027. Constructive Dividends - Salary Increases for Shareholder-General Managers

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Past pay increases for general managers of GmbH's who also hold any share in the GmbH, even a small one (shareholder-general managers) should be reviewed and confirmed by the end of this year by shareholder resolution where necessary.

The reason for this is a 1991 holding by the Federal Court of Justice (BGH: GmbH-Rundschau 1991, 363) that amendments to the employment contract of a general manager require approval by shareholder resolution. An amendment cannot be validly entered into for the GmbH by a second general manager, even if the second general manager is otherwise authorised to represent the GmbH individually.