Shareholder managing director of a German Limited Liability Company (GmbH) not insolvency-protected

 

 

In principle, insolvency protection applies to employees as pension recipients, meaning white-collar employees and workers. Accordingly, employees have a claim against the insolvency insurance to the extent the employer would have to make payments on basis of the respective direct pension commitment, if the insolvency proceedings had not been initiated.

Now, according to German Law shareholders that are at the same time managing directors are not employees. In order for them to benefit from the protection of the Company Pensions Act (BetrAVG), they would have to qualify as employee-like persons within the meaning of the Company Pensions Act. However, a shareholder managing director of a limited liability company holding a not only insignificant share”, regularly meaning more than 10%, in the company himself and jointly holding 50% of the shares in the company with one or more other shareholder managing directors, was not considered an employee-like person by the Federal Court of Justice (BGH).

The decisive factor was that the shareholder managing directors of a GmbH jointly holding 50% of the shares in the company are able to prevent the decision-making at the general meeting. Even though a shareholder managing director holds only a sixth of the shares in the company and thereby is a minority shareholder, the shares of the other shareholder managing directors are added to his participation for the purpose of the disqualification as an employee-like person. With regard to the management of the company, the Federal Court of Justice assumed that the interests of the shareholder managing directors are aligned.

Therefore, the pension commitments of shareholder managing directors are possibly not insolvency-protected even if the person concerned only holds a minority share.

Author:
Dr. Marc von Kopp
Business Lawyer
M&A / Corporate / Tax

(Date: 19.02.2020)

 

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19.02.2020

Shareholder managing director of a German Limited Liability Company (GmbH) not insolvency-protected
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