent“s right to claim compensation in the event of turnover increases with past clients comes up time and time again as a contentious issue. A ruling of the Oberlandesgericht (OLG) Celle, the Higher Regional Court of Celle, has now bolstered the position of commercial agents (Az.: 11 U 88/16).

Following termination of the commercial agency agreement, the commercial agent is often entitled to claim compensation. This right normally exists if the commercial agent has established new business contacts for the company and the latter continues to benefit from these contacts. The matter frequently becomes a contentious issue in cases where the commercial agent further develops business contacts with existing clients and increases turnover. Until now, the case law has started from the premise that the commercial agent only becomes entitled to claim compensation if he or she has increased their old client“s turnover by 100 per cent. We at the commercial law firm GRP Rainer Rechtsanwälte note, however, that a ruling of the Oberlandesgericht Celle from February 16, 2017 has bolstered the position of commercial agents.

According to the OLG Celle“s judgment, the commercial agent might already be entitled to claim compensation if he or she has increased past clients“ turnover by more than 50 per cent.

In the case in question, the commercial agent had marketed certain products to pharmacies and cosmetic institutes. When the commercial agency agreement was terminated, he asserted a claim for compensation for turnover increases with three past clients, each of whose turnover he had increased by between 58 and 76 per cent. In the view of the OLG, there can be said to have been a substantial expansion of business relations if an increase in turnover of over 50 per cent has been achieved. Thus, the commercial agent was entitled to claim compensation in these three cases. The Court held that national case law, which requires turnover to have been doubled in order to give rise to a claim for compensation, is not consistent with the Directive on Commercial Agents (Council Directive 86/653/EEC of 18 December 1986).

The position of commercial agents has been strengthened by the OLG Celle“s ruling. Notwithstanding this, the issue of whether an increase in turnover of more than 50 per cent is sufficient as a general matter of principle for the purposes of claiming compensation will need to be clarified by further case law.

Lawyers who are experienced in the field of commercial law can advise companies and commercial agents on matters ranging from the drafting and eventual termination of the agreement to claiming compensation.

https://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

GRP Rainer Rechtsanwälte – Report on D&O insurance

GRP Rainer Rechtsanwälte – Report on D&O insurance

GRP Rainer Rechtsanwälte - Report on D&O insurance

In cases where damage or injury has occurred, it is increasingly common for the issue of D&O liability to take centre stage. For this reason, many companies have taken out a D&O insurance policy for their managers.

Besides a great deal of responsibility, a company“s governing bodies also bear a high risk of personal liability. Mere negligence can be sufficient to give rise to both internal as well as external liability on the part of boards of directors, supervisory boards or managing directors. To reduce their managers“ risk of personal liability, a lot of companies therefore decide to take out a D&O (directors and officers) insurance policy for their governing bodies and executive employees. According to a report by the commercial law firm GRP Rainer Rechtsanwälte, D&O insurance should always be tailored to the individual risks faced by managers to ensure that the coverage actually kicks in.

A common point of contention here is when the governing bodies cede their right of indemnity vis-à-vis the D&O insurer directly to the company. What has often happened in these cases is that the insurance company has not wanted to stand good. They argue that the companies do not intend to make a serious claim on their governing bodies but instead are only after the insured sum.

On this issue, the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court, has bolstered the rights of policyholders substantially with two ground-breaking judgments (Az.: IV ZR 304/13 and IV ZR 51/14). In doing so, the BGH established that the seriousness with which a claim is brought is not a prerequisite for coverage kicking in if an insured eventuality occurs. Instead, the decisive factor was said to be the manger making the claim in written form. Moreover, the Court held that it is acceptable for the governing bodies to assign their right of indemnity to the company that makes a claim against them. Accordingly, ceding the right of indemnity to the aggrieved company did not constitute conduct amounting to a violation of contract. The aggrieved company can thus directly assert its claims against the D&O insurer.

When taking out a D&O insurance policy, one should therefore always make sure that the managers“ individual liability risks are optimally covered. A key issue here is ensuring coverage of the risk of both internal and external liability on the part of governing bodies. Other essential factors include, e.g. the extent of the insured sum as well as the issues of retroactive coverage and cover for follow-up liability.

