If the shareholder has shares that are, pursuant to the memorandum of association, to be gratuitously assigned back after the expiration of the agreement, which he previously acquired in return for consideration, this clause is potentially void.

Cologne, NRW -- (SBWire) -- 04/04/2013 --GRP Rainer Lawyers and Tax Advisors, Cologne, Berlin, Bonn, Düsseldorf, Essen, Frankfurt, Hamburg, Hanover, Munich, Stuttgart, Bremen, Nuremberg, London www.grprainer.com/en explain: It is generally recognised that contractual freedom also applies to shareholders. Occasionally, provisions in memoranda of association can be fully permissible, which would not, for example, be the case in the articles of association of a stock corporation (AG).

A notable exception to the above, however, is a clause in the memorandum of association according to which the shareholder is to gratuitously assign back shares, which he acquired in return for consideration, after termination of the corporate relationship.

The BGH recently had to reach a decision in such a case (Az.: II ZR 80/10): The matter appeared to concern an AG whose shareholders consisted of insurance brokers and which provided brokers financial support. This service was offered by the AG within the framework of a “partnership agreement”, in which the shareholders are connected with the AG. In the course of this partnership agreement being concluded in 2001, the claimant seemingly acquired 25 registered shares to the total value of 1,300 euros. Among other things, the agreement contained the clause in question, according to which the shareholder had to gratuitously assign back the acquired shares to the AG upon termination of the partnership agreement. The AG called for exactly that when it terminated the agreement in September 2007. However, the shareholder resisted this and in return demanded appropriate compensation.

In the view of the BGH, she was by all appearances right to do so. The Karlsruhe judges assessed the clause in issue as being legally void and consequently contrary to public policy.

Shareholders should therefore carefully examine whether such a clause is concealed within their agreement when concluding a memorandum of association. Even if agreements including such a clause have already been signed, you need not despair; a lawyer versed in company law shall examine the conclusion of your agreement with you and elucidate any necessary legal steps.

About GRP Rainer LLP
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.

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