Exclusion of a Shareholder though Initial Capital not Fully Paid up
Can a partner of a company be excluded from being a shareholder, or is it not prevented by the fact that his shares are not fully paid up? As you surely remember, this is the major responsibility and duty of any founding shareholder. The Federal Court of Justice gave us its opinion on August 4, 2020 (re II ZR 171/19).
Shareholder had Half of the Shares but did not Pay
When founding a company, you have the possibility to pay up only half of the initial capital of the company – under certain conditions. When paying only half upfront, the remainder will mature upon call by shareholder’s resolution. The articles of association of the company provided that a partner can be excluded from the company, if he is more than three months in arrears with his obligation to follow up on his contribution and does not make the contribution despite a request for payment. In this event, the shareholder in default must thereafter tolerate the collection of his shares or their compulsory assignment.
With reference to this, the shareholders' meeting of the GmbH decided to exclude the plaintiff as shareholder. No resolution was passed on the realization of the plaintiff's shares after the exclusion (confiscation / compulsory assignment). The plaintiff filed an action for rescission against the resolution, on which the Federal Court of Justice finally decided.
The plaintiff held 49 % of the shares in the GmbH. One part of the share capital on the shares had to be paid up immediately and the other part on demand of the GmbH. Accordingly, the plaintiff initially only made a partial contribution. Later, the management of the GmbH requested the plaintiff to pay the remaining capital contribution as well. However, the plaintiff refused payment despite several requests.
Exclusion of Default Partner Valid
The BGH declared the resolution to exclude the default partner as effective. In its opinion neither the circumstance that the due contribution on the shares of the plaintiff had not yet been paid in full stood in the way of the effectiveness of the resolution, nor that only the resolution for exclusion had been seized and a decision over the utilization of the shares of the plaintiff had not been made at the same time.
The exclusion has no direct effect on the shares of the excluded shareholder. Rather, the acquisition of the shares must still be realized in execution of the exclusion. For this purpose, they can be withdrawn or forcibly assigned to the company itself, one or more co-partners, or a third person. The seizure of a partner in default is subject to another shareholders’ resolution. In other words, two individual decisions must be made: 1) exclusion, 2) collect the shares. The above judgment now clarifies that both do not have to happen simultaneously.