Lawyers who are experienced in the field of company law can offer advice when taking out D&O insurance and enforce claims against the insurer.

https://www.grprainer.com/en/legal-advice/company-law/do-insurance.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

GRP Rainer Rechtsanwälte – Experience with right of authorized dealer to claim compensation

GRP Rainer Rechtsanwälte – Experience with right of authorized dealer to claim compensation

GRP Rainer Rechtsanwälte - Experience with right of authorized dealer to claim compensation

Like commercial agents, authorized dealers may also be entitled to claim compensation after the relevant agreement has been terminated. For this to happen, certain conditions need to be fulfilled.

Unlike commercial agents, authorized dealers operate under their own name and for their own account. The latter markets another company“s products under its own name, whereas a commercial agent enters into agreements and transactions on behalf of the company. In return, the commercial agent receives commission and is normally entitled to claim compensation once the commercial agency agreement has been terminated. We at the commercial law firm GRP Rainer Rechtsanwälte note that authorized dealers can also be entitled to this right to claim compensation under certain circumstances.

The reasoning behind the commercial agent“s right to claim compensation is that he has established business contacts which the company will continue to benefit from even after the agreement has been terminated and without having to continue paying commission. While the authorized dealer conducts business under their own name and bears the associated entrepreneurial risk, he might nonetheless be entitled to claim appropriate compensation from his contractual partner pursuant to sec. 89 b) of the Handelsgesetzbuch (HGB), i.e. the German Commercial Code.

One of the conditions for the analogous application of sec. 89 b) HGB entails the authorized dealer having committed to transfer their client base to the contractual partner, with the result that the latter can continue to benefit from the client data even after the agreement has been terminated. The authorized dealer should also be involved in the company“s marketing in a similar fashion to a commercial agent. He needs to be involved to the extent that he has extensive obligations to perform commercially-relevant tasks that are otherwise assigned to a commercial agent (BGH, VII ZR 315/13).

According to the provisions of sec. 89 b) HGB, the authorized dealer“s right to claim compensation cannot be excluded in advance. This applies both to authorized dealers operating in Germany as well as, following another ruling of the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court, those operating within the EU or the EEA (ruling from February 25, 2016, Az.: VII ZR 102/15).

Authorized dealers may therefore be entitled to claim compensation, but certain conditions need to be fulfilled for this to happen. Lawyers who are experienced in the field of commercial law can serve as expert advisors in the event of legal disputes and when drafting agreements.

https://www.grprainer.com/en/legal-advice/commercial-law/authorized-dealer-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

GRP Rainer Rechtsanwälte – Abuse of a dominant market position – Antitrust assessment

GRP Rainer Rechtsanwälte – Abuse of a dominant market position – Antitrust assessment

GRP Rainer Rechtsanwälte - Abuse of a dominant market position - Antitrust assessment

Businesses are not allowed to abuse their dominant market position, as this constitutes a violation of antitrust law. The key issue that requires assessment is when this kind of abuse has occurred.

Abuse of a dominant market position constitutes a violation of antitrust law. According to the Gesetz gegen Wettbewerbsbeschränkungen (GWB), Germany“s Act Against Restraints of Competition, a business is considered to occupy a dominant market position if it has no competitors or is not exposed to any substantial competition, or has a paramount market position in relation to its competitors. We at the commercial law firm GRP Rainer Rechtsanwälte note that one circumstance pursuant to which a dominant market position or superior market power can said to have been abused is when a business takes advantage of its contractual partner“s dependence or at least prompts the latter to grant it benefits for which there is no objective justification.

When it comes to assessing when this type of antitrust violation has occurred, the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court, further strengthened the so-called „Anzapfverbot“, i.e. the extraction ban, in its ruling of January 23, 2018 (Az.: KVR 37/17). According to this, a violation can be said to have occurred from as early as when the company prompts its contractual partner to grant it benefits that have no objective justification and not only once an agreement has been concluded to this end. In the case in question, a supermarket chain had demanded more favourable terms such as „Hochzeitsrabatte“ (wedding discounts) or „Partnerschaftsvergütung“ (partnership compensation) from suppliers during the course of a takeover. These demands are impermissible according to the BGH“s ruling, because they were neither met with any consideration nor did they have any objective justification.

Following this decision, businesses with a dominant market position or superior market power should refrain from exploiting their position and making arbitrary or retrospective demands if there are no objective reasons underlying these demands.

The BGH“s ruling has thus bolstered the position of suppliers, yet it has also restricted the freedom to negotiate of businesses in a dominant market position. While this does not mean that driving a hard bargain for better conditions is forbidden, certain limits do need to be respected if one is to avoid violations of antitrust law.

