Validity of a statutory redemption clause without a time limit upon the death of a GmbH shareholder

The Higher Regional Court of Munich ruled in its decision of November 19, 2025 (Case No.: 34 Wx 271/25 e) that a clause in the articles of association of a GmbH, according to which the shares of a deceased shareholder may be redeemed by resolution of the shareholders’ meeting, is not void or invalid simply because the articles of association do not specify a time limit for passing the redemption resolution.

While the register court must examine the entire wording of the articles of association when restated articles are filed, this examination is limited in scope. The court must only examine the articles for violations of mandatory provisions of the GmbH Act. However, there is no provision requiring a time limit in a redemption clause.

The specific case involved an entrepreneurial company (Unternehmergesellschaft) that, as part of restating its articles of association, added a clause stating that in the event of the appointment of a guardian or the death of a shareholder, redemption of a share may occur without the consent of the affected shareholder by resolution of the shareholders’ meeting.

The company in question filed its resolutions to amend the articles of association through the managing director with a notarially certified application, properly submitted through the certifying notary for registration in the commercial register.

The competent register court issued two interim orders in which it objected to the clause allowing forced redemption of shares upon the death of a shareholder or upon appointment of a guardian without a time limit for exercise. Even after an exchange of views and appeals against the interim orders, the register court ultimately rejected registration of the restated articles of association by order, as it considered the clause regarding the possibility of forced redemption to be inadmissible.

It referred to the fact that the case law of the Federal Court of Justice should be understood to mean that a forced exclusion of a new shareholder linked to the death of a former shareholder must necessarily be subject to a reasonable time limit. Otherwise, a state of uncertainty would arise. The register court argued that only in the case of a time limit provision would forced redemption not be equated with a free termination clause that is immoral under § 138 of the German Civil Code and therefore void.

The company filed an appeal with the Higher Regional Court of Munich against the rejection of registration.

The appeal was successful.

Legal issues and the decision of the Higher Regional Court

The Higher Regional Court of Munich first established that in the case of a restatement, the entire articles of association are subject to examination by the register court regarding the existence of grounds for nullity or invalidity. However, with respect to contestable resolutions on amendments to the articles of association, the examination authority is limited to mandatory provisions of the GmbH Act. Not covered by the examination authority are amendments to the articles of association that in the register court’s view are inexpedient or—even obvious—contradictions or ambiguities that merely concern the internal affairs of the company. In such cases, the shareholders would have the option of filing a contestation action.

The provision in question was not void or invalid according to this standard. There is no mandatory statutory provision requiring that in the event of a shareholder’s death, a time limit must be specified for exercising a redemption of shares granted in the shareholder agreement. There are no statutory limitations on asserting forced redemptions.

However, the redemption resolution must be passed within a reasonable period after the redemption conditions are met, so that no state of uncertainty arises that would be comparable to the situation when free “termination” is permitted and that would lead to a violation of § 138 of the German Civil Code. With regard to timely exercise, the shareholders’ knowledge of the redemption grounds is decisive.

If exercise no longer takes place within a reasonable period, one can assume the reasonableness of continuing with the new shareholder. Furthermore, the legal doctrine of forfeiture also limits a possible forced redemption. However, the absence of a time limit in the clause does not automatically establish an unlimited right of exercise and thus its nullity or invalidity. Moreover, even in Federal Court of Justice case law, the unlimited right of exercise literally included in the articles of association in that case was upheld with a time limitation by analogy to § 139 of the German Civil Code.

The Higher Regional Court therefore overturned the register court’s decision.

Practical consequences

When restating articles of association by shareholder resolution, it must be considered that the register court examines the entire articles of association for their validity. However, the scope of examination covers “only” the mandatory provisions of the GmbH Act. A refusal of registration by the register court due to inexpediency or “mere” contestability (because contradictions or ambiguities only concern the internal affairs of the company) is invalid.

This means a company may also specify in its articles of association that in the event of a shareholder’s death, there is a possibility of redeeming their shares without specifying a time limit for exercising this redemption option. However, the general principles of forfeiture continue to apply. A company wishing to exercise such a redemption option in the articles of association must therefore pass the redemption resolution within a reasonable period after becoming aware of the redemption grounds.

Conclusion and outlook

The decision of the Higher Regional Court of Munich provides greater flexibility in drafting shareholder agreements. The absence of a time limit does not automatically render the forced redemption clause upon a shareholder’s death void and does not prevent registration.

Nevertheless, from a practical perspective and for reasons of legal certainty, it is recommended to include an express time limit provision. This reduces disputes over indefinite legal concepts such as “forfeiture” and “reasonable time” as well as risks of objections by register courts in other Higher Regional Court districts that are more conservative.

Furthermore, in practice, when amending articles of association, it must be considered that while the entire articles of association are examined by the register court in the case of a restatement, the court has only limited examination authority. It is therefore still generally advisable to file restated articles of association with the register when more than just isolated changes are being made.

Clauses in articles of association that do not violate mandatory GmbH law are not subject to the register court’s examination authority, but may be contestable. It is therefore important to examine possible amendments to the articles of association for their validity before the shareholders’ meeting passes a resolution.

We are happy to assist you in implementing your desired amendments to the articles of association in a legally valid manner.

From the newsletter
“Corporate Law, Deals & Capital Markets”