In practice, disagreements and disputes between GmbH shareholders are not uncommon. There are often considerable financial and economic interests at stake. However, in most cases it is possible to work out a proper solution to the internal problems of society. Occasionally, however, the situation has proceeded in such a way that no solution is promising. In these cases, the action for dissolution against the GmbH serves as a last resort. The following article presents the basics of the dissolution action compactly.

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1. The basis of the action for dissolution

1.1. Purpose of the action for dissolution

The action for dissolution pursuant to § 61 GmbHG serves to protect minority shareholders. In particular, shareholders who, due to their small shareholding in the GmbH, have no or only very little influence on company decisions are offered the possibility of dissolving the company by court judgment, cf. § 60 para. 1 No. 3 GmbHG. The scope of the action for dissolution primarily covers situations that make it unreasonable for minority shareholders to remain in the GmbH. Such situations can finally be ended by bringing a successful action for dissolution. The action for dissolution thus constitutes an essential part of the legal protection of minority shareholders in the area of GmbH law.

1.2. “Ultima Ratio”

Due to the potentially serious consequences of an action for dissolution for the company and the other shareholders (= dissolution of the company), bringing an action can only serve as a last resort for ending the conflict. Therefore, the affected (minority) shareholders must first use other available methods to leave the company. In particular, the sale of the shareholder’s shares at a reasonable price can be considered. However, in individual cases the sale may be subject to certain conditions by the articles of association (“Vinculierung”). This includes, among other things, the approval of the GmbH or the consent of the other shareholders, cf. § 15 para. 5 GmbHG. Such contractual clauses can prevent the sale of the shares in individual cases.

Furthermore, depending on the individual case, the withdrawal of the shareholder for an important reason and the termination of the shareholder against an appropriate severance payment are also available as milder methods. However, an action for dissolution is again admissible if the severance payment due to the dismissing partner is not fulfilled within a reasonable period of time.

1.3. Deviating agreements

As an essential part of the legal protection for minority shareholders, the right to bring an action for dissolution is not at the disposal of the shareholders. Rather, it is mandatory law. Accordingly, the shareholders of a GmbH cannot exclude the right of action through individual agreements. Provisions in the articles of association in this regard are not legally valid. The same applies to restrictions on the right to bring an action for dissolution. Therefore, for example, an agreement on increasing the capital ratio required for bringing an action (see 3.) is invalid. Similarly, no concrete facts can be considered as important reasons within the meaning of § 61 Abs. 1 GmbHG (cf. here 2.) are excluded.

On the other hand, the extension of the right of action by individual agreements of the shareholders is permissible in principle. This, of course, leads to a better position for minority shareholders. Therefore, agreements on the reduction of the necessary capital ratio or additions to additional pleas in law are not the quality of an important reason within the meaning of § 61 para. 1 GmbHG, legally effective.

Existence of an important reason

The action for dissolution has only a chance of success insofar as it is based on the existence of an important reason for dissolution. Outside of an important reason, the dissolution of the GmbH would be too extreme an interference in the interests of the other shareholders in the company’s stock. The important reason must lie in the conditions of society. The circumstances of the individual shareholders usually play no role. Exceptionally, this may deviate insofar as the circumstances of the shareholders have a significant impact on the circumstances of the GmbH.

The impossible attainment of the purpose is the only important cause of action expressly regulated by law. The purpose of the GmbH is the objective pursued by the shareholders with it. In the case of commercially active companies, this is usually the achievement of profit by means of the object of the company (concrete business activity). The purpose must be permanently impossible to achieve. Therefore, only temporary obstacles are in principle not considered to be important grounds for action for annulment. In the case of a commercially active GmbH, permanent loss-making transactions will usually be regarded as a reason for the impossibility of the purpose.

2.2 Other important reasons

In addition, the existence of other important reasons for a dissolution action can also help to succeed. Although these other important reasons in §§ 61 para. 1 GmbHG, there is no legal norm that addresses the important reasons within the meaning of § 61 Abs. 1 GmbHG. In any case, it is acknowledged that the continued affiliation of the affected shareholder to the GmbH must be unreasonable due to the important reason. Such unreasonableness can result in particular from the circumstances of the GmbH. If a conflict situation in the GmbH leads to a complete blocking of the necessary decision-making (= decision-making and implementation) at the shareholders' meeting, this can justify an unreasonable situation for affected minority shareholders. Incurable shareholder disputes can also lead to an unreasonable situation for minority shareholders, as long as they permanently prevent an understanding on essential company matters.

On the other hand, causes in the person of individual shareholders do not usually constitute an important reason in the sense of the action for dissolution. Such causes may concern, for example, misconduct on the part of a partner or breach of obligations under the articles of association. Insofar as such causes concern only individual shareholders, the exclusion of the respective shareholder takes precedence over the action for dissolution. In this respect, the legitimate interest of the other shareholders in the GmbH’s assets weighs more heavily. Depending on the design of the articles of association, instead of exclusion, the shareholder's shares can also be recovered. The priority of these individual measures restricts the scope of the action for dissolution by the legal exclusion possibilities.

3. The action for winding up

As already stated, the right to bring an action for dissolution is not an individual right, but a right for minority shareholders. Therefore, legal standing is available to all shareholders who together hold shares worth at least ten percent of the share capital, § 61 para. 2 S. 2 GmbHG. This means, of course, that an individual shareholder with a corresponding share of the business is also entitled to sue. If this minimum capital ratio is not met, the action for dissolution shall be dismissed as inadmissible. However, in calculating the capital ratio, no account is taken of shares held by the GmbH itself and shares already effectively withdrawn.

The defendant is the GmbH itself, § 61 para. 2 S. 1 GmbHG. This is represented in the process by the managing directors, § 35 Abs. 1 GmbHG. The action must be addressed to the Landgericht of the respective company seat, § 61 Abs. Competent is the Chamber for Commercial Matters, § 95 para. 1 No. 4a GVG. If the lawsuit is successful, the court must pronounce the dissolution of the GmbH. Consequently, the GmbH is immediately dissolved with the effect of the judgment. This requires subsequent registration in the commercial register, § 65 GmbHG. Subsequently, the GmbH enters the stage of liquidation.