Premature Reappointment of Board Members of a Joint-Stock Company Is Possible

The Federal Supreme Court has decided (judgment of 07/16/2012, case No.: ZR 55/11) that an early reappointment of directors of a corporation may be possible.


North Rhine-Westphalia -- (SBWire) -- 01/19/2013 --GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Dusseldorf, Essen, Frankfurt, Hamburg, Munich, Stuttgart, Hanover, Bremen, Nuremberg and London conclude: According to the court, a premature reappointment of a board member of a corporation for five years is permitted in case of an amicable resignation without special reasons. For this purpose, the supervisory board should not be bound by the provisions of the Stock Corporation Act (AktG). Furthermore, it is necessary to decide at least every five years on the renewal of the appointment of board member.

The plaintiff was a member of the supervisory board of a stock corporation. One day before a general meeting, the supervisory board decided to re-appoint two board members for five years as board members, under mutual consent about termination of their not yet expired three-year term. The plaintiff sought to declare the board’s decisions invalid.

The Regional Court had dismissed the action already in the first instance. The Higher Regional Court now upheld the action. It stated as reasons that the premature reappointment of the board that was to be elected at the General Meeting represented an irreversible fact. The Federal Supreme Court supported the present decision, however, as a result of the ruling of the Regional Court. In its opinion, the impossibility does not result from the fact that the Supervisory Board should have been bound by the decision. There are no obvious reasons from which the reappointment may be considered under certain circumstances as abusive.

The stock corporation is a commercial company, and thus a merchant in terms of the law. This applies regardless of its actual field of business activity. It is a bearer of rights and duties, so it can sue and be sued. The Stock Corporation Act is the legal basis thereof.

An attorney experienced in corporate law can provide you support at the establishment of a corporation, drafting of its articles of association, change of ownership, and eventually during the liquidation of the company.

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