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GmbH shareholder’s rights of access and inspection

July 2018

The shareholders of a GmbH, a type of German private limited company, have extensive rights to information that go beyond the general meeting of the shareholders, and they are able to exercise their rights of access and inspection.

GmbH shareholders entrust the managing director with the fate of their company. Notwithstanding this, they do, of course, have the right to be informed about what is happening in their firm at all times. In addition to the general meeting of the shareholders, the rights of access and inspection are an important tool for shareholders to gain an insight into all commercially and legally relevant matters within the company. We at the commercial law firm GRP Rainer Rechtsanwälte note that while their rights of access and inspection are indeed wide-ranging, they are not without their limits.

What is the order situation? Which projects have been completed and which are at the planning stage? How are the agreements structured? These and other questions are of interest to all shareholders. They receive answers to these questions at the general meeting of the shareholders. They can also receive answers by exercising their rights of access and inspection, and in doing so request information concerning concluded transactions, projects at the planning stage, agreements, records, protocols etc. These rights to information may also be applicable to a limited extent if the GmbH has a financial interest in other companies.

The GmbH shareholder’s rights of access and inspection cannot be restricted by the articles of association. Moreover, the managing director is obligated to provide the desired information without delay. However, he or she must also assess whether providing the information would go against the company’s interests. This would be the case, for instance, if there was reason to fear that the shareholder might use the information for non-company purposes and thereby damage the company, e.g. because the shareholder has a financial interest in a rival company as well.

In such instances, the managing director needs to act prudently. If he or she acts on their own authority in refusing access or the right of inspection, he or she is committing a breach of duty and may render themselves liable to pay damages. Conversely, he or she cannot release the information if they have reason to fear an abuse of rights or use of information for non-company purposes. The final decision must therefore be taken by the general meeting of the shareholders. The shareholder seeking the information is not authorized to vote on this resolution. If the general meeting decides to deny the shareholder access or the right of inspection, the latter can still try and enforce his or her rights through the courts.

Lawyers who are experienced in the field of company law can advise shareholders and managing directors.

https://www.grprainer.com/en/legal-advice/company-law.html

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