Holzmüller Doctrine in International Corporations (Part I) – OLG Cologne Judgment of June 26, 2025

Fundamentals

In the stock corporation (“AG”), the general meeting can, in principleonly pass resolutions if the law provides for this. The responsibilities are standardized in § 119 Para. 1 AktG and are, in principle, exhaustive. In particular, the general meeting is largely excluded from the management of the company. In the AG, this is the responsibility of the Management Board (§ 76 Para. 1 AktG).

With a decision from 1982 (BGH, judgment of February 25, 1982 – II ZR 174/80 (Hamburg), NJW 1982, 1703), the BGH – going beyond the list in § 119 Para. 1 AktG – Frecognized cases in which the Management Board must involve the general meeting of the AG before (!) an intended measure. Accordingly, the Management Board must obtain the approval of the general meeting if the measure interferes with the rights of the shareholders in such a way that the Management Board cannot assume that it is allowed to make the decision alone. The approval of the general meeting must then – based on other structural mameasures in stock corporation law – be carried out with a three-quarters majority. This principle has become known as the “Holzmüller Doctrine.” The background at the time was the outsourcing of a particularly profitable business unit (approximately 80% of total sales) of Holzmüller AG to a subsidiary. As a result, the shareholders had hardly any influence on the fortunes of this valuable division, as the Management Board, as the legal representative of the AG, now exercised the rights in the subsidiary alone (so-called mediatization effect).

If the Management Board nevertheless does not obtain the approval of the general meeting, the shareholders can try to prevent the intended measures with an action for injunctive relief. However, should this no longer be successful in time – for example, because the relevant mameasure has already been implemented – only a declaratory action can be considered in order to prepare possible claims for damages against the Management Board. According to the BGH, a reversal of the implemented and registered capital increase is not possible (BGH, judgment of October 10, 2005 – II ZR 90/03), in NJW 2006, 374). According to another view, in the event of a faulty capital ma measure, the principles on the faulty company apply, so that the capital increase must be treated as initially effective after registration and can only be reversed with effect for the future (cf. Schürnbrand (see below), margin no. 746). However, such a reversal brings practical difficulties. So it usually depends on quick action to avoid irreversible consequences.

In the following period, the BGH had several opportunities to consolidate and specify its case law on these unwritten powers of the general meeting (as happened in the decisions “Gelatine I (BGH April 26, 2004 – II ZR 155/02, NJW 2004, 1860) & II (BGH, judgment of April 26, 2004 – II ZR 154/02 (OLG Karlsruhe), NZG 2004, 575)”). Nevertheless, l not all questions have been clarified for a long time and so the OLG Cologne recently had to decide on a complex case with international references, in which the legal protection options of the shareholders were also involved.

Facts

The starting point is a cross-border group structure consisting of a German parent company (“parent company” or “defendant”) and a 100 percent US subsidiary. This US subsidiary (“subsidiary”) was by far the most profitable company in the group (approximately 80% of the group’s total sales). In December 2020, the Management Board of the parent company resolved in the general meeting of the subsidiary to grant authorized capital in accordance with the articles of association and amended the articles of association accordingly. The Management Board did not issue an explicit (ad hoc) announcement about this resolution. The updated articles of association with the authorized capital were (only) deposited in the electronic register file. As a result, the subsidiary was fully authorized to implement the capital increase in factual terms as well amending the resolution on the granting of authorized capital and amended the articles of association accordingly. The Management Board did not issue an explicit (ad hoc) announcement about this resolution. The updated articles of association with the authorized capital were (only) filed in the electronic register file. As a result, the subsidiary was fully authorized to carry out the capital increase in factual terms as well – for example in the form of an IPO – to implement. A subscription right of the sharehold ers is foreign to the relevant law of the US state – in contrast to German law.

In July 2021, the parent company announced in an ad hoc announcement that an IPO of the subsidiary was being sought from the authorized capital. Thereupon, the main shareholder of the parent company ( “main shareholderin” or “plaintiff“) requested the convening of a general meeting (§ 122 Para. 1 AktG) in order to bring about a resolution on the planned IPO of the subsidiary and indicated in the justification that she was aware of the risks of the not insignificant dilution associated with the planned IPO. Furthermore, she applied for a special audit in accordance with § 142 Para. 1 AktG with regard to the defendant’s measure from December 2020. After the Management Board had not complied with the request, the relevant proceedings before the competent local court were also unsuccessful.

In October 2021, the parent company reaffirmed in an ad hoc announcement its approval of the IPO, which had been given by the Management Board and Supervisory Board resolution, and announced modifications to the conditions of the planned IPO in a further ad hoc announcement.

Then, in November, the parent company announced via ad hoc announcement that the IPO had been carried out with the authorized capital. Ad hoc announcements followed about a planned and subsequently implemented private placement. Further shares were also issued. As a result of these actually implemented capital measures, the parent company’s shares in the subsidiary were diluted to only 4.5% most recently.

With a general declaratory action filed with the Regional Court in mid-December 2021, the plaintiff sought a declaration that the approval resolutions of the Management Board and Supervisory Board passed in October 2021 were unlawful, which resulted from the fact that the planned capital measures required the approval of the general meeting of the parent company due to the existence of the requirements for unwritten powers of the general meeting under the “Holzmüller case law.” The Regional Court had granted the main shareholder’s declaratory action to the extent that it had determined the illegality of the approval resolutions of the Management Board and Supervisory Board from October 2021 due to the violation of the unwritten powers of the general meeting. The OLG Cologne now had to deal with the appeal.

