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Shareholders’/Partners’ information and control rights

Minority shareholders/partners, in particular, and/or shareholders/partners not authorised to manage a company frequently have only a limited amount of information about a company’s financial situation. Moreover, it is not uncommon for there to be a lack of awareness about the existing information rights for shareholders/partners and how exactly these can be exercised. That is why, in the following section, we provide an overview of the relevant regulations for the most common legal forms in the German SME sector.

To begin with, it should be pointed out that the statutory information and control rights may not be restricted via a company agreement. It would nevertheless be advisable to have a look at the agreement because, sometimes, the rights that are granted there can be more extensive than those provided for under the law.

Shareholders of a GmbH [German private limited company]

Extent of rights to information

The information rights of the shareholders of a GmbH have been very generously formulated. Besides the right to the presentation of the annual financial statements and the management report, all shareholders may, at any time, request from the company’s management: 

  • information about the company’s affairs (right to information) as well as 
  • an inspection of the books and records (inspection right).

The term ‘company’s affairs’ is to be understood in a broad sense here. In principle, the right to information covers everything that could be of significance for the shareholders in respect of their interests relating to controls, profits and assets. The inspection right is likewise correspondingly extensive. It includes all the business records of a company not just in paper form but also in electronic form. However, inspection is to be understood literally here, i.e. only the possibility to check the records at the offices of the company has to be granted. 

Please note: There is no entitlement to be provided with the records. Although, copies or photos can be made at your own expense.

Is refusal possible?

A company’s management may refuse to provide information and allow inspection if there is a risk that the shareholder will use the information for non-corporate purposes and, as a result, the company would be disadvantaged to a not inconsiderable degree. This could be the case, for example, in a competitive situation. Nevertheless, the company’s management would still have to gain approval for an intended refusal by passing a shareholders’ resolution. In such a case, the shareholder concerned would not have the right to vote.

Limited partners

The information rights of the limited partners of a Kommanditgesellschaft (KG) [German limited partnership] (or of a GmbH & Co. KG [a German limited partnership with a limited liability company as a general partner]) are currently still significantly more restricted. There is no information right that is regulated by law, but solely an inspection right. Limited partners may request copies of the annual financial statements and they are then allowed to check these within a reasonable period (approx three months) by inspecting the books and records. 

Please note: Bringing in an expert who is obliged to maintain professional confidentiality is usually permitted.

New regulations under the German Act on the Modernisation of Partnership Law

From the 1.1.2024, there will now however also be an information right regulated by law for limited partners. They will be able to request information from the partnership about the company’s affairs insofar as this is necessary for the exercise of their rights as members, especially if there are grounds for assuming that the management of the company is acting dishonestly (Section 166 of the German Commercial Code in its amended version). As regards the necessity of the request for information, a consideration of the balance of interests will be required. Ultimately, the limited partner who is requesting information will however have to demonstrate and provide evidence for the necessity to do so. 

Please note: Comprehensive inspection and also information rights for personally liable partners of an OHG [German general partnership) or a GbR (company/partnership under German civil law) will now likewise be regulated in the new Section 717(1) of the German Civil Code.

Recommendation: In this context, you should also keep a constant eye on the general fiduciary duties owed by shareholders/partners to a company. In case law, for example, exercising the legally guaranteed information rights excessively or vexatiously is regarded as being ‘not appropriate’ and therefore an abuse of the law. The agreements of partnerships should be reviewed in order to check that they are consistent with the new regulations.

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