If GmbH shareholders support competitors or conduct business for their own account in the GmbH division, this can make the financial and entrepreneurial success of a GmbH considerably more difficult. In order to prevent this competition from within our own ranks, competition bans for GmbH shareholders are widespread in the business world. However, it is often not clear to entrepreneurs in which cases a GmbH shareholder is already subject to a prohibition of competition by law and in which constellations a contractual prohibition of competition is necessary. Therefore, we take this topic as an opportunity to provide you with detailed information.

For the assessment of non-compete clauses used by a GmbH, it is first necessary to distinguish who is affected by the non-compete clause. Depending on the addressee or agreement partner, there are different conditions and legal consequences. This article deals exclusively with non-compete clauses directed at shareholders. The following statements are therefore not directly applicable to non-compete clauses for GmbH managing directors (shareholder managing directors and external managing directors) or employees of a GmbH.

Furthermore, a distinction must be made as to whether the prohibition of competition applies during the membership as a shareholder of the GmbH or should apply after the shareholder has left the GmbH. Both constellations are explained in more detail in the following embodiments.

2nd non-compete clause during the GmbH membership

2.1. Non-competition for dominant GmbH shareholders

During the active affiliation as a GmbH shareholder, shareholders are in principle not bound by any competition prohibitions existing by law. However, there is an exception to this principle. Dominating shareholders (usually due to a majority shareholding) who can exert significant influence on the GmbH’s economic and entrepreneurial decisions are prohibited from competing with the GmbH. This prohibition of competition is derived from the general company law loyalty relationship. It serves the purpose of protecting the GmbH from competition from its own ranks, which at the same time can decisively influence the fate of the GmbH. In the event of a breach of the non-compete clause, the GmbH is usually entitled to claims for injunction and damages. In addition, the exclusion of the shareholder from the GmbH is also considered. In the absence of a conflict of interest, the controlling shareholder of a Einmann GmbH is not subject to such a prohibition of competition. The non-compete clause derived from the company fidelity relationship ends with the departure of the affected shareholder from the GmbH.

2.2. Non-competition with minority shareholders

In particular with regard to shareholders who are not subject to a prohibition of competition by law (for example, minority shareholders without management competence), it may make sense for GmbHs to agree on a prohibition of competition by contract. The most common method is the integration of a corresponding clause into the GmbH’s social contract. The inclusion of such prohibition clauses is permissible in principle according to settled supreme court case law.

However, the drafting of the contract with regard to a statutory non-competition is by no means simple. The legal effectiveness of such a prohibition clause is often difficult to assess due to the sometimes unclear jurisprudence and lack of special legal regulations. According to supreme court case-law, a non-compete clause for minority shareholders is primarily only permitted if several shareholders jointly have a strong influence on the management or strategic direction of the company or if the individual minority shareholder is entitled to such influence by virtue of the granting of special rights. In addition, a statutory non-compete clause must in any case be measured against the standard of § 138 BGB in conjunction with Articles 2, 12 GG.

According to the relevant case law, a contractual non-compete clause is legally effective if it serves the legitimate interests of the GmbH and justifiably restricts the professional exercise and economic activity of the shareholder according to the location and subject matter. If the contractual clause violates these requirements, the prohibition of competition is in principle inadmissible and thus ineffective.

2.4. Local boundaries

The non-compete clause should in principle find its orientation in spatial terms in the (relevant) business area of the GmbH. In this respect, depending on the individual case, the prohibition may apply to a particular region or even internationally to different countries. However, by appropriately selecting the local application of the non-compete clause, one should ensure that an excessive regime is avoided.

2.5. The present boundaries

The present limits in the case of a non-compete clause standardize which activities of the shareholder the non-compete clause specifically prohibits. On the one hand, the prohibition clause can regulate to which undertakings or branches of business it refers. On the other hand, the clause can specify in detail the fields of activity that the shareholder should be prohibited (managing director, employee, self-employed, shareholder). However, in the light of Article 12 GG (Fundamental Right of Freedom of Occupation), the limits in question in the case of a non-compete clause must not be extended arbitrarily. Particularly with regard to minority shareholders, these limits are rather narrow in case of doubt.

Subcontractual Non-Competition

3.1. Principles for the post-compatible non-competition

In contrast to the non-compete clause, a post-contractual non-compete clause only applies after the shareholder leaves the GmbH on the basis of the general duty of fidelity under company law (2.1). The purpose of the post-contractual non-compete clause is primarily to prevent the support of competing companies by former shareholders immediately after the separation. This form exists exclusively on the basis of an express contractual agreement between the GmbH and the shareholders. For pure minority shareholders who do not have access to special know-how of the GmbH, however, an effective post-contractual prohibition of competition can probably not be agreed. In addition, a post-contractual non-compete clause, in addition to the above-mentioned effectiveness requirements, must also operate within its time limits within an appropriate framework for contractual non-compete clauses (2.3. – 2.5.).

3.2 Time limits for non-competition

A time-unlimited non-compete clause is in principle inappropriate and a violation within the meaning of § 138 BGB. However, the specific determination of an appropriate time limitation of the non-compete clause depends on the specific facts in the individual case. However, the problem in this context is the assessment of a necessary financial indemnity which would have to be paid by the GmbH to the affected shareholder for the period of application of the ban.

4.Sustainable reduction to non-competition

Whether a reduction of an inappropriately designed non-compete clause to an appropriate level is permissible cannot be assessed in a uniform manner. In this regard, case law assumes that a non-compete clause which is excessive in terms of time can in principle be reduced to a quantitatively appropriate level. The legal validity of the prohibition clause can thus be maintained for the appropriate substance. However, according to the case-law, such a maintenance of an appropriate level of non-compete is not permissible with regard to the scope of the present application. Whether the validity-preserving reduction can be applied to a crossing of the local borders has not yet been conclusively clarified, but is required by parts of the specialist literature with regard to the case law regarding the time limits.

5th Salvatorial clause on non-competition

Whether a salvatory clause, i.e. a contractual clause which limits the scope of a contract to the legally valid part in order to prevent complete nullity, can maintain an unreasonable non-compete clause with its appropriate part has also not yet been uniformly decided by case law. As a rule, however, it makes sense to include one as a supplement to a competition ban. Alternatively, a contractually agreed applicability of § 74a (1) HGB (non-binding nature of a non-competition clause for “agents and trainees”) comes into consideration.

6 Consequences in the event of an impermissible non-compete clause

If the contractually agreed non-compete clause is inadmissible according to the above criteria according to § 138 BGB, then it is completely invalid. It therefore has no effect or legal binding effect on the contracting parties.