4.3.4 Important reason

As can be derived from the judgment of the Supreme Court cited in § 4.3.1, an important reason (wichtiger Grund) justifying the exit of a shareholder has to be present, in order for the shareholder to obtain a claim for compensation. Circumstances have to be present that make it unacceptable (unzumutbar) to expect the continuation of the shareholding.1 To the open nature of the notions of important reason and unreasonable continuation is further given shape in the case law and legal literature. When assessing whether the exit of a shareholder is justified, all relevant interests have to be weighed in the light of the special circumstances of the case.2

The relevant interests that must be balanced are threefold, as pointed out by Schindler.3 First, the central interest to be addressed is the interest of the shareholder, who appeals on the important ground. With respect to the interest of the appealing shareholder, important factors are the reasons that underlie the wish to exit the company, the position of the shareholder within the company, and, if present, other economie interests of the shareholder in the company. The other two interests involve the interest of the company and the interest of the co-shareholders with regard to the continuation of the shareholding of the shareholder concerned.

The interests of the creditors of the company do not play a role with respect to the question whether or not an important reason to exit is present. As will be seen in § 4.3.6, the interests of the creditors will be addressed at a later stage, namely when the question whether the company is permitted to compensate the shareholder for the loss of his shares is dealt with. In this respect, the rules concerning the maintenance of the capital of the company are relevant.

The oppression remedy is considered to be a measure of last resort. It can only be used if other less far-reaching solutions are not found and it therefore has a subsidiary character.4 While the winding-up remedy (§ 4.2) is an even more drastic measure, it does not preclude the shareholder from using the oppression remedy. A less drastic solution may, for example, be the legal action to challenge the validity of resolutions adopted by the general meeting of shareholders or another body of the company. Likewise, the shareholder can use other voice rights. For instance, he can legally enforce his right to obtain information on the company or information on his claim for payment of dividend.

Moreover, the application of the exit right must be proportional to the circumstances of the case. Obviously, this highly depends on the circumstances and gives the courts a certain scope of discretion. How courts have dealt with proportionality in practice will be illustrated in the following paragraph.