Cologne, NRW -- (SBWIRE) -- 07/30/2013 -- GRP Rainer Lawyers Tax Advisors, Cologne, Berlin, Bonn, Bremen, Düsseldorf, Essen, Frankfurt, Hamburg, Hanover, Munich, Nuremberg, Stuttgart and London www.grprainer.com/en explains: The supervisory board functions within the stock corporation (AG) as the controlling organ and monitors the management board’s business dealings. However, the resolutions of the supervisory board are also subject to a degree of control and can be invalid under certain circumstances.

Two defects are possible with supervisory board resolutions. A defect as to content exists if the resolution’s content contravenes the law or the articles of association. A procedural defect exists if despite the resolution’s content being unobjectionable a statutory provision or provision found in the articles of association relating to procedure has been breached. In principle, all supervisory board resolutions that suffer from defects as to content or procedure are void, yet on the basis of legal certainty in commerce defects must nevertheless be differentiated as per their severity.

If merely a lesser defect is present, the objection to the resolution must be carried out with all reasonable haste, otherwise it is forfeited. The situation is different in the case of severe defects. In this instance, nullity can be asserted without prior notice by way of a declaratory action. The action can submitted by a member of the supervisory board, a member of the management board or the entire management board.

In order to ensure legal certainty, a clause should be included in an AG’s articles of association which sets the deadline for submitting a declaratory action. It must, however, be noted in this connection that no disproportionate curtailment may occur thereby.

The organs of stock corporations are subject to many tasks and duties which are not all conclusively regulated. Even the legal consequences and remedies where provisions are breached are often developed by case law. In order to create legal certainty and avoid possible damages claims, the legal framework ought to be defined at an early stage with the help of a lawyer active in the field of company law.

Investors as well as management and supervisory board members should turn to a lawyer where legal problems and complex circumstances are present. Where there are questions regarding liability, rescission of resolutions and the enforcement of claims, he can carry out an individual examination and highlight existing possibilities.

About GRP Rainer
GRP Rainer LLP http://www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Essen, Frankfurt, Hamburg, Hannover, Munich, Stuttgart, Bremen, Nuremberg and London UK.

Contact Michael Rainer
Lawyer, Managing Partner
GRP Rainer LLP
Hohenzollernring 21-23
50672 Cologne
Germany
Phone: +49 221-27 22 75-0
info@grprainer.com
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