What legal steps can I take if a shareholder commits a breach of contract?
January 18, 2022 | 50,00 EUR | answered by Otto König
Dear corporate lawyer,
I am reaching out to you as the managing director of a GmbH (limited liability company) who has found herself in a difficult situation. One of my shareholders, with whom I have previously worked closely and trustingly, has suddenly breached the contract. He has violated several clauses in the company's articles of association, causing harm to the company and the other shareholders.
The situation is as follows: Some time ago, we drafted articles of association that regulate the rights and obligations of the shareholders. These include agreements on shareholding percentages, participation rights, and non-compete clauses. Without consulting the other shareholders, our shareholder has founded a competing company that directly competes with our own. This has not only led to financial damages, but also a significant loss of trust.
I am greatly concerned, as I do not know how to address this breach of contract. What legal steps are available to me as the managing director and to the other shareholders? How can we hold the shareholder accountable and pursue claims for damages? Are there ways to exclude him from the company or take other measures to protect the business?
I am grateful for your support and hope for your expert advice in this challenging matter.
Sincerely,
Nina Endres
Dear Mrs. Endres,
Thank you for your inquiry regarding the breach of contract by a shareholder in your GmbH. It is understandable that you find yourself in a difficult situation and are seeking legal options to address the misconduct of the shareholder.
First and foremost, it is important to note that a violation of the partnership agreement is a serious issue and can have legal consequences. In your case, where the shareholder has founded a competing company that directly competes with your business, it constitutes a breach of the non-compete clause stipulated in the partnership agreement. This violation can have both civil and corporate law consequences.
As the managing director and the other shareholders, you have various legal remedies available to take action against the shareholder and seek damages. First, you should carefully review the partnership agreement and all relevant documents to ensure that the violation can be clearly proven.
In the next step, you can initiate legal proceedings to hold the shareholder accountable. This may involve initiating arbitration proceedings or filing a lawsuit in court. It is important that you seek advice from an experienced corporate law attorney to determine the best course of action.
Additionally, there is also the possibility of excluding the shareholder from the company. However, this is a complex process that requires certain legal requirements. It is advisable to seek advice from a specialist in corporate law to ensure that all legal steps are initiated correctly.
Overall, it is important that you act swiftly and take legal action against the shareholder to protect the company and minimize the damage. I strongly recommend that you consult with an experienced corporate law attorney to receive comprehensive advice and support in this matter.
I hope that my explanations are helpful to you and wish you success in resolving this issue.
Sincerely,
Otto König