Lawyers who are experienced in the fields of antitrust law and competition law can advise businesses as well as enforce or fend off claims in the event of violations of antitrust or competition law.

https://www.grprainer.com/en/legal-advice/antitrust-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

GRP Rainer Rechtsanwälte – Assessing manager liability in the event of imminent insolvency

GRP Rainer Rechtsanwälte – Assessing manager liability in the event of imminent insolvency

GRP Rainer Rechtsanwälte - Assessing manager liability in the event of imminent insolvency

One of a managing director“s duties is filing for insolvency on time. If this duty is breached, the managing director may be held personally liable.

Under no circumstances should managing directors ignore signs of imminent insolvency, as filing for insolvency in a timely manner is one of their duties. Failure to file for insolvency on time or making undue payments in spite of impending insolvency can make life extremely unpleasant for the managing director; his or her breach of duty can give rise to personal liability and an obligation to pay damages to both the company“s shareholders and creditors.

We at the commercial law firm GRP Rainer Rechtsanwälte note that the managing director is obligated by law to file for insolvency without undue delay, but no later than three weeks following the onset of insolvency or the company“s over-indebtedness. The initial decisive factor here is an assessment of the point in time when factual insolvency occurred, or when the company became insolvent or over-indebted.

According to the Insolvenzordnung, the German Insolvency Act, insolvency has occurred if the company is not able to meet its payment obligations. This condition is said to have been satisfied if a large proportion of due liabilities is not being paid, even if payments are still being made. However, it also needs to be assessed whether solvency is capable of being re-established within the three-week period. A company can typically be said to be over-indebted if its assets no longer cover the existing liabilities.

In the case of imminent insolvency, it is no longer permissible for any payments to be made that might reduce the insolvency estate. The managing director should therefore ensure that no more payments are made from within the company, including by other persons who are authorized to make payments. If the managing director breaches his duty, he may be held personally liable.

To avoid the risk of manager liability, if a company experiences financial difficulties it ought to be assessed whether insolvency has in fact already occurred or whether there are only some indications of this. Managing directors should take prompt action in these cases. Lawyers who are experienced in the field of company law can serve as go-to experts.

https://www.grprainer.com/en/legal-advice/company-law/managing-director.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

GmbH shareholder“s rights of access and inspection

GmbH shareholder“s rights of access and inspection

GmbH shareholder"s rights of access and inspection

The shareholders of a GmbH, a type of German private limited company, have extensive rights to information that go beyond the general meeting of the shareholders, and they are able to exercise their rights of access and inspection.

GmbH shareholders entrust the managing director with the fate of their company. Notwithstanding this, they do, of course, have the right to be informed about what is happening in their firm at all times. In addition to the general meeting of the shareholders, the rights of access and inspection are an important tool for shareholders to gain an insight into all commercially and legally relevant matters within the company. We at the commercial law firm GRP Rainer Rechtsanwälte note that while their rights of access and inspection are indeed wide-ranging, they are not without their limits.

What is the order situation? Which projects have been completed and which are at the planning stage? How are the agreements structured? These and other questions are of interest to all shareholders. They receive answers to these questions at the general meeting of the shareholders. They can also receive answers by exercising their rights of access and inspection, and in doing so request information concerning concluded transactions, projects at the planning stage, agreements, records, protocols etc. These rights to information may also be applicable to a limited extent if the GmbH has a financial interest in other companies.

The GmbH shareholder“s rights of access and inspection cannot be restricted by the articles of association. Moreover, the managing director is obligated to provide the desired information without delay. However, he or she must also assess whether providing the information would go against the company“s interests. This would be the case, for instance, if there was reason to fear that the shareholder might use the information for non-company purposes and thereby damage the company, e.g. because the shareholder has a financial interest in a rival company as well.

In such instances, the managing director needs to act prudently. If he or she acts on their own authority in refusing access or the right of inspection, he or she is committing a breach of duty and may render themselves liable to pay damages. Conversely, he or she cannot release the information if they have reason to fear an abuse of rights or use of information for non-company purposes. The final decision must therefore be taken by the general meeting of the shareholders. The shareholder seeking the information is not authorized to vote on this resolution. If the general meeting decides to deny the shareholder access or the right of inspection, the latter can still try and enforce his or her rights through the courts.

