Form requirements for general meeting invitations: Erroneous information on power of attorney does not lead to nullity
The proper invitation to a general meeting of a corporation forms a crucial cornerstone of the company’s decision-making process. Particular attention should be given to the design of notices regarding the authorization of shareholders. The Federal Court of Justice (BGH) clarified on July 20, 2011 (Ref.: II ZR 124/10) the consequences of incorrect information regarding representation options in the invitation.
Invitation formalities and their significance
Compliance with corporate law requirements
The German Stock Corporation Act (AktG) prescribes formal requirements for general meetings concerning the location of the meeting, the agenda, and the method of authorizing representation. Shareholders must be informed about the modalities of granting a power of attorney for exercising voting rights. If inaccuracies or incomplete information occur, the question regularly arises as to whether this leads to the nullity of the resolutions passed at the general meeting.
BGH decision on the invalidity of resolutions
Incorrect information on voting rights representation
In the case decided by the BGH, the invitation to the general meeting contained information about granting power of attorney that contradicted the statutory regulations of the AktG. A shareholder then claimed that the incorrect information had impaired the participation rights of shareholders and should lead to the invalidity of the resolutions passed at the general meeting.
The Federal Court of Justice, however, determined that merely erroneous information in the invitation concerning the modalities of authorization – such as the form and scope of the power of attorney – does not automatically render the resolution invalid. A requirement for such a severe legal consequence is that the information has to be so seriously misleading that proper participation by shareholders in the decision-making process could not have been ensured. The decisive criterion remains whether the shareholders’ rights were concretely impaired.
Prerequisites for the nullity of general meeting resolutions
The BGH thus differentiates between general violations of formal requirements and severe errors that significantly affect the participation rights of shareholders. It is not sufficient for deeming a resolution null that the power of attorney information is not entirely correct in every respect. It must be established that the error significantly influenced the typically expected decision-making process and restricted the minority rights to such an extent that the purpose of the law is thwarted.
Impact on the practice of convening general meetings
The case law clarifies that, when convening a general meeting, careful differentiation must be made between substantive inaccuracies with merely informational character and those that affect the core of participation rights. The mere possibility of impairment is not sufficient to assume nullity of the resolutions from the outset. As long as the shareholders’ participatory rights are not unreasonably restricted, the resolutions remain valid.
Conclusion
The decision of the Federal Court of Justice thus strengthens legal certainty regarding minor errors in general meeting invitations, especially if these do not directly detriment the shareholders’ rights. In case of legal uncertainties or more complex questions concerning the conduct and preparation of general meetings, it is advisable to seek qualified assistance. Further information and contact options are provided by MTR Legal under the keywordLegal advice on corporate law.
