Expulsion Clauses in Management Participation Programmes: Federal Court of Justice Stays Its Course (II ZR 71/24)

In its judgment of 10 February 2026 (II ZR 71/24), the Federal Court of Justice (Bundesgerichtshof, BGH) adheres to its settled case law and rejects the widespread criticism in the legal literature.

Accordingly, free expulsion clauses (Hinauskündigungsklauseln) – i.e. provisions that allow a shareholder to be excluded without an objective reason – are in principle contrary to public policy and therefore void under § 138(1) of the German Civil Code (BGB). They impair the freedom of decision of the shareholder concerned within the company and open the door to arbitrariness on the part of those entitled to exclude.

This principle did and does not apply without exception, however. Free expulsion clauses are, by contrast, valid where they are objectively justified by special circumstances. For management participation programmes, the BGH makes clear that this is the case in particular where the shareholder position is granted to the manager precisely because of his or her function as managing director and the participation has no independent significance vis-à-vis his or her position as managing director.