Exit rights of minority shareholders in a private limited company (IVOR nr. 72) 2010/4.2.4.1:4.2.4.1 Impossibility to achieve the company's purpose

Exit rights of minority shareholders in a private limited company (IVOR nr. 72) 2010/4.2.4.1

4.2.4.1 Impossibility to achieve the company's purpose

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

A first ground for winding-up sterns from § 61 I GmbHG and applies if the purpose for which the company has been set up can no longer be achieved, in other words, if there is loss of substratum. With respect to the notion of purpose of the company, the GmbHG distinguishes two concepts. Firstly, it distinguishes the purpose (Zweck) of the company, which the general purpose or aim for which the company is set up. § 1 GmbHG stipulates that:

Private limited companies can be incorporated by one or more persons in accordance with the standards of the provisions of this Statute for any purpose allowed by statute.1

On the other hand, German law identifies the objects (Gegenstand) as the range of activities that can be carried out by the company.2 The GmbHG merely prescribes that the objects of the company have to be included in the articles of association. The notion of purpose of the company in § 61 I GmbHG regards both the impossibility to accomplish the purpose and the impossibility to perform the objects of the company.3 In itself, this is not very remarkable, as the impossibility to carry out any activities will normally have the consequence that the general purpose of the company cannot be achieved as well.

An example of a situation that falls within the ambit of § 61 I GmbHG represents a company set up for the exploitation of a patent, whereas the patent has been declared redundant or whereas the patent has expired. In these situations, it is no longer possible to achieve the initial purpose of the company. Another instance of loss of the company's purpose relates to the situation where a GmbH includes in its objects developing banking activities and no permission for the banking activities is given by virtue of the Banking Act (Kreditwesengesetz). In this situation, the company will fail to achieve its objects.4

Nevertheless, the court-ordered winding-up of the company is not the most desired result in most situations. Whereas the objects are contained in the articles of association of the company, it is possible to change the objects by means of amending the articles of association.5 The amendment of the objects of the company can be preferred as a less far-reaching measure to winding-up, obviously provided that such amendment is possible in the circumstances of the case.6

Deze functie is alleen te gebruiken als je bent ingelogd.