TURGERLEGAL - Expertise. Reliability. Dedication
Shareholders’ meeting: Once the vote has been received, it cannot be revoked
Specialist article in corporate law
situation
The Munich Higher Regional Court (OLG) has issued a ruling based on the following facts: A limited partnership (KG) passed a resolution to sell real estate at a shareholders' meeting with the required majority. The plaintiff has challenged this resolution. In its view, the resolution is invalid due to a lack of a majority. The plaintiff argues that several shareholders changed their votes before the voting deadline. In the plaintiff's view, a change of vote is still possible at any time up until the votes are counted.
The Higher Regional Court of Munich made a decision on April 5, 2023 (case number 7 U 6538/20).
The Munich Higher Regional Court has dismissed the lawsuit. The court holds that the cast vote is binding. It is not possible to change a cast vote after it has been received. Even if a shareholder has a (supposedly) important reason for changing their mind, this does not allow for subsequent changes. This also applies to shareholder resolutions that are not passed in person. For a resolution passed by circulation, the time for revoking a vote is determined by the time the vote is received by the chairperson of the meeting.
Recommendations for practice
Companies are represented vis-à-vis third parties by the managing directors, board members, or personally liable partners. The general meeting, on the other hand, is the body that makes decisions related to the merger of the partners. These decisions are essential and fundamental to the company.
In the past, shareholders' meetings were generally held in person. However, in response to the coronavirus crisis, the legislature has introduced further simplifications for such meetings to facilitate decision-making.
If a shareholder changes their mind after casting their vote, they can only prevent their vote from being binding by acting quickly. There are several ways to revoke their vote:
- Circulation procedures and mailed ballots: A phone call or email is usually sufficient to effect the revocation in time before the ballot arrives.
- Circular mailings and the use of electronic means of distance communication (such as email, chat, or messenger services): Since immediate delivery is expected after dispatch, revocation can only be made by an immediate declaration at the same time. This could only be relevant if the "Send" button is accidentally clicked.
- "Online shareholders' meeting": No revocation is possible if the meeting is held online or in a hybrid format (partially in-person, partially online). In this case, the vote cast becomes effective immediately upon casting and being heard by the other participants (chairman, fellow shareholders).
Circular voting and online meetings offer practical and important options. However, it is important that shareholders carefully consider their voting and do not act hastily.
