date | theme

17. January 2020 | GmbH shareholders: Managing Director salary or profit distribution?

04. February 2020 | Exclusion of a GmbH shareholder – exclusion/confiscation and compulsory assignment

26. June 2020 | Competition ban for GmbH shareholders – legal perspective

03. July 2020 | Reimbursement obligation of the shareholders in the event of inadmissible payments by a GmbH

21. August 2020 | GmbH: The shareholder resolution – voting rights / voting ban and resolution

03. June 2021 | Partner of a GmbH – What to consider (this contribution)

Due to the many regulations in the GmbH law for shareholders of a GmbH, it is necessary to know them before they are founded or joined a company, but at the latest after taking over shares in the company. Financial rights and regulations, but also information and control rights often play a role. In addition, a shareholder must also be aware of any obligations on his part and of the managing director.

In terms you have to distinguish between a shareholder and a managing director. Although a shareholder can also be managing director in his own company, this is not necessarily the case.

1.1. Shareholders

Before we talk about the rights and obligations of a shareholder, we consider the function of a shareholder. This is according to § 16 Abs. 3 GmbHG with its shares in the company. This is also the basis for the contribution to be made under § 14 GmbHG.

In this case, we assume a corporation in the form of the GmbH. In the case of an externally managed GmbH, the shareholder and the managing director differ as a person. It is often the case that the owners do not want to involve a stranger in the company, but a successful participation often takes the form of a silent participation. In addition, it should be noted that in addition to natural persons, legal persons can also be involved in a GmbH.

For a self-managed GmbH, shareholders and managing directors correspond to each other. This is often the case with a one-person GmbH or with family businesses. In doing so, attention must be paid to certain intrinsic transactions according to § 181 BGB and an exemption from them must be integrated into the managing director contract. Otherwise, no business with yourself is possible later on.

1.2.

Now it is important to distinguish the shareholder from the managing director. According to § 6 GmbHG, a company can appoint one or more managing directors who lead the organization and are thus also responsible for regular and strategic business operations. In accordance with § 35 GmbHG, the company’s external representation is also connected. In addition, § 43 GmbHG regulates the liability of the managing director. Accordingly, the managing director must carry out the business of the GmbH like a proper merchant.

Furthermore, a managing director has the task of convening the shareholders’ meeting and regularly informing the shareholders about important events in the company. In addition, it is subject to § 37 Abs. 1 GmbHG of the instruction binding of the shareholders. Due to the superior position, however, very different rights and obligations apply to the shareholder, which are considered in more detail below.

2nd rights of the GmbH shareholder

Before the individual rights according to § 45 GmbHG of a GmbH shareholder are considered, it is generally necessary to know the origin of the rights. For a GmbH shareholder, the majority of the rights are based on the amount of the participation in the company. Thus, it also applies that he holds the following rights exclusively as long as he owns these shares. If a new shareholder buys, inherits or receives the company shares, all rights are transferred to the new owner.

In addition, shareholders should be informed about different rights. These are basically regulated in a company agreement, if this is not the case, the provisions according to §§ 45-51 GmbH-Gesetz apply. Subsequently, a subdivision is made into property rights on the one hand and administrative rights on the other.

2.1. Property rights of the GmbH shareholder

2.1.1. Proportion of profit generated

In principle, the profit distribution of each shareholder is based on the amount of his participation in the company. The amount of the payment depends on the annual profit generated by the company at the end of the year. Nevertheless, it is possible under company law to agree on a payment in another way.

This includes, for example, disquotal and incongruent profit distributions, the latter still being viewed critically by the financial administration. Because here a profit distribution takes place, which is not based on the shares in the GmbH. But there are certain reasons that support such a distribution of profits. Such a provision seems justified, provided that the disadvantaged partner agrees to such a clause in the statutes, which is adopted unanimously or by a majority of 75 %. Furthermore, one reason for such a scheme may be an orientation towards the deposits actually made or the agreement of an advance profit for a performance contributed particularly to the company’s success. However, this rule usually applies when a shareholder leaves, as he is still to participate in the profit of the year in which he has left.

2.1.2 Participation in the liquidation proceeds

Furthermore, shareholders have the right to share in a possible liquidation proceeds. This is determined by the proceeds obtained upon liquidation of the company less the costs of liquidation. On the basis of this result, each shareholder receives income corresponding to his share in the company.

2.1.3. Subscription right

Due to existing shares in a GmbH, each shareholder automatically has the right to newly issued shares in the course of a capital increase. However, a shareholder may reject this right and accept a relative reduction in his voting rights.

The right to vote of a GmbH shareholder includes, among other things, the right to speak during the shareholders' meeting and the right to express one's opinion and finally to represent it in votes.

If the participation of a shareholder exceeds the limit of 25% of the shares, the shareholder has a so-called blocking minority. In this way, he can prevent important decisions of the company, such as capital increases, the appointment and removal of the directors or changes to the statutes or the legal form of the company. Further important core areas of a shareholder are the resolutions on the use of profit and participation in the preparation of the annual accounts. However, for most resolutions, the shareholders' meeting requires only a simple majority. That is why we are talking about a false blocking minority. In the case of a genuine blocking minority, the shareholder could prevent any decisions of the shareholders’ meeting, this applies from a participation rate of 50 %. A person above this level of participation is also referred to as a controlling partner.

