“Risks and Problems for Minority Shareholders in GmbH: Solutions and Recommendations from a Specialist Lawyer”

1. General

“What risks and problems can arise for me as a minority shareholder if I invest in a GmbH?”

This is the inevitable second question (after profitability and return) that a potential shareholder who has the opportunity to invest in a GmbH asks himself.

Resolutions (and thus decisions) in the GmbH are generally made with a simple majority, see Section 47 GmbHG. i.e. in the case of a decision, a minority shareholder always needs “allies” in the context of the resolution of a shareholders’ meeting.

Otherwise, the following problems and disadvantages may arise for a minority shareholder.

2. Risks, problems and disadvantages in the GmbH

The following risks, problems and disadvantages can arise for a minority shareholder in a GmbH:

a) Lack of say and influence

As a minority shareholder, you have only limited or no say, since you cannot influence business decisions due to the small number of votes. Majority shareholders can make important decisions without the consent of minority shareholders, which can lead to a power imbalance in the company.

b) Disadvantage of limited access to information

The majority shareholders and management often have better access to information about the company. Minority shareholders may have difficulty accessing relevant information that is/would be important for their decision-making and the protection of their rights (information asymmetry).

c) Lack of influence on the profit distributions of the GmbH

Minority shareholders have no direct influence on the distribution of profits. Majority shareholders may choose to keep profits in the company rather than distribute them, which can result in minority shareholders not receiving a reasonable return on their investment. In the worst case, this can lead to the financial “starvation” of the minority shareholders.

d) Share dilution issue

If the company raises additional capital and new shares are issued, this can lead to a dilution of the participation of the minority shareholders. This reduces their participation in the company, which can lead to an even more drastic imbalance of power (keyword “eroding participation through dilution”).

e) Confrontation with majority shareholders and/or management

Minority shareholders can get into conflicts with the majority shareholders, which can lead to an unequal dispute within the GmbH (David versus Goliath).

3. Recommendations for action for minority shareholders

In order to avoid the aforementioned constellations and to prevent an imbalance of power within the company, corresponding (protective) regulations in favor of minority shareholders should already be included in the articles of association.

This can also be done by adding an addendum to an existing partnership agreement.

If the fronts have hardened and/or there has already been an escalation between the shareholders, the protection of the interests of the minority shareholders must be enforced on the basis of the legal regulations for minority shareholders and the principles developed by case law.

This article does not constitute concrete and individual legal advice, but only provides a rough initial overview of the very complex legal matter described. You can only obtain legal certainty for your specific case constellation through coordinated examination and advice from a competent lawyer.

I am happy to be at your disposal as a lawyer and specialist lawyer for a legal assessment and assessment of your case and represent your interests assertively and resolutely. of the company, the management and the (co-)shareholders. Feel free to contact me by phone or write to me.

I advise nationwide on site or via Zoom as a specialist lawyer in the areas of corporate law, tax law and insolvency law, including in the cities and metropolitan areas around Stuttgart, Heilbronn, Karlsruhe, Freiburg, Ulm, Augsburg, Munich, Frankfurt, Wiesbaden, Saarbrücken, Kaiserslautern, Bonn, Wuppertal, Duisburg, Nuremberg, Munster, Saarbrücken, Düsseldorf, Cologne, Dortmund, Hanover, Kassel, Leipzig, Dresden, Bremen, Hamburg and Berlin.

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