LG Darmstadt (Regional Court of Darmstadt) considered the circumstances in which a lasting breakdown of trust between two shareholder-managing directors may justify removal for cause (LG Darmstadt, decision of 28 April 2026 – 18 O 44/24 (case no.)). The 6. Kammer für Handelssachen (6th Chamber for Commercial Matters) of the Landgericht Darmstadt (18. Kammer) had jurisdiction. The official subject heading is, in translation, “The breakdown of the relationship between two managing directors in the context of removal for cause”.
Conflict within the management
The claimant’s position within the group of companies
The defendant holding company was the sole shareholder of Company A. Company A, in turn, acted as the general partner of the operating Company B.
The claimant had been part of the group of companies since 2008. Since 2016, he had been both a shareholder and managing director of the defendant. He also served as a managing director of Company A.
Increasing tensions between the parties
In 2023, conflicts arose between the claimant and the other managing directors. They were initially triggered by an employee’s criticism of the claimant’s management style. In May 2024, further allegations were made concerning his leadership and morale within his department.
The claimant then called into question whether he would continue in his roles as shareholder and managing director. Although he subsequently declared that he was prepared to continue working with the others, no agreement was reached on the future form of their cooperation.
Resolutions on removal and termination of contract
Shareholders’ meeting of 21 August 2024
On 21 August 2024, the shareholders resolved to remove the claimant as managing director of the defendant for cause due to the breakdown of trust. The claimant attended this shareholders’ meeting in person. Notice of his removal was received by him during the meeting.
In addition, the shareholders adopted resolutions concerning the following matters:
- They approved the claimant’s removal as managing director of Company A.
- They approved the termination of his service agreement.
The claimant objected to the resolutions. He took the view that there had been no good cause and that the resolutions adopted were invalid on both procedural and substantive grounds.
Landgericht dismisses the action
Legal interest in judicial review of the resolutions
The actions seeking to set aside the shareholders’ resolutions and have them declared void were unsuccessful. However, the Landgericht held that the requisite legal interest did exist. There was an objective interest in having the validity of the challenged resolutions reviewed by a court.
In the court’s view, however, the resolutions were not affected by any procedural or substantive defects. In particular, there was no material defect in the notice convening the shareholders’ meeting. The meeting was also validly reconvened after it had initially lacked a quorum.
Good cause under § 38 GmbHG
The Landgericht found that the irretrievable breakdown of trust between the claimant and co-managing director C constituted good cause for removal under § 38 GmbHG (German Limited Liability Companies Act). Continued cooperation could no longer reasonably be expected.
For this assessment, it was not decisive which party had been primarily responsible for causing the conflict. Rather, the decisive question was whether productive cooperation could still be expected in the future. In the required overall balancing of interests, particular weight must be attached to a lasting breakdown of trust between two shareholder-managing directors.
Subsequent statements by the managing director concerned may be taken into account if they merely confirm a breakdown that has already occurred. In that case, they need not constitute a separate new ground for removal.
Admissibility of evidence from a conversation between neighbouring managing directors
The proceedings also concerned a conversation between the two managing directors, who were also neighbours. According to the decision, there was no procedural prohibition on using the content of the conversation as evidence.
This was not altered by a confidentiality agreement entered into subsequently. The court was therefore entitled to take the content of the conversation into account in reaching its decision.
Approval of measures at the subsidiary
Scope of the duty of loyalty at parent-company level
The shareholders’ meeting of the parent company also had to decide whether to approve resolutions that were only to be adopted at subsidiary level. These concerned the removal and dismissal of a managing director of the subsidiary who was also a shareholder-managing director of the parent company.
According to the decision, the corporate duty of loyalty in this situation does not require a comprehensive examination of whether, and if so under what conditions, the relevant resolutions may be adopted at the subsidiary. The approval of the claimant’s removal as managing director of Company A and of the termination of his service agreement was therefore valid.
The Landgericht found neither a breach of the articles of association nor a breach of the corporate duty of loyalty.
Significance of the decision for shareholders and managing directors
Removal for cause cannot be based solely on subjective tensions within the management. An overall assessment of the specific circumstances and the conflicting interests remains necessary.
The decisive question is whether, viewed objectively, the company can still reasonably be expected to continue the working relationship. Particularly where managing directors work closely together, personal conflicts may affect their position as corporate officers if they have permanently and irretrievably destroyed the necessary trust.
At the same time, the decision makes clear that resolutions concerning the removal of a shareholder-managing director cannot be considered in isolation. In addition to the substantive grounds for removal, the resolution procedure, the requirements of the articles of association and the parties’ duties of loyalty are particularly relevant. MTR Legal Rechtsanwälte advises companies, shareholders and managing directors on related matters as part of its corporate law advisory services.