Lawyers who are experienced in the field of company law can advise shareholders and managing directors.

https://www.grprainer.com/en/legal-advice/company-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

No discrimination – Local authority position for equal opportunity officer only open women

No discrimination – Local authority position for equal opportunity officer only open women

No discrimination - Local authority position for equal opportunity officer only open women

Germany“s General Act on Equal Treatment, aka the allgemeine Gleichbehandlungsgesetz (AGG), is supposed to protect against discrimination, e.g. on the basis of gender. That being said, exceptions can be made, as demonstrated by a ruling of the Landesarbeitsgericht (LAG) Schleswig-Holstein [Regional Labour Court of Schleswig-Holstein].

Discrimination in the workplace is also meant to be prohibited. The AGG is supposed to afford protection and prevent people from being discriminated against, for example, because of their race, gender, religion or age. We at the commercial law firm GRP Rainer Rechtsanwälte note that for employers this means the need to ensure they use appropriate wording, including when posting job advertisements; if applicants are discriminated against from the outset, they may be entitled to claim compensation.

Having said that, not every instance of discrimination is automatically a violation of the AGG, as is clear from a judgment of the LAG Schleswig-Holstein from November 2, 2017 (Az.: 2 Sa 262 d/17). In the instant case, a district in Schleswig-Holstein had advertised a vacancy for an equal opportunity officer. A man who had applied for the position was rejected, according to the Ministry for Social Affairs, Health, Science and Equality, on the grounds that only women can carry out the role of an equal opportunity officer in the public sector.

The man felt he had been treated unfairly and sued pursuant to the AGG for compensation amounting to three times the monthly salary on account of gender-related discrimination in the application process.

However, the LAG Schleswig-Holstein dismissed the claim. The Court stated that while the plaintiff had indeed been discriminated against because as a man he had no chance of getting the job, this form of discrimination is permissible as the legal framework in Schleswig-Holstein only provides for female equal opportunity officers, and this does not constitute a violation of the requirement for equal treatment; the relevant provisions are designed to eliminate structural disadvantages that are still faced by women to this day. The LAG went on to say that being female is an important prerequisite for a substantial portion of the tasks that go hand in hand with the position of equal opportunity officer.

There is always the possibility of discrimination leading to legal disputes, similar to how dismissal or working hours are frequent points of contention in the workplace. Lawyers who are experienced in the field of labour law can advise employers.

https://www.grprainer.com/en/legal-advice/employment-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

BGH: Removal of a shareholder managing director for good cause

BGH: Removal of a shareholder managing director for good cause

BGH: Removal of a shareholder managing director for good cause

When it comes to the removal of a shareholder managing director of a GmbH, a type of German private limited liability company, for good cause, it is a matter of whether there was in fact good cause at the time the decision was taken.

Disputes among the shareholders of a GmbH are not uncommon. If these give rise to a situation whereby the shareholder managing director is set to be removed and his or her employment contract terminated, it is often the shareholder managing director“s right to vote at the general meeting of the shareholders that tips the scale. That being said, he or she will not be able to exercise their right to vote if they are being removed for good cause. We at the commercial law firm GRP Rainer Rechtsanwälte note that a frequent point of contention in the case law is whether it is enough for good cause justifying removal to have a merely formal basis or whether good cause needs to be objectively supported by the facts and circumstances.

The Bundesgerichtshof (BGH), Germany“s Federal Supreme Court, has provided clarity on this issue. In its judgment of April 4, 2017, the BGH ruled that when it comes to removing a shareholder managing director of a GmbH or terminating his or her employment contract, it is a matter of whether there was in fact good cause at the time the decision was taken. The burden of proof is on the party making reference to good cause (Az.: II ZR 77/16).

In the instant case, two shareholders of a GmbH had differences of opinion. The plaintiff held 49 per cent of the shares in the company and sought the immediate removal of the managing director as well as termination of his employment contract. The defendant shareholder managing director held 51 per cent of the shares. He voted against the proposals in the general meeting of the shareholders and secured their rejection.

The legal proceedings concerned whether the shareholder managing director had been allowed to exercise his right to vote in the first place. The action was unsuccessful. The BGH held that there needs to objectively be good cause justifying removal and termination of the employment contract at the time the decision was made. The Court ruled that no such good cause existed at the time of the general meeting of the shareholders. The BGH went on to say that there can be said to be good cause if any further activity by the managing director would be unreasonable for the company, especially if this is due to gross derelictions of duty.

Lawyers who are experienced in the field of company law can advise shareholders and managing directors in the event of disputes and see to it that there are detailed contractual arrangements.

https://www.grprainer.com/en/legal-advice/company-law/managing-director.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en