Preparing Shareholder Resolutions Properly

In good times, partnership and shareholder agreements are often interpreted generously: resolutions are passed in fast-forward mode, and time limits or formalities are dismissed as "bureaucratic". This phenomenon is frequently observed in partnerships (Personengesellschaften), in particular in civil-law partnerships (GbR).

However, as soon as disagreement arises among the shareholders, precisely these formal errors can become decisive. Errors in the notice of the meeting, the agenda or the exclusion of voting rights open up opportunities to overturn unwelcome resolutions. Even if the resolution is not void but merely unlawful – i.e. valid but contestable – it is indispensable in the case of important shareholder resolutions that all formalities are observed. A subsequent shareholder dispute over the validity of a resolution is not only tedious but also time-consuming and costly.

Preparing and conducting a shareholders' meeting in accordance with the law and the articles of association is therefore not mere formalism but must be strictly observed, particularly in situations of tension.