Removal of a Managing Director in Germany

Who may remove a managing director, and how does it work?

The shareholders' meeting is the competent body for a removal. Section 46 no. 5 GmbHG assigns the appointment and the removal of managing directors to the shareholders. The removal is effected by shareholders' resolution, which is passed as a rule by a simple majority of the votes cast (section 47 (1) GmbHG), unless the articles of association require a higher majority or particular conditions. A single shareholder or a fellow managing director cannot pronounce a removal on their own; it is always a decision of the body of shareholders.

The procedure follows a fixed sequence. First the shareholders' meeting is convened, as a rule by the management (section 49 GmbHG); if the management holds back, the minority right to convene the meeting and to add items to the agenda under section 50 GmbHG applies. At the meeting the removal is put to a vote and the result is recorded. Once the resolution is passed, the managing director's office (Organstellung) ends in principle at once, without any registration in the commercial register (Handelsregister) being required. The removal is then filed with the commercial register, and the service agreement is dealt with separately.

Anyone preparing a removal should not dismiss these steps as a formality. In conflict-laden situations in particular, every error in the convening, the agenda or the casting of votes later becomes a point of attack. A cleanly documented procedure is the best safeguard against a later challenge.

Does removing a managing director require good cause?

In the statutory default case, no. Section 38 (1) GmbHG permits the revocation of the appointment (Widerruf der Bestellung) at any time and without reasons. This free revocability expresses the principle that the shareholders may decide freely on the person at the head of their company. The managing director has no right to remain in office, and the shareholders do not have to prove any fault against them.

The position differs where the articles of association depart from this basic rule. Under section 38 (2) GmbHG the articles may restrict the removal to the existence of good cause. Such clauses are common where a founder or a family branch is to be protected as a shareholder-managing director. Where such a restriction is agreed, the removal takes effect only for good cause, and in case of doubt its existence is fought out in court. Even a strict clause in the articles cannot, however, exclude removal for good cause; this right must always remain with the shareholders.

The Act names what constitutes good cause only by way of example: gross breach of duty and inability to conduct the business properly (section 38 (2) sentence 2 GmbHG). In practice this includes significant breaches of duties under the articles, unauthorised transactions beyond one's own authority, breaches of the non-compete obligation, acts of embezzlement, or a durably destroyed basis of trust. The test is always whether, weighing all the circumstances, the shareholders can no longer reasonably be expected to keep the managing director. A mere difference of opinion about business policy is as a rule not enough.

How must the shareholders' meeting be convened?

The formalities of convening decide the fate of a removal more often than the argument over the cause. Section 51 GmbHG requires the meeting to be convened by registered letter with a notice period of at least one week. The period begins only when the invitation reaches the recipient in the ordinary course of post, so a time buffer has to be planned in. If the articles provide for a different form, such as email, it applies only where it is expressly permitted.

The agenda calls for particular care. The purpose of the meeting must be announced so that every shareholder can prepare for the resolution. A blanket item such as "personnel matters" is not enough for a removal. The agenda must name the removal of the managing director expressly, and as a rule the name of the affected person belongs to it. If this announcement is missing, no valid resolution on the removal can be passed unless all shareholders are present and consent to it being dealt with.

The consequences of convening errors are graded. A defect in the announcement of the agenda regularly renders the resolution voidable; it remains effective until a challenge succeeds. Serious defects that amount to a failure to invite a shareholder lead instead to nullity, in line with the legal thinking of section 241 of the German Stock Corporation Act (Aktiengesetz, AktG). The convening should therefore be set up so that it also withstands a later judicial review.

May the shareholder-managing director vote on their own removal?

That depends on whether the removal is a free one or one for good cause. In a free removal without particular cause, the affected shareholder-managing director may vote with their shares. The position differs in a removal for good cause: here the director is subject to an exclusion from voting under section 47 (4) GmbHG, because no one is to be judge in their own cause. Their votes are then not counted, so that a co-shareholder can carry the removal even against the affected director's will.

This distinction is the sore point of many removals. The chair of the meeting has to assess in advance whether good cause exists and then decide whether to count the affected director's votes. If the chair gets this wrong, the outcome of the resolution stands on uncertain ground.

The Federal Court of Justice (Bundesgerichtshof, BGH), judgment of 4 April 2017 (II ZR 77/16), has eased this situation. On that judgment, the validity of the resolution ultimately turns on whether good cause actually existed at the time the resolution was passed. The fact that the affected director voted despite the exclusion from voting does not, on its own, make the resolution voidable. Whoever relies on the good cause must, however, plead and prove it.

For practice this yields a twofold piece of advice. The shareholder side should document the good cause carefully before the meeting, because it bears the burden of proof in a dispute. The affected managing director, in turn, should have their vote recorded in the minutes and check the recording of the result closely, because this is where the footholds for a later challenge lie.

Does the removal also end the service agreement?

No. The office and the service agreement are legally separate, which is known as the separation principle (Trennungsprinzip). The removal ends only the office (Organstellung), that is, the position as managing director under section 38 GmbHG. The service agreement, which governs the remuneration and the contractual duties of service, remains unaffected for the time being and has to be terminated separately. As long as there is no effective termination, the remuneration claim continues, regardless of the ground on which the removal was made.

