Resignation and exclusion at the limited liability company – possible in contrast to the limited company!

• Corporate, Company Law
• Private Clients
• SME

In the case of the limited liability company, the person of the shareholder is in the foreground

The shareholding in a corporation changes primarily through the purchase or sale of shares or ordinary shares. Whereas in the case of a limited company (SA) a shareholder can only withdraw by transferring his shares, the law of a limited liability company (SARL) recognises the possibility of individual shareholders withdrawing from the company or also being excluded. This is because in the case of the SARL the focus is on the person of the shareholder, whereas in the case of the SA the focus is mainly on the subscribed capital contribution.

Withdrawal from the limited liability company

The articles of association can grant the shareholders the right to withdraw. The articles may stipulate certain facts which are considered so important that a withdrawal is possible if they occur.

Even if the articles do not contain a right to resign, a shareholder does not have to remain in the limited liability company for important reasons if the others do not voluntarily take over his shares. He can sue the court for resignation. Important reasons can lie in the personal sphere of the partners. Disputes and quarrels, if necessary combined with a withdrawal of trust / abuse of power or serious defamation, can lead to a situation where it is no longer reasonable to remain. Differences over business orientation or conflicts of interest can also constitute good cause.

Resignation enforced by the courts must be the last remaining option; therefore, serious conflicts that cannot be resolved or continued strikes or the like are required.

Expulsion from the limited liability company

The same applies in the opposite sense. A shareholder or individual shareholders may have cause to remove one or more shareholders from the SARL. Again, due to the personal structure, there is the possibility of exclusion if successful cooperation with individuals is no longer possible.

The articles of association may also state important reasons for an exclusion. These must, of course, be clearly described and of a certain scope. In this case, the limited liability company can pass a resolution to exclude a member; this requires a qualified majority.

If the grounds for exclusion are not set out in the articles of association, the limited liability company may bring an action before the court for the exclusion of a shareholder if it can prove that there are important grounds. These are predominantly personal reasons or reasons relating to the way in which the shareholder’s role is exercised. The incompatibility, misconduct or incapacity are not dependent on fault, but must make further cooperation impossible.

Entitlement to severance pay

Both the withdrawing shareholder and the excluded shareholder are in principle entitled to a severance payment at the real value of their ordinary shares. The funds for this come either from an acquiring shareholder or from the SARL’s equity capital. Special relationships among the shareholders must be taken into account in the amount of the compensation due to the personal structure of the SARL.

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