Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Part 7
Nullity of resolutions adopted by the general meeting and of the annual accounts as approved and established. Special audit for impermissible understatement
Chapter 1
Nullity of resolutions adopted by the general meeting
Subchapter 1
General provisions
Section 241
Grounds for nullity
Except in the cases governed by section 192 (4), section 212, section 217 (2), section 228 (2), section 234 (3), and section 235 (2), a resolution adopted by the general meeting shall be null and void only if
1. It was adopted by a general meeting that was convened such that section 121 subsections (2) and (3), first sentence, or subsection (4) were violated,
2. It has not been recorded by a notary pursuant to section 130 subsections (1) and (2), first sentence, and subsection (4),
3. It is not to be reconciled with the nature of the stock corporation or violates, by its content, regulations that exclusively or primarily were instituted for the protection of the company’s creditors or that otherwise serve the public interest,
4. Its content is contrary to public policy,
5. It has been declared null and void by a final and conclusive judgment handed down on an action for avoidance,
6. It has been cancelled due to its nullity pursuant to section 398 of the Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction (FamFG) on the basis of a final and conclusive court decision.
Section 242
Remedy of nullity
(1) The nullity of a resolution adopted by a general meeting that, contrary to section 130 subsections (1) and (2), first sentence, and subsection (4), has not been recorded by a notary, or not properly, no longer may be asserted once the resolution has been entered in the Commercial Register.
(2) Where a resolution adopted by the general meeting is null and void pursuant to section 241 nos. 1, 3, or 4, its nullity may no longer be asserted once the resolution has been entered in the Commercial Register and three (3) years have lapsed since its entry. Where, at the time the period expires, an action for a declaratory judgment as to the nullity of the resolution adopted by the general meeting is pending, the period shall be extended until that point in time at which the final and conclusive decision has been taken regarding that action, or at which it has been conclusively dealt with and terminated in some other way. The lapse of time does not preclude the cancellation ex officio of the resolution pursuant to section 398 of the Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction (FamFG). Where a resolution adopted by the general meeting is null and void pursuant to section 241 no. 1 due to a violation of section 121 (4), second sentence, the nullity may no longer be asserted also in those cases in which the stockholder who was not invited approved the resolution. Where a resolution adopted by the general meeting is null and void pursuant to section 241 no. 5 or section 249, the judgment pursuant to section 248 (1), third sentence, no longer may be entered in the register if it has been finally and conclusively determined by a court’s declaratory judgment pursuant to section 246a (1) that any deficiencies of the resolution adopted by the general meeting will not impair the effects of the entry in the register; section 398 of the Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction shall have no application.
(3) Subsection (2) shall apply mutatis mutandis if, in the cases governed by section 217 (2), section 228 (2), section 234 (3), and section 235 (2), the required entries were not made in due time.
Section 243
Grounds for avoidance
(1) A resolution adopted by the general meeting may be challenged on grounds of its violating the law or the by-laws by bringing an action for avoidance.
(2) The action for avoidance may also be based on the fact that a stockholder, by exercising the voting right, sought to obtain special benefits for himself or for a third party to the detriment of the company or of the other stockholders and that the resolution is suited to serve this purpose. This shall not apply if the resolution grants adequate compensation to the other stockholders for their damage.
(3) The action for avoidance may not be based on:
1. The violation caused by a technical disruption of rights that have been exercised using electronic means pursuant to section 118 (1), second sentence, subsection (2) and section 134 (3), unless the company is to be charged with having acted grossly negligently or intentionally; the by-laws may stipulate a stricter measure of culpability,
2. A violation as set out in section 121 (4a), section 124a, or section 128,
3. Grounds justifying proceedings pursuant to section 318 (3) of the Commercial Code (HGB).
(4) An action for avoidance may be brought where inaccurate or incomplete information has been provided, or a request for information has been refused, only if a stockholder assessing the situation objectively would have regarded the provision of the information as a significant pre-requisite for the appropriate exercise of his participatory rights and rights as a member. An action for avoidance may not be based on inaccurate, incomplete, or insufficient information having been provided at the general meeting concerning the identification, amount, or appropriateness of compensation, settlement payments, additional payments, or other forms of recompense if the law stipulates that objections concerning assessments must be pursued in valuation proceedings.
