Definition and basic structure of the written circular procedure
The Umlaufverfahren (written circular procedure) is a legal decision-making and voting process in which resolutions are passed not in a formal meeting, but by means of written, electronic or other communication between the parties outside a face-to-face gathering. The aim is to reach a decision even without a simultaneous physical meeting. The Umlaufverfahren plays an important role in various areas of law and governance, especially in corporate law, association law, condominium law, as well as for public law corporations and in committee work.
The permissibility and structuring of the Umlaufverfahren depend on statutory provisions, articles of association, or procedural rules. The admissibility and execution must therefore be examined on a case-by-case basis according to the relevant legal norms.
Legal basis and application of the written circular procedure
Corporate law
In corporate law, especially for limited liability companies (GmbH) and stock corporations (AG), the Umlaufverfahren is an established means of adopting resolutions. It enables flexible corporate governance and reduces the organizational burden compared to physical meetings.
GmbH resolutions by written circular procedure
According to section 48 (2) of the German Limited Liability Companies Act (GmbHG), shareholder resolutions can be passed by written circular procedure—i.e., outside a shareholders’ meeting—provided all shareholders agree and declare their consent. This consensus requirement protects minority rights and ensures that decisions are not made against the will of individual participants using this method.
Stock corporation law requirements
Within the framework of the Stock Corporation Act, Umlaufverfahren are generally recognized for both the management board and the supervisory board (Section 108 (4) AktG applies for both organs). The company’s articles of association may facilitate, restrict, or exclude the procedure.
Association law and foundations
Association law permits, pursuant to section 32 (2) German Civil Code (BGB), that resolutions can also be made outside meetings by written procedure, provided all members consent to this process. This method is particularly practical for associations with many members or when members reside far apart. Additional details may be stipulated in the statutes.
Similar principles apply to foundations, usually regulated by the foundation’s statutes and applicable state foundation laws.
Condominium law
The Condominium Act (WEG) regulates Umlaufverfahren in Section 23 (3) WEG. Resolutions of the community of condominium owners can be passed in the written circular procedure provided all condominium owners consent to vote via this method. The Umlaufverfahren offers a practical alternative to the owners’ assembly but requires unanimity.
Public law and committee work
Many public law corporations and bodies now permit written circular procedures for the passing of resolutions, particularly in committees, advisory boards, supervisory bodies, or organs of self-governing institutions. The relevant rules are typically set out in the respective rules of procedure or articles of association.
Form and process of the written circular procedure
Written form, text form, and electronic communication
The Umlaufverfahren can be conducted in various formats. Traditionally, this is carried out in writing, such as by letter or fax. Increasingly, text form (Section 126b BGB) or electronic communication methods such as email, portals, or dedicated circular tools are used. The chosen form must comply with statutory or constitutional requirements and, in particular, adequately document the outcome.
Deadlines and formal requirements
The process usually requires a sufficiently specific draft resolution, a deadline for submitting votes, and documentation of statements by the participants. The procedure must ensure that the decision-making process is traceable and manipulation is excluded. Complete record keeping and final notification of the result to all involved parties are recommended for evidentiary and transparency reasons.
Effectiveness requirements and possible challenges
Requirement of consent and unanimity of all involved parties
For most legal forms, a key requirement for effectiveness is the consent of all parties involved to the process itself (principle of unanimity). If one participant’s consent is lacking, the Umlaufverfahren is generally invalid. Exceptions apply only if explicitly provided for by law or in the statutes.
Challenging resolutions and consequences of errors
Mistakes in the Umlaufverfahren—such as non-compliance with formal requirements, the ability to revoke consent until the adoption of the resolution, or failure to observe deadlines—can lead to a resolution being contestable or invalid. The modalities of contesting a resolution are governed by the relevant special regulations (e.g. action for annulment under stock corporation law or contesting resolutions in accordance with section 46 WEG).
Advantages, disadvantages, and distinction from other procedures
Advantages of the written circular procedure
- Increased efficiency due to the elimination of physical meetings
- Faster decision-making, especially for urgent matters
- Lower costs and organizational relief
- Enabling participation even for parties located remotely
Disadvantages and limitations
- Requirement of unanimous consent as prerequisite for effectiveness
- Higher demands on transparency and documentation
- Potential communication deficits compared to face-to-face meetings
- Risk of misunderstandings about the draft resolution at hand
Distinction from hybrid and virtual meeting formats
The Umlaufverfahren differs from hybrid and virtual meeting formats. While there is no simultaneous communication in the Umlaufverfahren, virtual and hybrid formats enable synchronous decision-making and real-time interaction.
Relevant case law and practical recommendations
Numerous judicial decisions clarify the requirements for Umlaufverfahren, in particular regarding form, deadlines, revocation, and record keeping. Courts scrutinize compliance with formal requirements strictly, as the procedure concerns the need for legal certainty and minority protection.
