Okay, I just learned that the Geschäftsführer represents the company towards the public. Why do we have to have a shareholders’ assembly? What is its function?
The shareholders hold the capital and the internal decision making is the shareholders’ job. They determine the “politics” of the company on a general basis. The daily nitty-gritty work remains with the managing director (Geschäftsführer).
What are the responsibilities of the Shareholders Assembly?
The assembly of shareholders is the superior body of the GmbH. It consists of all shareholders – regardless of their capital. Voting rights can and often differ – often respecting the invested capital. They have all the rights and duties as assigned by the articles of association and §46 GmbHG. The statutory and mandatory duties of the shareholder’s assembly are:
- acknowledgment of the annual closings and use of the profit,
- calling for contributions,
- dividing, combing, and confiscating of shares,
- engaging „second class directors (Prokuristen),
- alterations in the articles of association,
- dissolution of the company,
- calling for (further) funds.
- These duties are mandatory for the shareholders assembly and cannot be delegated to any board of directors (Aufsichtsrat) or other representatives. The assembly’s decisions are made by resolutions. The formalities of the resolution are found in the articles of association and if the articles do not contain any regulation or invalid ones, the Act on GmbHs will determine these formalities. Anyhow, with the mutual consent of shareholders any formalities can be waived.
Isn’t it a conflict that I as a shareholder am also the CEO of my company?
Not at all. The law demands that there be at least one managing director and one shareholder. If the director also holds any shares or not is irrelevant for the position. Seen from daily life, CEOs in bigger corporation often get stocks as part of their salary.
Oh well, my managing director has split. I can’t find him anywhere and nobody knows his whereabouts. Who cares?
You should care! According to the old law, only the managing director was obliged to file for bankruptcy when the company became unable to pay. Being without management does not mean that the shareholders can rest and do nothing. They now are also in the position to file bankruptcy, unless the shareholders did not know that there was no managing director appointed or did not know of any grounds for bankruptcy. The obligation to file for bankruptcy cannot be circumvented by the Geschäftsführer disappearing.
Our managing director is refusing to deplete the company’s funds because we shareholders want to split to the Bahamas. The company is broke and we don’t want to take care of it anymore. Can the managing director refuse to follow the shareholder’s wish?
It’s a very good idea for your managing director to disobey your orders. If he were to obey, he would be aiding and abetting a fraud (of the creditors). The prohibition on payment in §64 GmbHG is to ensure this.