To create this alignment, many contracts contain a link clause (Kopplungsklausel) that lets the service agreement end automatically with the removal. Such clauses are permissible but limited. The Federal Court of Justice made clear at an early stage that an automatic termination must not undercut the mandatory minimum notice period of section 622 of the German Civil Code (Bürgerliches Gesetzbuch, BGB); the contract therefore ends at the earliest on the next permissible date, not immediately with the removal resolution.

Where the clause is pre-formulated, review under the rules on standard terms (AGB-Kontrolle) is added. The Higher Regional Court (Oberlandesgericht, OLG) Karlsruhe, judgment of 25 October 2016 (8 U 122/15), held a standard-form clause that provided for immediate termination on receipt of the removal resolution to be void, because it departs from the statutory model of the separation principle and disregards the minimum periods.

The development is not settled. The Higher Regional Court (OLG) Hamm, judgment of 1 December 2025 (8 U 93/24), worked out for the fixed-term managing director's contract the conditions under which a link clause withstands review of standard terms: it must observe the statutory notice periods, give both sides an equivalent right of termination, be transparently worded, and secure the managing director financially in an appropriate way. The court allowed an appeal on points of law, so a supreme court ruling is still outstanding. For contract drafting this means that link clauses should not be treated as self-executing but aligned with these criteria.

When does the removal take effect, and does it have to go into the commercial register?

The removal takes effect in principle at once with the resolution, not only with registration in the commercial register. The register entry is declaratory; it merely reflects the legal position that has already arisen. In the case of a defective but merely voidable resolution, the removal remains effective for the time being and is removed with retroactive effect only through a successful action to set the resolution aside (Anfechtungsklage). This provisional effectiveness gives the shareholder side the opportunity to act immediately but shifts the dispute into a later court action.

Despite the declaratory effect, the filing with the commercial register is mandatory and urgent. Under section 39 GmbHG every change in the persons of the managing directors and the termination of their authority to represent the company must be filed; the filing requires public, that is notarially certified, form.

The reason for the urgency lies in section 15 of the German Commercial Code (Handelsgesetzbuch, HGB): until the removal is registered and published, third parties acting in good faith may rely on the former managing director still being able to represent the company. A removed but still registered managing director can therefore continue to bind the company externally.

Those authorised to make the filing are the remaining or newly appointed managing directors in a number sufficient to represent the company; the removed managing director can no longer file their own removal, because they lack the power of representation to do so.

What applies to a removal in the two-member GmbH?

The two-member GmbH, with two shareholder-managing directors each holding half, is the classic conflict case. If each accuses the other of good cause and removes them, the exclusion from voting under section 47 (4) GmbHG applies to both, so that each can apparently remove the other effectively. If both resolutions were treated as immediately effective, the company would be without a managing director and unable to act, and even the appointment of a third managing director would fail on the stalemate.

The case law does not resolve this in a schematic way. Unlike in stock corporation law, where section 84 (4) AktG gives the removal resolution provisional effect until a court has clarified the matter, this rule is not readily transferred to the two-member GmbH, because it would make abuse of the removal easier. As long as the good cause is in dispute, the affected director therefore in principle keeps their powers until a court decides on the validity.

It is precisely for this reason that the dispute in the two-member GmbH almost always shifts into interim relief, with which one side seeks to prevent the other from creating accomplished facts during the interim period. Anyone caught in such a constellation should tie the removal from the outset to a litigation strategy for the interim period, rather than relying on the formal resolution alone.

What legal protection do the company and the affected managing director have?

Legal protection works in both directions, and in both directions the interim proceedings often decide. The shareholder side wants to stop a removed managing director who continues to exercise the office from managing the business and to withdraw their access to the business premises, records and systems. The affected managing director, conversely, wants to secure the continuation of the office or to attack the removal.

On the affected managing director's side, the main proceedings turn on the action against the removal resolution, either as an action to set aside a resolution (Anfechtungsklage) or as a declaratory action (Feststellungsklage), depending on the defect in the resolution. No rigid statutory time limit applies to the challenge as it does in stock corporation law, but the case law takes its bearings from the one-month period in section 246 AktG and requires the party to proceed with the diligence that can reasonably be expected; whoever waits too long risks losing the right to challenge.

An interim injunction (einstweilige Verfügung) that secures the managing director's continued exercise of office comes into consideration only in narrow exceptional cases, because it requires a special ground for the injunction, that is a genuine situation of urgency or need, to be shown to the court's satisfaction.

On the company's side, interim relief against the removed managing director is the sharper sword, because the final clarification of validity often takes years. The condition is regularly that the removal resolution was, on a summary examination, formally validly passed, that the good cause has been shown to the court's satisfaction, and that a particular urgency exists.

In the two-member GmbH, the Higher Regional Court (OLG) Munich has recognised that a shareholder can obtain, by way of the actio pro socio, an interim injunction prohibiting the management of the business and access, where good cause has been shown to the court's satisfaction and the resolution has been validly passed. Other courts are more cautious. For both sides it therefore holds that the substantive entitlement and the procedural preparation must go hand in hand, because in urgent proceedings what counts is what can be proved at once.