Decision

The OLG Cologne already rejected the main shareholder’s right to sue. This had been forfeited because the main shareholder had not filed a declaratory action concerning the illegality of the capital measure from December 2020 in good time (at the latest) after the planned capital measures at the subsidiary became known in July 2021, and thus the capital increase measure from December 2020 had already become final. A declaratory action must be “filed without undue delay,” whereby the one-month period of § 246 Para. 1 AktG can provide an orientation. The request for a meeting convened by the plaintiff in September in accordance with § 122 Para. 1 AktG should not be sufficient.

A success of the action brought instead for a declaration of the illegality of the approval resolutions of the Management Board and Supervisory Board of the parent company for the capital increase at the subsidiary from October 2021 would have required that an injunction against these resolutions would have been mandatory. This would have required a legal obligation to prevent the IPO, which may even have originally existed if the capital increase measure in December 2020 had in turn been illegal due to the lack of approval of the general meeting in accordance with “Holzmüller principles.” However, this question is no longer to be examined, since the forfeiture of the right to sue has occurred anyway due to the capital measure that has become final in the meantime. Without the aforementioned circumstances of the obligation to prevent the IPO, the approval resolutions of October 2021 are merely “declaratory” in nature, since all measures had already been taken by the parent company and the actual implementation of the capital measure by way of the IPO could be carried out by the subsidiary alone without further action by the parent company, which is why they could not have been the subject of a declaratory action in such a case.

However, the judgment is not yet final and the court has allowed the appeal to the BGH due to the importance of the case for the development of the law. A decision by the highest court is “indicated.” The plainti ff has filed an appeal as expected.

Assessment & Practical Advice

The question of which measures specifically justify an unwritten power of the general meeting has been the subject of intense discussion for years and therefore sometimes leads to legal uncertainty in practice. In its original Holzmüller decision, the BGH also mentioned the capital increase with the exclusion of subscription rights at group subsidiaries as a serious intervention that could justify such an obligation to obtain approval. The LG Cologne also agreed with this view in the present case. In its judgment, the OLG Cologne has now relied on the finality of the authorized capital and referred to the meaning and purpose of the institution of forfeiture, namely to prevent an “infinite” incidental review of decisions of the company bodies, and thus strengthened the legal certainty on the part of the companies and company bodies.

However, the forfeiture of the right to sue requires a legitimate trust on the part of the defendant that the plaintiff will no longer assert his right. Whether the Management Board was entitled to rely on this in the decided case seems at least questionable in view of the immediate countermeasures taken by the shareholders (request for a meeting in accordance with § 122 Para. 1 AktG). In the past, however, the BGH had rejected a forfeiture in similar cases.

In addition, although the plaintiff referred to the existence of the requirements of the “Holzmüller case law” in the context of the application to convene a general meeting and thus discloses that it is aware of the relevant circumstances. On the other hand, the plaintiff argues in the action of December 14, 2021 that it had previously assumed that the Management Board and the Supervisory Board had only approved the IPO including the capital increase with the exclusion of subscription rights in their resolutions of October 1, 2021 and October 27, 2021. The OLG Cologne merely notes that a subscription right of the existing shareholders is not provided for under the relevant law of the US state concerned.

Can lessons possibly be learned from the “Siemens/Nord” (BGH, judgment of June 23, 1997 – II ZR 132/93, in NJW 1997, 2815) – and “Mangusta/Commerzbank II” (BGH, judgment of October 10, 2005 – II ZR 90/03), in NJW 2006, 374) – decisions of the II Civil Senate of the BGH as well as from the associated hanging dispute in the literature (cf. among others Schürnbrand: “Inventory and legal protection for authorized capital” in ZHR 171 (2007), 731 (Schürnbrand)) on inventory and legal protection for authorized capital? In both cases, the BGH dealt with the exploitation of authorized capital with the exclusion of subscription rights of the shareholders and, in the latter decision, additionally with the question of the permissible legal remedy.

For a (declaratory) action by the shareholder, it must be possible for him to reliably take note of the resolutions of the Management Board and Supervisory Board on the exclusion of subscription rights (Schürnbrand, margin no. 744). However, since the Management Board has no reporting obligation regarding the planned exclusion of subscription rights (judgment of October 10, 2005 – II ZR 148/03, NJW 2006, 371), the shareholders are not guaranteed to be aware of this before the capital measure is carried out (Schürnbrand, margin no. 744). For this reason, Schürnbrand comes to the conclusion that at least subsequent legal protection must be opened up (Schürnbrand, margin no. 744). As a reference point for the calculation of a possible period for bringing an action or the forfeiture of the right to sue, only the day of the general meeting in which the Management Board subsequently reports on the implementation of the capital increase can be considered (cf. Schürnbrand, margin no. 744, Reichert/Senger, DK 2006, 338, 350). The focus is therefore on the shareholder’s knowledge of having been excluded from the subscription right.

Although in the present case, with which the OLG Karlsruhe has so far dealt, there is no active exclusion of subscription rights at the level of the subsidiary, but the institution of subscription rights does not exist at all in the law of the US state concerned, but against this background, should not the Management Board’s discussion with the shareholders take place in the general meeting, in which the Management Board – if not already in advance – subsequentlyreports on the implementation of the capital increase or even earlier on the resolution on the authorized capital including the amendment of the articles of association at the subsidiary, in order to ensure that the shareholders are at least granted subsequent legal protection in order to protect the shareholders. This would give both the shareholders and the bodies of the companies more clarity about the reference point for the calculation of the period for bringing an action or the forfeiture of the right to sue.

The judgment of the OLG Cologne has made it clear how important a precise and quick approach is if membership rights of the shareholders are potentially violated, because a forfeiture of the right to sue prevents the enforcement of rights, even if the measures of the Management Board were actually illegal.

The OLG Cologne refers to the existing uncertainties in this area and has therefore allowed the appeal. The appeal has been lodged in the meantime (II ZR 119/25).

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