Section 244
Confirmation of voidable resolutions adopted by the general meeting
No action for avoidance may be brought if the general meeting has confirmed the voidable resolution by a new resolution and no action has been brought to set aside the resolution within the period for avoidance, or the action for avoidance has been dismissed in a final and conclusive manner. Where the plaintiff has a legitimate interest in the voidable resolution being declared null and void for the period until the adoption of the resolution confirming it, then he may continue to pursue the action for avoidance with the objective of having the voidable resolution declared null and void for that period of time.
Section 245
Authority to bring an action for avoidance
The following shall have authority to bring an action for avoidance:
1. Any stockholder attending the general meeting, provided he has purchased the shares of stock already prior to the agenda having been published by notice and provided he raised an objection concerning the resolution and had it recorded in the minutes;
2. Any stockholder not attending the general meeting if he was not admitted to said general meeting without the refusal to admit him being justified, or if the general meeting has not been duly and properly convened, or if no proper notice has been published of the subject matter of the resolution to be adopted;
3. In the case governed by section 243 (2), any stockholder who has purchased the shares of stock already prior to the agenda having been published by notice;
4. The management board;
5. Each member of the management board and of the supervisory board, if, by implementing the resolution, the members of the management board or of the supervisory board were to commit an act punishable under law or an administrative offence, or if said implementation would obligate them to provide compensation.
Section 246
Action for avoidance
(1) The action must be brought within one (1) month of the resolution having been adopted.
(2) The action is to be brought against the company. The company shall be represented by the management board and the supervisory board. Where the management board or a member of the management board is bringing the action, the company shall be represented by the supervisory board, where a member of the supervisory board is bringing the action, the company shall be represented by the management board.
(3) Exclusively that regional court (Landgericht) shall have jurisdiction for the action in the judicial district of which the company has its seat. Where a division for commercial matters has been formed at the regional court, this shall take the decision instead of the civil division. Section 148 (2), third and fourth sentences, shall apply mutatis mutandis. The hearing for oral argument shall not take place prior to expiry of the period of one (1) month stipulated in subsection (1). The company may inspect a complaint filed, immediately upon the period of one (1) month stipulated in subsection (1) having expired, already prior to its being served, and may have the court registry provide it with excerpts and copies. Several avoidance proceedings are to be consolidated such that their hearings for oral argument and the decisions taken by the court coincide.
(4) The management board is to give notice, without undue delay, in the company’s publications of record of the fact that the action has been brought. A stockholder may become involved in the action as a joint party only within one (1) month of the notice having been published.
Section 246a
Proceedings for the release for entry in the register
(1) Where an action is brought against a resolution adopted by the general meeting as to a measure serving the procurement of capital, the reduction of capital (sections 182 to 240), or an inter-company agreement (sections 291 to 307), the court may establish by order, upon a petition having been filed by the company, that the fact of the action having been brought does not contravene the entry of the resolution in the register and that deficiencies of the resolution adopted by the general meeting will not impact the effects of the entry. Unless otherwise determined, section 247, section 82, section 83 (1), and section 84 of the Code of Civil Procedure (ZPO) shall correspondingly apply to the proceedings, as shall the regulations of the Code of Civil Procedure applying in the first level of jurisdiction to the proceedings before the regional courts (Landgerichte). A senate of the higher regional court (Oberlandesgericht) in the judicial district of which the company has its seat shall decide regarding the petition.
(2) A court order pursuant to subsection (1) shall be delivered if:
1. The action is inadmissible or manifestly unfounded,
2. The plaintiff has failed to provide evidence by submitting the corresponding records and documents, within one (1) week of having served the petition, that he has been holding a stake of at least 1,000 euros since the notice convening the assembly was published, or
3. The prompt entering into force of the resolution adopted by the general meeting appears to take precedence because the court holds, at its discretion and conviction, that the significant disadvantages for the company and its stockholders as presented by the petitioner outweigh the disadvantages the respondent stands to suffer; this shall not apply if the violation of the law is particularly grave.
