Are you planning to set up a company in Germany? Understand the rules governing the meeting of shareholders at GmbH.
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The meeting of shareholders at a German GmbH (limited liability company) is the most important body of the company. All shareholders meet to resolve any key issues and make decisions that are passed in the form of resolutions. The decisions taken by the meeting are guidelines for the management of the company to follow. If you are thinking about setting up a company in Germany, it’s worth knowing.
The legal principles to be followed by the meeting of shareholders are laid down in the articles of association and, in cases not covered by this document, general provisions apply.
Obligations of the meeting of shareholders at GmbH
During shareholders’ meetings, resolutions are adopted which constitute guidelines for the functioning of the company. These decisions should be taken by majority vote. The Act stipulates that if all shareholders agree in writing, the meeting does not have to be convened. The main responsibilities of the shareholders include supervision and control over the CEO of the GmbH. Control measures may also be laid down in a resolution adopted by the shareholders.
How often should a shareholders’ meeting be convened?
The general meeting of shareholders is governed by the articles of association or the will of the shareholders. Cyclical meetings every 4-6 weeks and additional meetings may be arranged, e.g. to determine the company’s annual performance. However, at least one meeting per financial year should be held. In addition, it is possible to convene extraordinary meetings if the company is in danger.
Rules for convening a shareholders’ meeting
When convening a shareholders’ meeting, the company’s management board should specify the purpose of the meeting. The notice of the meeting should be sent by registered mail at least one week before the scheduled date. The notice shall be delivered to each shareholder separately. The provisional agenda may also be included in the delivery.
At least three days before the shareholders’ meeting, the final agenda must be communicated to each shareholder. All shareholders must be present when key resolutions are adopted. Compliance with the rules governing the convening of a shareholders’ meeting is of the utmost importance, as resolutions adopted at a meeting with formal errors may be declared null and void. The undeniable advantage of these formalities is transparency and the prevention of disputes between shareholders. The articles of association should specify a quorum – it is generally assumed that at least 50% of the shareholders must be present.
The main point of the shareholders’ meeting is voting on the adopted resolutions. The significance of each shareholder’s vote is determined by the size of their shares. Unless otherwise provided in the articles of association, a simple majority of the votes shall be sufficient for a resolution to be adopted. If the decision being made concerns the dismissal of the partner or otherwise directly concerns them, they lose their voting rights. Resolutions concerning the basis of the company’s operations or its structure should be adopted by a majority of 75% of votes unless the articles of association provide otherwise.
In the case of a single-person GmbH, there is only one shareholder. As a result, the shareholders’ meeting is not possible and this obligation is replaced by a documentation obligation – every decision taken must be documented and signed.