Skip to content

You are here:

The right to participate in a shareholders’ meeting in person during times when there are travel restrictions

In times of the coronavirus pandemic, it has not been uncommon to have travel restrictions and these can make it necessary to postpone or cancel a physical shareholders’ meeting. A recent court ruling clarified that a GmbH [German limited liability company] that sends invitations to a meeting has to ensure that the shareholders receive these together with the agenda in good time so as to be able to actually organise the participation in the shareholders’ meeting as well.

Sending invitations to a shareholders’ meeting during times when there are travel restrictions

In the case that was recently decided by the Stuttgart Regional Court (Landesgericht, LG), some of the shareholders of a GmbH based in Germany lived abroad. The GmbH, in its invitation letter of 10.8.2020, duly convened a shareholders’ meeting for 14.9.2020. On the date of the shareholders’ meeting, there were restrictions on travel to Germany on account of the COVID-19 pandemic.

The statutes of the GmbH did not provide for shareholders’ meetings in the form of phone conferences or video conferences. According to the statutes of the GmbH, the shareholders had to be notified of the agenda three days before the shareholders’ meeting, at the very latest. The shareholders who lived abroad received the agenda 11 days prior to the planned shareholders’ meeting and, thus, within the period stipulated in the company’s statutes. The agenda included, among other things, the removal of one of the shareholders – who was also one of the claimants – as the managing director of the GmbH.

Some of the shareholders who lived abroad petitioned the Stuttgart LG to cancel the extraordinary shareholders’ meeting on account of the restrictions for entry into Germany, which were blocking the possibility of participating in the meeting.

The decision of the Stuttgart LG – A right to participate in person

While all the formal and notice period requirements provided for in the statutes had been fulfilled, nevertheless, the Stuttgart LG complied with the petition of the shareholders who had brought the action. In its ruling of 10.2.2021 (case reference: 40 O 46/20), the court explained that while the statutes of the GmbH admittedly included provisions on the passing of resolutions, however, these did not provide for any possibility of a meeting on the basis of phone conferencing or video conferencing. In this respect, an exhaustive rule had been made for the passing of resolutions under the company’s statutes. 

Consequently, the court awarded the shareholders who had brought the action the right to participate in a shareholders’ meeting in person. However, during times when there are travel restrictions, the meeting has to be convened early enough and notification of the agenda has to be such that the shareholders have the possibility of organising their journeys and fulfilling any quarantine requirements. To substantiate this the court pointed out that a shareholder’s right to participate forms a part of the inalienable core of membership rights and that a shareholder can only embark on a decision-making process with regard to their participation after being notified of the agenda.

Ultimately, the GmbH did not adequately carry out its acknowledged duty to give due consideration to the interests of the shareholders.

Putting the ruling into context

Regardless of the currently existing coronavirus pandemic, travel restrictions can be imposed for a variety of reasons. A shareholders’ meeting that, according to a company’s 
statutes, requires attendance in person would have to be postponed if it were not possible to enter the country as well as participate in the meeting in good time. Potential travel restrictions should be taken into consideration when sending out invitations to a shareholders’ meeting.

Recommendation: Statutes and memorandums of association should be reviewed as to whether or not these include rules for the passing of resolutions in the form of phone conferences or video conferences. Managing directors should take travel restrictions into account when they are issuing invitations to a shareholders’ meeting.

Back to top of page