(3) Transferring the matter to a judge sitting alone is precluded; no conciliation hearing is required. In urgent cases, a hearing for oral argument may be forgone. The facts and circumstances brought before the court, by reason of which the court order may be delivered, are to be demonstrated to the satisfaction of the court. There shall be no right of appeal against the court order. It shall be binding upon the court of registration; the establishment by the court that the entry is final and non-appealable shall take effect for and against any entity or individual. The court order should be delivered not later than three (3) months after the petition has been filed; the reasons for any delays to the decision shall be provided in a court order against which there shall be no right of appeal.
(4) Should good cause have been shown for the action, then the company that has obtained the court order shall be under obligation to compensate the respondent for the damages that the latter has suffered as a result of the resolution adopted by the general meeting having been entered in the register based on the court order. Once it has been entered in the register, any deficiencies of the resolution shall not affect its implementation; no demand may be made to cancel the effects of entering the resolution in the register, also not by way of compensation of damages.
Section 247
Value of the matter in dispute
(1) The court hearing the case shall determine the value of the matter in dispute at its equitably exercised discretion, taking account of all circumstances of the individual case, in particular the significance of the matter for the parties. However, the value may not exceed one tenth of the share capital or, if this tenth amounts to more than 500 000 euros, the value may exceed 500 000 euros only insofar as the significance of the matter for the petitioner is to be assessed as higher.
(2) Where a party demonstrates to the satisfaction of the court that, were it to be charged with the costs of the proceedings based on the value of the matter in dispute determined in accordance with subsection (1), this would gravely jeopardise its economic situation, then the court hearing the case may order, upon that party filing a corresponding petition, that the party’s duty to pay court fees shall be assessed based on a part of the value of the matter in dispute defined in keeping with its economic situation. This order will have as its consequence that the beneficiary of same will need to pay the fees charged by its lawyers also only based on that part of the value of the matter in dispute. Inasmuch as costs of the legal dispute are imposed on the party or inasmuch as it accepts to bear such costs, it is to reimburse the court fees paid by its opponent and the fees of the opponent’s attorneys only based on the part of the value of the matter in dispute. Inasmuch as the costs incurred out of court are imposed on the opposing party, or inasmuch as the opposing party accepts to bear such costs, the lawyer of the beneficiary will be able to recover his fees from the opponent in accordance with the value of the matter in dispute as it applies for the opponent.
(3) The petition pursuant to subsection (2) may be filed by having it recorded by the registry of the court hearing the case. It is to be recorded prior to the hearing for oral argument being held at which the merits of the case are to be heard. Filing the petition later shall be admissible only if the value of the matter in dispute assumed or established is increased by the court hearing the case. Prior to a decision being taken regarding the petition, the opponent is to be heard.
Section 248
Effects of the judgment
(1) Inasmuch as the resolution adopted is declared null and void by a final and conclusive judgment, the judgment shall take effect for and against all stockholders as well as the members of the management board and of the supervisory board, even if they are not parties to the proceedings. The management board is to file the judgment with the Commercial Register without undue delay. If the resolution was entered in the Commercial Register, then the judgment as well is to be entered. The entry in the register of the judgment is to be published by notice in the same manner as the entry in the register of the resolution.
(2) Where the resolution had as its subject matter an amendment of the by-laws, the full wording of the by-laws as it stands after considering the judgment and all previous amendments of the by-laws is to be filed with the Commercial Register along with a certificate from a notary confirming this fact.
Section 248a
Notices by publication regarding the action for avoidance
Where the avoidance proceedings are terminated, the company listed on the stock exchange is to give notice without undue delay in the company’s publications of record of the termination of the proceedings. Section 149 subsections (2) and (3) shall be correspondingly applied.
Section 249
Action for annulment
(1) Where a stockholder, the management board, or a member of the management board or of the supervisory board brings an action against the company to have a resolution adopted by a general meeting declared null and void, section 246 subsection (2), subsection (3), first to fifth sentences, subsection (4), sections 246a, 247, 248, and 248a shall have corresponding application. The assertion of nullity by some other manner than bringing an action is not precluded. Where the resolution adopted by the general meeting creates the pre-requisites for a transformation pursuant to section 1 of the Transformation Act (UmwG) and the resolution as to the transformation has been entered in the register, section 20 (2) of the Transformation Act shall apply mutatis mutandis to the resolution adopted by the general meeting.
(2) Several annulment proceedings are to be consolidated such that their hearings for oral argument and the decisions taken by the court coincide. Annulment proceedings and avoidance proceedings may be consolidated.
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