In determining the valid grounds of immediate termination of a Managing Director, the knowledge available to the parties in regards to the reasons for making the termination effective are decisive.

Cologne, Germany -- (SBWire) -- 08/09/2013 --GRP Rainer Attorneys and Tax Advisors in Cologne, Berlin, Bonn, Bremen, Düsseldorf, Essen, Frankfurt, Hamburg, Hanover, Munich, Nuremberg, Stuttgart and London www.grprainer.com/en explain: With its judgment dated April 9, 2013 (file ref. no.: II ZR 273/11), the German Federal Supreme Court (BGH) took a formal position as to the circumstances of a termination without notice of a GmbH Managing Director. The immediate termination of a Managing Director is governed by the German Civil Code (BGB). For such termination, it is required that termination is effective within two weeks after receiving knowledge of the determining factors of the termination. In the aforementioned judgment, the BGH decided that the determination of the grounds for termination depends on the known reasons giving cause to the decision for immediate termination which were known by the decision-making party. In the case of a GmbH, such a party would be the general meeting of shareholders or the sole shareholder. Deviating from that, however, shareholders are free to transfer authority to issue effective terminations to other persons. This can be done, for example, by a provision in the articles of association.

For them, the knowledge of the determining factors of termination which enacted the two-week period should then be presented once the party (or parties) has collected all relevant information which would be necessary for making a decision in regards to a possible termination.

In particular, the plaintiff asserted in the present case that the termination was not effective as it was not enacted within the above-mentioned, two-week period. The BGH did not agree with this notion. The Court cited the justification that having to know or grossly negligent ignorance does not influence the start of the two-week period. For the start of the two-week period, only the actual knowledge itself is decisive.

The substance of company law is often difficult to penetrate and quite complex even for Managing Directors and shareholders. Questions pertaining to the liability of persons involved in the event of terminations pose challenges and to those affected.

An attorney can clarify the facts of any given case and determine possible claims. Oftentimes, immediate action is required to enforce claims. Terminations should not just simply be tolerated and their status should be checked for effectiveness.

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