Shareholder resolutions in text form
Scope of the Covid-19 Act
The Act to Mitigate the Consequences of the Covid-19 Pandemic under Civil, Insolvency and Criminal Procedure Law (“Covid-19 Act”) came into force in Germany on 28 March 2020. Article 2 of the Covid-19 Act sets out measures in the area of company law. These include making it easier for resolutions to be made without physical presence of the shareholders of a German limited liability company (GmbH). Article 2, section 2 of the Covid-19 Act temporarily provides that by way of derogation from section 48(2) of the Limited Liability Companies Act (GmbHG), shareholder resolutions may be taken, in text form or by submitting votes in writing, even without the consent of all the shareholders. The arrangement applies only to general meetings taking place in 2020, and may be extended by ordinance of the Federal Ministry of Justice until 31 December 2021 at the latest (Article 2 section 8 Covid-19 Act).
The Covid-19 Act does not contain any amendments to the law on partnerships. The Act, directly applied, thus does not facilitate the making of resolutions in companies with the legal form of a GmbH & Co KG (partnership whose general partner is a limited liability company), which play a large role in practice. It is questionable whether the Covid-19 Act applies analogously to such companies, as this would require a loophole in the Covid-19 Act. In interim injunction proceedings, Cologne Regional Court has now decided that making resolutions in a GmbH & Co KG in analogous application of the Covid-19 Act is inadmissible.
According to its explanatory memorandum, the Covid-19 Act is, as an exceptional act, intended to mitigate the effects of the limited opportunities for assembly, which would otherwise have a significant impact on the capacity of companies to act. This applies in particular to essential financial measures, for which there should be no delay even in the light of the pandemic.
In practice, it is currently under discussion whether the new provision of Article 2, section 2 of the Covid-19 Act also applies to limited liability companies whose articles of association – as is often the case – require the approval of all members for decisions taken outside physical meetings. The reason for the discussion is that section 45(2) of the Limited Liability Companies Act provides for a fundamental primacy of provisions of articles of association over statutory provisions. The Covid-19 Act does not affect this rule. In that regard, systematically there are strong indications that the intention of the shareholders laid down in the articles of association continues to prevail over the provisions laid down in section 48(2) of the GmbHG. Thus the scope of the Covid-19 Act is significantly reduced in the case of making resolutions at a GmbH, since many articles of association require the consent of all shareholders in order to pass resolutions outside of physical meetings. However, this appears to be tolerable in terms of legal systematics.
Any questions? Please contact: Dr Sarah Schmidt-Versteyl
Practice group: Litigation, Arbitration & ADR