Exclusion of voting rights of the controlling shareholder in a factual group in accordance with Sec. 136 (1) sent. 1 case 3 AktG (Federal Court of Justice, jdgmt. of 28 November 2023 - II ZR 214/21)

According to Section 136 para. 1 sentence 1 case 3 AktG, no one may exercise voting rights for themselves or another person if a resolution is passed on whether the stock corporation (AG) should assert a claim against them. This exclusion of voting rights is particularly relevant for Annual General Meeting resolutions on the assertion of claims for compensation by the AG against members of the Management Board and Supervisory Board of the AG in accordance with Section 147 para. 1 sentence 1 AktG. In this case, Section 136 para. 1 sentence 1 case 3 AktG prohibits members of the company's Management Board or Supervisory Board who are also shareholders from voting on the assertion of claims for damages against themselves at the Annual General Meeting. Votes that are cast despite a voting ban are generally considered null and void in accordance with Section 134 BGB and may therefore not be taken into account when passing a resolution. If votes are taken into account despite a voting ban, this leads to the Annual General Meeting resolution being contestable if the votes that were wrongly counted influenced the voting result, i.e. the votes were the cause of the resolution result (see, for example, Federal Court of Justice, judgement of 9 October 2018 - II ZR 78/17(KG), para. 18).

In its ruling of 28 November 2023 (II ZR 214/21), the Federal Court of Justice has now decided that the controlling company in the factual group is also excluded from voting rights at the Annual General Meeting of the dependent AG due to a conflict of interest "in analogous application of Section 136 para. 1 sentence 1 AktG" if a resolution is passed on the assertion of claims for damages against members of the governing bodies of the dependent AG and the alleged breach of duty is alleged to have been committed at the instigation of and for the benefit of the controlling company.

In the case underlying the decision, a minority shareholder accused the members of the Management Board and Supervisory Board of a de facto grouped AG of having participated in the acquisition of shares from a company affiliated with the majority shareholder at an inflated purchase price at the instigation of the majority shareholder and in this way having made a concealed transfer of assets to the majority shareholder to the detriment of the AG. The minority shareholder therefore requested that the Annual General Meeting pass a resolution to assert claims for compensation by the AG against certain members of the Management Board and Supervisory Board in accordance with Section 147 para. 1 AktG. The Annual General Meeting rejected the proposed resolution with the votes of the majority shareholder. Without taking into account the votes of the majority shareholder, the resolution would have achieved the simple majority of votes required in accordance with Section 147 para. 1 AktG. The minority shareholder then sought a declaration of nullity of the negative resolution by way of a challenging action and a declaratory judgement that the resolution had been passed to assert claims for compensation in accordance with Section 147 para. 1 AktG.

The Federal Court of Justice justifies the extension of the exclusion of voting rights to the majority shareholder by stating that a majority shareholder who is accused of having initiated a transaction detrimental to the company for his own benefit also always makes a judgement on his "own matter" when passing a resolution on the assertion of claims for compensation based on these facts against the executive bodies of the dependent company and thus at the same time approves or disapproves of his own (mis)conduct (para. 14). According to the Federal Court of Justice, the existence of a "typified conflict of interest" justifying the exclusion of voting rights depends crucially on whether there is a factual connection between the misconduct of which the shareholder is accused on the one hand and the misconduct of which the executive bodies are accused on the other. However, it is irrelevant whether votes are passed against the parties involved in a certain order, whether in one act or against each separately. According to the Federal Court of Justice, the required factual connection is given in the present case because the majority shareholder is said to have caused the behaviour of the executive bodies of the dependent company and the financial advantage accruing to the majority shareholder is said to mirror the damage to the company caused by the inflated purchase price.

With this decision, the Federal Court of Justice strengthens the control mechanism of Section 147 AktG in factual group constellations. The extension of the exclusion of voting rights prevents the majority shareholder from protecting the executive bodies of the dependent AG from pursuing claims for damages and thus indirectly protecting itself through its voting behaviour. The decision therefore deserves unreserved approval.