Therefore, it is advisable in practice to:
- Clearly define the written circular procedure in the articles of association or rules of procedure
- Careful documentation and record keeping
- Compliance with all substantive and formal requirements
- Transparent information to all parties regarding procedure and outcome
References and literature
- Münchener Kommentar zum BGB, current editions, Sections 32 BGB, Section 23 WEG
- Hüffer/Koch, Aktiengesetz, commentaries on section 108 AktG and section 119 AktG
- Scholz, GmbHG, section 48 GmbHG
- BayObLG ZMR 2002, 654 – Umlaufverfahren in WEG
- BGH, decision dated 11.01.1968 – II ZB 10/66
- Further case law and literature on written circular procedures in committee and board work
The Umlaufverfahren is a versatile decision-making tool of great relevance for the modern self-governance of companies, associations, public law corporations, and committees. Strict adherence to the legal framework is essential for the validity and durability of resolutions.
Frequently Asked Questions
Who is authorized to initiate a written circular procedure?
The authority to initiate a written circular procedure derives primarily from the relevant statutory provisions as well as applicable articles of association or partnership agreements. Depending on the legal form, the right to initiate the Umlaufverfahren may belong, for example, to the chairperson of a company, a management board member, a specified number of shareholders, or—in association law—the board. In some cases, a qualified minority may also request the written circular procedure. It is important to check whether the respective statute (e.g., section 2 GmbHG, section 48(2) GmbHG, section 32 BGB or stock corporation law regulations) or the articles of association contain special requirements, deadlines, and formalities for initiating this procedure. Often, for the validity of the Umlaufverfahren, the consent of all participants is required, which may impose restrictions regarding feasibility.
What formal requirements must be observed for the Umlaufverfahren?
The Umlaufverfahren is subject—depending on the area of law and the chosen communication medium—to special formal requirements. In the case of GmbHs, resolutions by written circular procedure can generally be made in writing unless the articles of association provide otherwise. For stock corporations, the written Umlaufverfahren within the management bodies is only permissible under very strict conditions. Association law, as per the German Civil Code, generally requires text form under section 126b BGB, unless stricter rules are set by the statutes. In some cases, notarization (e.g. for certain amendments to the articles of association) is also mandatory. Furthermore, every voting member must be fully and equally informed of the matter to be voted on, so that proper decision-making is ensured.
What deadlines must be observed in the written circular procedure?
The law generally does not prescribe fixed deadlines for the written circular procedure; the relevant time periods usually arise from the respective statutes, rules of procedure, or a shareholders’ resolution. However, all eligible voters must be given sufficient time to form an opinion and cast their vote. In practice, a period of at least one week is often regarded as reasonable, unless special circumstances justify a shorter or longer period. For listed companies or large corporations, company statutes or relevant convening rules sometimes contain detailed deadlines applicable to written circular procedures.
What grounds for challenge exist for resolutions adopted by written circular procedure?
Even in the written circular procedure, adopted resolutions are not immune from challenges. Classic grounds for challenge, for example, arise from formal errors (such as failure to comply with written form or deadlines), insufficient information for eligible voters, violations of mandatory statutory provisions, or actions in breach of the statutes. In addition, a resolution may be contestable if the procedure was not accessible to all participants or if individuals were excluded from decision-making. For corporations, challenge conditions must be examined in detail; in stock corporation law, for example, sections 243 et seq. AktG govern the details and deadlines for a challenge. In any case, the challenging parties must credibly demonstrate an infringement of their rights or a formal error.
How is the documentation and evidentiary preservation of a written circular procedure carried out?
Thorough documentation is essential from a legal perspective in order to prove the validity of a resolution passed by written circular procedure. This begins with the written or digital invitation or notice to all eligible voters concerning the matter to be decided. Furthermore, all votes received, declarations, or statements must be fully, chronologically, and immutably recorded. Ideally, a protocol is prepared documenting the procedure, the resolution proposal, and the result including voting participation and the distribution of votes. In some cases, documents must be deposited with a notary or officially certified. For electronic circular procedures, attention must also be paid to the authenticity and integrity of the communication means (e.g. qualified electronic signature) to facilitate subsequent proof.
Can amendments to the articles of association be adopted by written circular procedure?
Whether amendments to the articles of association can be made by written circular procedure depends essentially on the respective legal form, legal situation, and the specific provisions of the statutes. In civil law companies and some associations, amendments can in principle be adopted by written circular procedure provided that the necessary majorities and formal requirements are met. For corporations, especially GmbHs, amendments usually require notarization of all declarations (section 54 (2) GmbHG), which may preclude a purely written or text-form circular procedure. Under stock corporation law, significant restrictions apply: amendments typically require a general meeting, and adoption by circular procedure is not foreseen. In all cases, it must be checked whether the statutes explicitly permit the written circular procedure for amendments and under which conditions.
What special features apply to digital written circular procedures?
The digital written circular procedure offers extensive possibilities but is also subject to specific legal requirements. While electronic communication—for example via email or secure voting tool—may be legally admissible, compliance with the required form (usually text form, sometimes written form or notarized form) must be ensured. In some cases, the use of certified technologies (such as qualified electronic signatures under the eIDAS Regulation) is required to guarantee legal certainty. Data protection requirements must be observed regarding the processing and storage of personal data, especially when voting processes and resolution records are digitally archived. In addition, measures should be taken—and documented transparently—to ensure confidentiality, authenticity, and integrity of the communication.
