Amendment of the articles of association

GmbH, AG, GmbH & Co. KG, GbR - how to change the articles of association in a german company?

In every german multi-member company, the partnership agreement is one of the most important legal documents. Already with the foundation of the company in Germany many relevant relations and relationships are fixed by the articles of association. The partnership agreement not only adjusts profit and power relations between the partners, but also regulates the relationship with the management. Often, a partnership agreement must also take into account changing circumstances (for example, new legal situation or new shareholding relationships). Depending on whether the german company is a GmbH, UG, AG, KG or GbR, different procedural and formal requirements for the amendment of the articles of association must be observed.

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Importance of the partnership agreement in Germany

The articles of association are of great importance for any german multi-person company. Depending on the legal form, some companies cannot exist without a written partnership agreement. The articles of association regulate the legal relationships and responsibilities between the individual bodies of a company. It standardizes the essential procedural issues concerning the shareholders' meeting, voting prohibitions for shareholders' resolutions, participation, control and information rights. In addition to the so-called management rights, each partnership agreement also contains asset rights of the shareholders, which relate to annual profit claims (dividends) and compensation claims in the event of shareholder withdrawal. With special duties and prohibitions vis-à-vis shareholders and managing directors, such as non-competition clauses and customer protection regulations, the partnership agreements ensure protection concepts for the operational business.

The adaptation and amendment of articles of association on the basis of the interests of majority shareholders or investor groups is regulated differently under german procedural law. The requirements and procedural specifications of amendments to the articles of association of german GmbHs, UGs, AGs, KGs and GbRs are presented in detail below.

Amendment of the GmbH partnership agreement

The articles of association of a GmbH are generally amended at a shareholders' meeting by a shareholders' resolution. To do this, the shareholders' meeting must vote in favor of the new provision in the articles of association with the so-called majority that amends the articles of association. This means that ¾ of the votes cast by the shareholders must be in favor of the amendment to the articles of association, Art. 53 para. 2 GmbHG.

Moreover, the shareholders require a notary public for the amendment of the articles of association. The articles of association cannot be effectively amended by circulation. The shareholders' resolution amending the articles of association must be notarized in Germany. If a shareholder is represented by a third person, the power of attorney only requires the written form. The power of attorney does not require public certification or notarization. If all partners agree, all forms and deadlines for a partners' meeting can be waived and the amendment of the partnership agreement can be decided in a general meeting.

It should be noted that the articles of association may require a higher majority than the 75% of votes cast required by german law.

Amendment of the articles of association of a german UG (limited liability company)

The UG (haftungsbeschränkt) is a legal form variant of the GmbH. Therefore, the same applies to the amendment of the articles of association of a UG as to the GmbH. In the absence of special rules in the articles of association, a shareholders' resolution with a majority of 75% of the votes cast is required to amend the articles of association. The amendment resolution must be notarized in Germany. The requirements also apply if the UG only has a model protocol and this is to be amended.

Amendment of the articles of association of a german stock corporation (AG)

Art. 179 AktG regulates the procedure for amending the articles of association. This provision of german stock corporation law requires a resolution of the general meeting for any amendment to the articles of association. The resolution amending the articles of association must be adopted by a majority of ¾ of the capital stock represented when the resolution is adopted. When amending an AG's articles of association, the principle of the strictness of the articles of association in Art. 23 para. 5 AktG must be observed. This provision severely restricts the ability to amend an AG's articles of association in order to protect future shareholders and creditors of the AG.

A resolution of the annual general meeting on the amendment of the articles of association is accompanied by a notarial record of the annual general meeting. The resolution of the annual general meeting amending the Articles of Association is filed with the german commercial register together with a notarial certification that the amended provisions of the articles of association are consistent with the resolution on the amendment of the articles of association. The application for registration in the german trade register is the responsibility of the AG's management board.

Amendment of the Articles of Association of a german GmbH & Co. KG

Unlike the legal requirements for articles of association of german corporations (GmbH and AG), the articles of association of a KG and not subject to any mandatory form. Amendments to the articles of association of a GmbH & Co. KG do not require any form. Consequently, amendments to the provisions of the partnership agreement of a german KG can be resolved or agreed between the partners on a purely oral basis. However, a written documentation of the amendment of a KG partnership agreement is strongly recommended, as otherwise there may be evidentiary problems in the event of a shareholder dispute and undesirable tax consequences for the tax authorities. The majority requirements necessary for an amendment to the partnership agreement are usually regulated in the partnership agreement. Otherwise, unanimity applies.

In the case of a german GmbH & Co. KG, it must be taken into account that two partnership agreements exist. In addition to the KG, the general partner GmbH also has its own partnership agreement. The amendments to the KG partnership agreement may also entail the requirement to amend the GmbH partnership agreement in order to ensure the necessary synchronization between the two companies. While the KG partnership agreement is informal, but preferably in writing, the shareholders' resolution aimed at amending the partnership agreement of the general partner GmbH must necessarily be notarized in Germany.

Amendment of the GbR partnership agreement in Germany

According to the statutory model, the partnership agreement of a german GbR can only be amended unanimously, Art. 705 f. BGB. In german practice, however, the requirement of unanimity is often relativized. Often, a qualified voting majority of ¾ is required. As with the KG, resolutions amending the partnership in the german GbR are not subject to any time limit or formal requirements. However, written company resolutions are advisable here as well.

If you have any questions regarding the drafting of partnership agreements or if you wish to have the validity of partnership agreement clauses examined, please do not hesitate to contact our specialist lawyers for german partnership law in our offices in Hamburg, Berlin, Munich, Frankfurt or Cologne.