German Corporate Law — Legal Advice

What corporate law covers in practice

Corporate law is more than formation law. It begins with the choice of legal form and the articles of association, continues with the governance of shareholder relationships, resolutions, appointment and removal of managing directors — and accompanies the company through restructurings, share transfers, business successions and, where necessary, liquidation.

The applicable statutory framework depends on the legal form: the GmbHG, AktG, HGB (OHG, KG) and BGB (GbR). For the GmbH, as the most commonly used business vehicle, §§ 1 et seq. GmbHG provide the framework — with specific provisions on voting rights and resolutions (§ 47 GmbHG), share transfers (§ 15 GmbHG), managing director liability (§ 43 GmbHG) and shareholders’ rights.

Articles of association and governance drafting

Articles of association are not a form document. They define the legal constitution of the company — and in most cases are read carefully only when something goes wrong. Careful drafting at the outset can reduce uncertainty and the risk of later disputes.

Typical provisions include voting rights and majority requirements, profit distribution, transfer restrictions under § 15(5) GmbHG — which may make a transfer subject to company approval or other agreed conditions — non-compete provisions, succession rules and exit compensation. The more shareholders involved, and the more diverse their interests, the more important individually drafted articles become.

Unless the articles provide otherwise, shareholders’ resolutions are adopted by a majority of the votes cast, and each euro of a share generally carries one vote. Statutory voting exclusions under § 47(4) GmbHG must also be observed.

Depending on the ownership structure, the articles may be supplemented by a separate shareholder agreement. Both documents must be coordinated carefully, particularly where transfer, option, exit or succession provisions may trigger the notarial-form requirement under § 15(4) GmbHG.

We draft articles of association for new and existing companies and review existing articles for gaps. Related page for the formation phase: GmbH formation.

Share transfers and shareholders’ resolutions

The transfer of a GmbH share requires notarial form under § 15(3) GmbHG — in particular for share sales, gifts and transfers in the context of corporate transactions. An agreement creating an obligation to transfer a GmbH share also requires notarial form under § 15(4) GmbHG. The compulsory redemption of a share under § 34 GmbHG is a separate matter: it is available only where the articles authorise redemption, and a redemption without the shareholder’s consent requires that the relevant grounds were already set out in the articles before the shareholder acquired the share; the capital-maintenance requirements must also be observed. Transfer restrictions under § 15(5) GmbHG may additionally make a transfer subject to the approval of the company or the shareholders’ meeting or other agreed conditions.

Shareholders’ resolutions in GmbH law must be formally valid — in particular as to notice, voting rights, voting exclusions, majority requirements and the requirements of the articles. Defects may result in a resolution being voidable or, in more serious cases, void. Actions to set aside a resolution and actions seeking a declaration of nullity are subject to different requirements. The GmbHG does not contain an express statutory time limit for an action challenging a shareholders’ resolution. Under established case law, however, the one-month period in § 246(1) AktG must generally be observed by analogy unless the articles contain a valid different rule. A delay may be excused only in exceptional circumstances. Legal advice should therefore be sought immediately.

Shareholder disputes — prevention and resolution

Shareholder conflicts rarely arise overnight. Disagreements over management, profit distribution, investment decisions or succession often crystallise over months — without either party seeking a conversation. Once the conflict escalates, various legal routes are available.

Where commercially and strategically appropriate, negotiations, mediation or an agreed separation may provide a more controlled solution than immediate litigation. Where these routes are not available or do not succeed, the options may include proceedings to challenge shareholders’ resolutions, compulsory redemption of a share under § 34 GmbHG where the articles authorise it, removal of the managing director and separate assessment of the managing director service agreement, or, in exceptional cases, judicial dissolution under § 61 GmbHG.

Removal from the corporate office must be distinguished from termination of the managing director service agreement. The appointment is generally revocable under § 38 GmbHG, subject to any valid restriction in the articles, while the contractual relationship requires a separate assessment.

An action for judicial dissolution under § 61 GmbHG may be available where achievement of the company’s purpose has become impossible or another important reason rooted in the company’s circumstances exists. The action may be brought only by shareholders whose shares together represent at least 10% of the share capital. Exclusion of a shareholder may be available for good cause, depending on the articles and the circumstances; it is not a routine remedy and requires careful assessment of the applicable procedure, proportionality and compensation consequences. Uncoordinated escalation may increase cost, delay and strategic risk. We advise shareholders and managing directors in conflict situations. Related page: managing directors & shareholders.

International shareholders and structures

For companies with foreign shareholders or managing directors, corporate law regularly intersects with immigration and commercial law. Shareholders may be represented by proxy; under § 47(3) GmbHG, the power of attorney must be in text form. Under the statutory default rules, meetings may be held by telephone or video communication if all shareholders consent in text form, and resolutions without a meeting are possible under § 48(2) GmbHG where all shareholders consent to the procedure or the resolution in text form. The articles may provide additional rules.

In cross-border share transfers or corporate procedures, foreign documents, powers of attorney or register extracts may require an apostille, legalisation, evidence of authenticity or a certified German translation, depending on the country, document and intended use. Under § 20 GwG, a GmbH must obtain, retain, keep current and notify the required information on its beneficial owners to the transparency register. Section 19 GwG specifies the information recorded, including the beneficial owner’s name, date of birth, place of residence, nationalities and the nature and extent of the beneficial interest. The obligation applies regardless of the beneficial owner’s place of residence.

We advise on international corporate structures — in German and English. The GmbH for foreign shareholders page addresses the formation side in detail.

Advice in Hamburg — corporate law at Neuer Wall

We advise shareholders, managing directors, Mittelstand companies and international investors in Hamburg on ongoing corporate-law matters, including articles of association, share transfers, shareholders’ resolutions, restructurings and disputes. Kagan Legal, Neuer Wall 75, 20354 Hamburg.

Advice is provided by Alexander Kagan, admitted as a German Rechtsanwalt and a member of the Hanseatic Bar Association Hamburg (Hanseatische Rechtsanwaltskammer Hamburg).

The content of this page is general information only and does not constitute legal advice. The corporate law assessment depends on the circumstances of the individual case.