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Violation of approval-required legal transactions and their cure by retroactive shareholder resolution

January 29, 2022 | 40,00 EUR | answered by Steuerberater Knut Christiansen

§ 5 Management, Representation

5. The managing directors' authority to represent is unlimited in external relations. In internal relations, the management authority extends to all actions that are part of ordinary business transactions. For all important and extraordinary business transactions and measures, the prior approval of the shareholders' meeting is required. This applies in particular to the following transactions:

a) Acquisition, encumbrance, and sale of real estate and rights similar to real estate,
b) Acquisition and sale of interests,
c) Relocation, sale, or shutdown of the company or a part of the company,
d) Taking up new and abandoning essential areas of activity,
e) Conclusion and amendment of contracts with recurring services, insofar as they create an obligation for the company of more than €500.00 per month at the time of contract conclusion,
...
g) Hiring employees with a gross annual salary of over €5,000.

Does a violation of "e" and "g" mean that these transactions do not allow for deduction of operating costs?

Can this be remedied if, for example, in the past there was a violation of letters "e" and "g," as these business transactions were only approved by oral shareholder resolution, and now, with the current date, a written shareholder resolution is recorded stating that all transactions in the past and for the future corresponding to letters "e" and "g" are retroactively allowed by shareholder resolution?

Can a single shareholder resolution be drafted for retroactive documentation for all transactions, or would a shareholder resolution have to be passed for each individual transaction?

Last question:

Regarding "b) Acquisition and sale of interests..."

Does this also include the purchase of open-end investment fund units such as DWS "Vermögensbildungsfonds I"? If yes, what tax implications would a violation have, and can the issue be remedied with a retroactive shareholder resolution as described above?

I refer to this article, which dates back to 2010:

https://www.gmbh-persoenlich.de/353n2648/Rueckdatierung-nein,-rueckwirkende-Protokollierung-ja.htm

Attached is the complete GmbH statute.

Thank you in advance.

Steuerberater Knut Christiansen

Good day and thank you for using frag-einen.com!

Regarding your question, I would like to provide you with the following feedback in the context of an initial consultation and also with regard to the remuneration provided.

If the decision(s) were made orally, it can be retrospectively documented. Ultimately, the approval generally concerns the internal relationship of the company. So, if all shareholders have orally agreed, there is no violation. However, if it is a one-man GmbH, retrospective documentation would be critical, especially if it concerns the salary of the shareholder-managing director. According to § 48 Abs. 3 GmbHG, immediate written records of decisions must be available. Furthermore, remunerations to the shareholder-managing director must be clearly and pre-agreed upon.

The protocol serves to document the decisions in writing. If the decisions were made on the same day, they can be recorded in one protocol. If the decisions were made on different days, a protocol must be kept for each decision-making.

Regarding your second question:
Participations usually refer to participations in the sense of § 271 HGB. Shares of at least 20% would be necessary for this. This is unlikely to be achieved with an investment fund. Therefore, in my opinion, there is no violation of the regulations here.

I hope this answers your questions, otherwise, feel free to reach out again. Please note that this forum cannot replace personal advice but only allows for a tax initial assessment. Incomplete or missing information about the facts can therefore alter the legal result.

Best regards,

Knut Christiansen
Tax advisor