The articles of association are the foundation of every GmbH. We explain which clauses are indispensable and what to consider when drafting them.
The Articles of Association as the Constitutional Framework of the GmbH
The articles of association, also referred to as the Satzung, are more than a legal obligation. They are the constitution of the GmbH, governing the interplay among shareholders, decision-making processes, and the future of the company. Well-drafted articles of association prevent conflicts and create clarity.
Statutory Minimum Content under § 3 GmbHG
The law prescribes the following minimum content in § 3 Abs. 1 GmbHG:
- Company name and registered office
- Business purpose
- Amount of share capital
- Number and nominal values of shares held by each shareholder
However, this minimum content is far from sufficient in practice. Carefully drafted articles of association contain numerous additional provisions.
Key Clauses in Detail
Management and Representation
The regulation of management is among the most important contractual provisions:
- Appointment and removal: Who may serve as managing director, who appoints and removes? Is good cause required for removal?
- Power of representation: Sole or joint representation? Exemption from the restrictions of § 181 BGB (self-dealing)?
- Catalogue of transactions requiring approval: Which transactions require prior approval of the shareholders' meeting? Typical examples include investments above certain thresholds, entry into new business areas, or the conclusion of long-term contracts.
Shareholders' Meeting and Decision-Making
- Convocation: Who convenes, what notice periods apply, what form is required?
- Voting majorities: Simple majority as the default rule, qualified majorities for specific resolutions (amendments to articles, capital measures, dissolution)
- Voting rights: Generally based on shareholdings, though special rights are possible
- Written resolution procedure: Option for decision-making without a physical meeting
Profit Distribution and Withdrawals
- Profit appropriation: Retention or distribution? Obligation to distribute a minimum amount?
- Profit distribution ratio: Deviation from the statutory rule (proportional to shareholdings) is possible
- Interim distributions: Provisions on intra-year profit withdrawals
Transfer of Shares
- Transfer restrictions (Vinkulierung): Requirement for approval by the company or fellow shareholders when transferring shares (§ 15 Abs. 5 GmbHG)
- Pre-emptive rights: Right of the remaining shareholders to acquire the shares on the same terms in case of an intended sale
- Offer obligation: Obligation of the selling shareholder to first offer the shares to fellow shareholders
Succession and Buyout Provisions
- Inheritance clause: Provisions for the death of a shareholder. Succession clause, entry clause, or redemption clause?
- Buyout provisions: Calculation of the buyout payment upon a shareholder's departure. Fair market value, book value, or Stuttgarter Verfahren?
- Buyout limitations: Instalment payments, maximum buyout amounts. Caution: Unconscionable limitations are void.
Non-Compete Clause
- Scope: Non-compete obligation defined by subject matter, geography, and duration for shareholders and managing directors
- Post-contractual non-compete: Provisions for the period following departure
- Compensation for non-competition: May be required for shareholder-managing directors
Redemption of Shares
- Grounds for redemption: Definition of the grounds justifying redemption pursuant to § 34 GmbHG (e.g., insolvency of a shareholder, serious breach of duty, commencement of divorce proceedings)
- Procedure: Voting majorities and hearing rights of the affected shareholder
Arbitration Clause
An arbitration clause can remove shareholder disputes from the ordinary courts and refer them to an arbitral tribunal. Advantages include confidentiality, specialist expertise, and speed. The clause must satisfy the requirements established by case law for corporate arbitration clauses.
Common Mistakes in Drafting
- Template contracts without adaptation: Standard articles do not account for the individual needs of the shareholders.
- Missing buyout provisions: Without clear buyout provisions, protracted and costly valuation disputes are likely.
- Non-compete clauses that are too narrow or too broad: Invalid clauses fail to protect the company.
- Neglecting succession: Without succession provisions, a shareholder's death can jeopardise the company.
Conclusion
Tailored articles of association are the best investment in the future of your GmbH. They should reflect the individual circumstances of the shareholders, industry-specific features, and the company's development prospects. The cost of professional drafting is negligible compared with the cost of a shareholder dispute that could have been avoided through prudent planning.