On the other hand, in some circumstances, which are decided by shareholder resolutions, a voting ban on a shareholder can also be waived. The regulation of § 47 Abs. 4 GmbHG, according to which the direct or indirect concern of a shareholder is decisive.

2.2.2 Right to participate in company meetings

In addition to the right to vote and speak, the shareholder logically also receives a right of attendance for the general meeting. In this case, according to § 47 GmbHG, decisions are made by a simple majority of the votes. This plays with regard to the drafting of shareholder resolutions adopted by the meeting in accordance with § 48 para. 1 GmbHG will play a central role. In doing so, the statutory provisions for convocation according to § 49 GmbHG must be complied with. It must be observed by law that at least one meeting of the shareholders must take place annually.

Another regulation for the shareholders’ meeting concerns the managing director. The latter must report to the general meeting, but has no right to participate in the general meeting.

2.2.3. Right of access and information

In addition, a special right of access and information is part of the rights of a shareholder. Accordingly, the latter may require inspection of the company’s books as well as the correspondence and contracts of the company according to § 51a para. 1 GmbHG. Exclusively under very special reasons according to § 51a Abs. 2 GmbHG a managing director may object to this request of a shareholder.

3. Obligations for the shareholder of a GmbH

3.1. Asset obligations of the GmbH shareholder

3.1.1. Obligation of the shareholder

The concept of the obligation to make contributions pursuant to § 14 GmbHG includes the parent contribution agreed between the shareholders. This is fixed by the shareholder contract.

3.1.2. No compensation for losses

Now it is important to consider the obligations of a shareholder at a GmbH also the handling of incurred losses. However, in the event of a loss, compensation is provided only with the company assets and not with the private assets of the shareholder. This is an important advantage of a limited liability company. Nevertheless, loss transfers and loss carry forwards for the GmbH must be considered, which can influence the results of the past and future financial years. Taking losses into account serves to spread bad financial years over already positive ones in order to reduce the burden on society.

3.1.3. Social security obligations of the partner

Due to the complex assessment of the social security obligation, it is advisable to consult experts. However, it can be said that in the case of the spurious blocking minority mentioned above (25 % < spurious blocking minority < 50 % < real blocking minority), a criterion that classifies the shareholder as liable to social security is often considered to be met. In addition, criteria such as existing power of instruction, fixed working and leave periods and the prohibition of the aforementioned transactions apply. In addition, especially for shareholder-managing directors, the fixed contractual relationship assumes a social security obligation. However, there are also special cases with an international connection, and we are happy to advise you. For example, we have expertise in the treatment of dividend payments by a GmbH in Austria as part of the social insurance obligation to its shareholder managing director and can provide adequate information on any questions on their part.

3.1.4. Reimbursement obligation

The GmbH Act regulates a so-called payout ban in § 30 GmbHG. This occurs if the company's assets have already fallen below the share capital due to disbursements or before. In this case, a payment ban against the shareholders enters into force. However, a violation of this prohibition is followed by the company-law reimbursement obligation according to § 31 para. 1 GmbHG. This does not require a shareholder resolution. If the payment ban is disregarded, the reimbursement obligation can be enforced by the company’s GF. In addition, other shareholders are liable for non-recoverable amounts of the debtor shareholder according to § 31 Abs. 3 GmbHG.

Here the shareholders are prescribed that they should always produce the best of society through their actions. In addition, it is the task to avert any damage to society, if possible.

Furthermore, a special prohibition of competition applies to GmbH shareholders, which prohibits activities in the same industry or sector. Often this is recorded individually in contracts, because such a clause is intended to protect the company from damage by a possible departure of a shareholder. In such regulations, however, it is advisable to consult an expert. In addition, a competition ban applies to managing directors.

3.2.2. Documentation obligation

Furthermore, although only for Einmann GmbHs a documentation obligation applies for shareholder resolutions, this is recommended for each company for proof and clarity purposes. Furthermore, the law prescribes the notarisation of the order in special individual cases. This is the case in particular in the case of amendments to the Statutes (> 75% of the voting rights are necessary) and conversion decisions.

4th Special regulations of a GmbH

4.1. Exclusion of a shareholder

This is a very important topic in corporate practice and not clearly regulated in the GmbH law. However, since the exclusion of a shareholder rarely takes place without legal dispute, it is generally advised to record this very specifically, preferably already at the time of incorporation, in the contract. You can call us at any time on this topic and arrange a comprehensive consultation on this topic.

4.2. Appropriate GF content

As a managing partner or controlling partner, he determines his salary for the activity as a managing director in the course of his function as a shareholder himself. Nevertheless, attention should be paid to the rules on hidden profit distributions (vGA). In order to work out an appropriate salary, we are happy to help you. Otherwise, the resulting consequences should be known in the case of excessively high executive salaries.

However, these regulations must also be taken into account as a shareholder without a managing director function, since vGA may result in subsequent tax payments. In addition, you can achieve tax savings through vGA, but this is rather unlikely due to the comprehensive consideration of profit distributions in company audits. Finally, depending on the activity of the managing director, it is important to determine the appropriate salary, we advise more often and look forward to your questions.