Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Subchapter 2
Nullity of certain resolutions adopted by the general meeting
Section 250
Nullity of the election of members of the supervisory board
(1) The election of a member of the supervisory board by the general meeting shall be set aside as null and void, except in the case governed by section 241 nos. 1, 2, and 5, only if:
1. The supervisory board is constituted such that section 96 (4), section 97 (2), first sentence, or section 98 (4) is violated;
2. The general meeting elects a person not nominated in spite of being bound to nominations (sections 6 and 8 of the Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestG);
3. The election results in the statutory maximum number of members of the supervisory board being exceeded (section 95);
4. At the commencement of his term of office, the person elected is prohibited, pursuant to section 100 subsections (1) and (2), from being a member of the supervisory board.
5. The election violates the stipulations of section 96 (2).
(2) The following are eligible to act as parties to an action brought to obtain a declaratory judgment from the court setting aside the election of a member of the supervisory board as null and void:
1. The central works council of the company or, where only a single works council exists for the company, the works council, as well as the group works council if the company is the controlling enterprise of a group of companies,
2. The central committee, or corporate council, representing the executive staff of the company or, where only a single council representing the executive staff exists for the company, the council representing the executive staff as well as the group council representing the executive staff if the company is the controlling enterprise of a group of companies,
3. The central works council of some other enterprise, the employees of which themselves vote, or vote through delegates, to elect members of the company’s supervisory board, or, where only a single works council exists in the other enterprise, the works council,
4. The central committee representing the executive staff, or the corporate council representing the executive staff, of some other enterprise, the employees of which themselves vote, or vote through delegates, to elect members of the company’s supervisory board, or, where only a council representing the executive staff exists in the other enterprise, the council representing the executive staff,
5. Any union, as well as its umbrella organisation, represented in the company or in an enterprise, the employees of which themselves vote, or vote through delegates, to elect members of the company’s supervisory board.
(3) Where a stockholder, the management board, a member of the management board or of the supervisory board, or any organisation or employee representative body designated in subsection (2) brings an action against the company for a declaratory judgment by a court setting aside the election of a member of the supervisory board as null and void, section 246 subsection (2), subsection (3), first to fourth sentences, subsection (4), section 247, section 248 (1), second sentence, as well as sections 248a and 249 (2) shall apply mutatis mutandis. Asserting nullity by some other manner than bringing an action is not precluded.
Section 251
Action to set aside the election of members of the supervisory board
(1) An action may be brought to set aside as null and void the election of a member of the supervisory board by the general meeting, on grounds of the law or the by-laws having been violated. Where the general meeting is bound to nominations, the action to set aside the election may also be based on the nomination having come about unlawfully. Section 243 (4) and section 244 shall apply.
(2) Section 245 nos. 1, 2, and 4 shall apply to the authority to bring an action to set aside the election. Any works council of an operation of the company, any union represented in the operations of the company, or the union’s umbrella organisation may bring an action to set aside the election of a member of the supervisory board who has been elected pursuant to the stipulations of the Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestG) upon having been nominated by the works councils. Any member of the supervisory board may also bring an action to set aside as null and void the election of a further member who has been elected pursuant to the stipulations of the Act on Employee Co-Determination in the Iron- and Steel-Producing Industry or the Amending Act on Employee Co-Determination in the Iron- and Steel-Producing Industry (MontanMitbestGErgG) upon having been nominated by the remaining members of the supervisory board.
(3) Sections 246, 247, 248 (1), second sentence, and section 248a shall apply to the proceedings concerning the action to set aside the election.
Section 252
Effects of the judgment
(1) Where a stockholder, the management board, a member of the management board or of the supervisory board or of any organisation or employee representative body designated in section 250 (2) brings an action against the company for a declaratory judgment by a court that the election of a member of the supervisory board by the general meeting be set aside as null and void, a judgment finally and conclusively setting aside the election as null and void shall take effect for and against all stockholders and employees of the company, all employees of other enterprises the employees of which themselves vote, or vote through delegates, to elect members of the company’s supervisory board, the members of the management board and of the supervisory board, as well as the organisations and employee representative bodies designated in section 250 (2), even if they are not party to the proceedings.
(2) Where the election of a member of the supervisory board by the general meeting is set aside as 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 the supervisory board, even if they are not party to the proceedings. In the case governed by section 251 (2), second sentence, the judgment also shall take effect for and against the works councils, unions, and umbrella organisations having authority pursuant to the present regulation to bring an action for avoidance, even if they are not party to the proceedings.
Section 253
Nullity of the resolution as to the appropriation of the net income
(1) The resolution adopted as to the appropriation of the net income shall be null and void, except in the cases governed by section 173 (3), section 217 (2), and section 241, only if the approval and establishment of the annual accounts on which it is based is null and void. Asserting the nullity of the resolution based on these grounds no longer shall be possible once the nullity of the approval and establishment of the annual accounts can no longer be asserted.
(2) Section 249 applies to the action brought against the company for a declaratory judgment as to nullity.
Section 254
Action for avoidance of the resolution as to the appropriation of the net income
(1) An action for avoidance may be brought against a resolution adopted as to the appropriation of the net income also on the grounds, besides those set out in section 243, of the general meeting allocating amounts from the net income to retained income or carrying amounts forward as profits that are not, according to the law or the by-laws, precluded from being distributed among the stockholders, in spite of the fact that so allocating the amounts or carrying them forward is not necessary, when the matter is assessed while applying prudent business judgment, to secure the viability and resilience of the company for a foreseeable period of time in terms of economic and financial requirements, meaning that no profits can be distributed among the stockholders in the amount of at least four (4) percent of the share capital reduced by the contributions not yet called in.
(2) Sections 244 to 246 and sections 247 to 248a shall apply to the action for avoidance. The period for avoidance shall commence running on the date on which the resolution is adopted also in those cases in which the annual accounts are to be audited anew pursuant to section 316 (3) of the Commercial Code (HGB). Stockholders shall have authority to bring an action for avoidance pursuant to subsection (1) only if their shares, taken together, are at least equivalent to one twentieth of the share capital, or to a stake of 500 000 euros.
Section 255
Action for avoidance of the capital increase in return for contributions
(1) An action for avoidance may be brought against the resolution as to a capital increase in return for contributions pursuant to section 243.
(2) The action for avoidance may be based, if the pre-emptive right of the stockholders for newly issued shares of stock has been precluded as a whole or in part, also on the fact that the issue price resulting from the resolution adopted as to the increase, or the minimum price below which the new shares of stock should not be issued, is unreasonably low. This shall not apply if the new shares of stock are to be acquired by a third party along with the duty to offer them to the stockholders for subscription.
(3) Sections 244 to 248a shall apply to the action for avoidance.
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