Dismissal of Martin Kind – a breach of the articles of association?

Dismissal of Martin Kind – a breach of the articles of association?

Hannoversche Sportverein von 1896 e.V. (e.V.) regularly provides material on company law. In a recent decision, the BGH (judgement of 16 July 2024 – II ZR 71/23) had to rule on the dismissal of Martin Kind as managing director of Hannover 96 Management GmbH (GmbH) by the e.V. as the sole GmbH shareholder. The Karlsruhe court ruled that a shareholder resolution in the GmbH, which had been passed by the shareholder (in this case the e.V.) in deliberate disregard of the allocation of competences in the GmbH articles of association, was only contestable, but not void from the point of view of a breach of the articles of association that would give rise to the status quo.

What is it all about?

The e.V. has outsourced its licence match operations to Hannover 96 GmbH & Co KGaA (KGaA). Martin Kind was the managing director of the limited liability company (Komplementär-) GmbH, which is wholly controlled by e.V. The limited liability shareholder of the KGaA is Sales & Service GmbH & Co. KG (KG), of which Martin Kind remains Managing Director. The GmbH has a four-member Supervisory Board, half of which is made up of representatives of the e.V. and half of representatives of the KG. According to the articles of association of the GmbH, the Supervisory Board is responsible for appointing and dismissing the Managing Director. The so-called Hannover 96 Agreement was also concluded between the e.V., the KGaA and the KG. This stipulates that the e.V. may not amend, supplement or replace the articles of association of the GmbH without the prior written consent of the KG. As a result, the managing director cannot be dismissed by the e.V. as its sole shareholder, but only by the supervisory board of the GmbH with a majority vote. However, this was not the case. At an extraordinary shareholders‘ meeting, representatives of the e.V. (the shareholder) passed a notarised resolution to dismiss Martin Kind as managing director of the GmbH with immediate effect for good cause „by way of a resolution breaching the articles of association“. In his action, Martin Kind sought a declaration that this resolution was null and void.

Decision of the BGH

The Karlsruhe court examined various grounds for nullity. Firstly, the grounds for nullity pursuant to Section 241 No. 3 and No. 4 AktG came into consideration. Finally, the judges also discussed nullity from the point of view of a breach of the Articles of Association that would give rise to a status quo.

Nullity in accordance with Section 241 No. 3 AktG

In accordance with Section 241 No. 3 AktG, a shareholder resolution is null and void if it is incompatible with the nature of the GmbH. In contrast to a violation of the law or the articles of association, for which a resolution of the shareholders‘ meeting can only be contested (Section 243 (1) AktG), only a violation of the fundamental structural principles of GmbH law can justify an incompatibility of the resolution with the nature of the GmbH. The court found that shareholder resolutions that only violate the allocation of competences laid down in the articles of association are compatible with the nature of GmbH law. Pursuant to Sections 45 (2), 46 No. 5 GmbHG, the shareholders‘ meeting, and not the optional supervisory board of a GmbH, has the power to dismiss. The disregard of the reservation of consent in the Hannover 96 agreement does not lead to nullity because the observance of such voting agreements is not one of the fundamental structural principles of GmbH law. The dispute over the legal consequences of such a breach was to be settled between the parties to the agreement and not with the company.

Nullity in accordance with Section 241 No. 4 AktG

In the opinion of the BGH, nullity due to immorality of the dismissal resolution in accordance with Section 241 No. 4 AktG is also out of the question. The consequence of nullity would only be relevant if the content of the resolution – i.e. „considered on its own“ – violated common decency. In order to be able to assume an offence, it is generally not sufficient that the person acting breaches a contractual obligation or the law or causes financial loss to another person. Rather, there must be a particular reprehensibility of the behaviour, which may result from the objective pursued, the means used, the attitude displayed or the consequences incurred. The assumption of immorality through the deliberate undermining of the statutory distribution of competences and the Hannover 96 contract would overstretch the concept of immorality.

Nullity from the point of view of a breach of the articles of association that gives rise to status

Resolutions that deviate from the articles of association are not invalid per se. The criterion is whether the resolution is intended to amend the articles of association. In this case, the formal requirements for an amendment to the articles of association, notarisation and entry in the commercial register, must be met. If, on the other hand, the articles of association are only to be amended once, the formal requirements for an amendment to the articles of association do not need to be met. Case law therefore distinguishes between one-off amendments to the articles of association and amendments to the articles of association that establish the status quo. Interruptions of the articles of association at certain points are generally effective without compliance with the formal requirements for amending the articles of association. Breaks in the articles of association that create a status are aimed at a permanent amendment to the articles of association. In such a case, the requirements for amending the articles of association must be met, the resolution must be notarised and entered in the commercial register. In the specific case, the BGH ruled that the dismissal of a managing director by the shareholders‘ meeting, which is not responsible for this according to the articles of association, does not constitute a legal situation that permanently deviates from the articles of association. The violation of the articles of association merely concerned the passing of the resolution and was finalised at the latest when it was announced to the managing director. Compliance with the formalities of an amendment to the articles of association is also not required in consideration of the protection of legal transactions intended by the publicity in the register.

Conclusion

External third parties (such as Martin Kind) are not authorised to challenge shareholder resolutions. Only the shareholders are authorised to bring an action for annulment against a dismissal resolution. External third parties can only invoke the nullity of a resolution by means of an action for declaratory judgement. However, grounds for nullity rarely exist. In the specific case of Hannover 96, the supervisory board of the GmbH, which is made up of equal numbers of representatives of the e.V. and the KG, must agree on a new managing director. It remains to be seen to what extent Hannover 96 will provide further material for company law in the future.

The author of this article will be happy to answer any questions you may have regarding the nullity of shareholder resolutions and help you assert your interests.

Auszeichnungen

• „MEYER-KÖRING ist besonders renommiert für die gesellschaftsrechtliche Beratung.“
  (JUVE Handbuch Wirtschaftskanzleien 2022)