Section 108(2) sentence 3 of the German Stock Corporation Act (AktG) mandates that the supervisory board of a stock corporation can only pass resolutions if at least three members participate. This requirement also applies to the supervisory board of a limited liability company (GmbH) that is required to establish a supervisory board under the laws governing employee co-determination.
This regulation can present challenges when the supervisory board consists of only three members. If one member is absent, the board cannot pass any resolutions, effectively rendering it inoperative. While this may be acceptable in isolated instances, it poses a significant risk of abuse. A supervisory board member who persistently boycotts meetings can paralyze the board’s decision-making ability indefinitely.
What steps should be taken in such a scenario? Undoubtedly, the boycotting member is in breach of their official duties, as all supervisory board members are obligated to attend meetings and participate in resolutions. However, recognizing this breach does not resolve the issue. One might consider court intervention to supplement the board under section 104 AktG, which allows the court to appoint additional members if the board lacks the quorum needed to operate.
The problem with applying section 104 AktG in the case of a boycott is that the boycotting member remains a board member despite their absence. Therefore, the legal criteria for court intervention are not met. Analogous application of section 104 AktG is also not feasible, as there is no comparable situation of interest: unlike a permanently incapacitated board member, the boycotting member can end their boycott at any time, restoring the quorum and terminating the court-appointed member’s tenure. Repeated boycotts would necessitate repeating the entire process, leading to an insecure legal solution. Consequently, the Federal Supreme Court (BGH) has ruled out the analogous application of section 104 AktG in cases of persistent boycotting (decision of January 9, 2024, II ZB 20/22).
If a supervisory board member persistently boycotts the board, they can be dismissed by the Annual General Meeting without cause, in accordance with section 103(1) sentence 1 AktG. If the majority at the Annual General Meeting does not support this action, another solution exists:
Under section 103(3) AktG, the court must dismiss a supervisory board member at the request of the board if there is good cause related to the member. Persistent boycotting of board resolutions undoubtedly constitutes good cause for dismissal. However, initiating court proceedings requires a board resolution, which the boycotting member is likely to obstruct. This dilemma is resolved as follows: A board member facing dismissal proceedings under section 103(3) AktG is subject to a voting ban and cannot block the initiation of such proceedings. In a three-member board, the member in question must participate in the resolution process to maintain the quorum but must abstain from voting. Hence, the member abuses their legal position if they cite the quorum deficiency caused by their own absence to thwart the dismissal resolution. Consequently, the motion to dismiss under section 103(3) AktG is valid even if only the two other board members participate in the resolution (BGH, decision of January 9, 2024, II ZB 20/22).