cooperation.law

Acting together binds us.

Shareholders among themselves

The question

What do shareholders and partners owe one another? And how can they give their cooperation a form that survives disagreement, deadlock and the departure of one of them?

In brief

Shareholders owe one another a duty of loyalty: in everything that concerns the company they must have regard to its interests and to those of their fellow members. The articles or the partnership agreement organise the company; a shareholders’ agreement alongside them can govern what binds the members personally. The law provides no procedure for deadlock, so it has to be resolved by contract in advance. Whether the rules hold becomes clear when someone joins or leaves.

The law

The examples come mainly from the German private limited company (GmbH), the civil-law partnership (GbR) and the registered association (Verein). The reasoning applies to every form of company.

The duty of loyalty as a duty to cooperate

The shareholders’ duty of loyalty (Treuepflicht) is not written in any statute. The courts developed it for partnerships and corporations alike. It reaches further in a small partnership where everyone works together than among the shareholders of a listed company.

Mostly it works as a limit: votes may not be cast against the common purpose, and the company’s business opportunities may not be quietly taken for oneself. Exceptionally it also requires action, such as consenting to a measure that is indispensable for the company’s survival and reasonable for the individual (Federal Court of Justice (BGH), judgment of 19 October 2009, II ZR 240/08, “restructure or leave”).

This is the core of it: the duty of loyalty is the legal form of the insight that founding a company begins a shared course of action, not merely a contract. It turns co-owners into partners in cooperation.

A shareholders’ agreement alongside the articles

A GmbH’s articles are open to inspection in the commercial register, bind future shareholders and can only be amended by a three-quarters majority and notarial recording (Section 53 GmbHG). What shareholders want to agree privately among themselves goes into a shareholders’ agreement, a contract alongside the articles: voting agreements, pre-emption, tag-along and drag-along rights, duties to work for the company, non-compete clauses, reporting lines, the resolution of deadlock. If the agreement contains an obligation to transfer GmbH shares, it must be notarially recorded (Section 15(4) GmbHG).

The price of separation is that two sets of rules can drift apart. The agreement binds only those who signed it. Whether a resolution can be challenged because it breaches an agreement signed by all shareholders is not answered uniformly [prüfen]. It is safer to align both texts and to require every new shareholder to accede to the agreement. In a GbR, the partnership agreement is itself the agreement between the partners. In a Verein, the articles govern the relationship between the members, and side agreements hardly play a role there.

Information rights

A GmbH shareholder may demand information on the company’s affairs from the managing directors without delay and inspect its books and records (Section 51a(1) GmbHG). This may be refused only where misuse for purposes alien to the company is to be feared, and only on a shareholders’ resolution; the articles cannot deviate (Section 51a(2) and (3) GmbHG).

For the GbR, Section 717 German Civil Code (BGB) has governed information rights since 1 January 2024. Every partner may inspect the partnership’s records, take extracts and additionally ask for information (subsection 1). Contractual restrictions do not apply where the information is needed to exercise the partner’s own membership rights, in particular where there is reason to suspect dishonest management. Managing partners must volunteer the necessary information (subsection 2).

Deadlock and how to resolve it

In a GmbH with two equal shareholders a tied vote means rejection; in a GbR, under the statute, a single “no” is enough (Section 714 BGB). Either can paralyse a company. In the end the law offers only dissolution, for a GmbH for example by an action for dissolution for good cause (Section 61 GmbHG). A sequence of steps therefore belongs in the contract:

  • Escalation: renewed discussion within a deadline, then talks at a higher level or in an advisory board.
  • Mediation: a structured procedure with a neutral third party (see Resolving conflicts).
  • Arbitration clause: a decision by an arbitral tribunal. For disputes over defective resolutions the clause must meet particular requirements so that all shareholders can take part (BGH, judgment of 6 April 2009, II ZR 255/08; for partnerships BGH, order of 23 September 2021, I ZB 13/21).
  • Buy-out mechanisms: in the so-called Russian roulette, one shareholder names a price and the other must either sell at that price or buy at the same price. In the Texas shoot-out both submit offers and the higher one wins. The labels are not used consistently.

Buy-out mechanisms end deadlock reliably, but at the price of separation. Their risk lies in unequal financial strength: whoever cannot raise the price has to sell, even at a low price. The Higher Regional Court (OLG) of Nuremberg did not regard such a clause as contrary to public policy, but pointed to the danger of abuse by a stronger shareholder (judgment of 20 December 2013, 12 U 49/13). Anyone agreeing one should also settle when it may be triggered and how long the financing may take.

Joining and leaving

The articles may make the transfer of GmbH shares subject to consent (Section 15(5) GmbHG), and compulsory redemption requires a basis in the articles (Section 34 GmbHG). In a GbR the transfer of a share requires the consent of the other partners (Section 711(1) BGB). Since 2024, death, termination or expulsion of a partner generally lead to that partner leaving rather than to dissolution (Section 723(1) BGB), and the departing partner is entitled to appropriate compensation (Section 728(1) BGB). Membership of a Verein cannot be transferred (Section 38 BGB), and a member may always leave (Section 39 BGB).

Two general limits apply. A right to expel a shareholder without objective reason is, according to the case law, generally void as contrary to public policy (Section 138 BGB). And restrictions on compensation must not be grossly disproportionate to the value of the share.

Online

Shareholders now often live in several countries. That calls for care in three places.

First, resolutions. GmbH meetings may be held by telephone or video if all shareholders agree in text form (Section 48(1) sentence 2 GmbHG); resolutions without a meeting require all shareholders to agree in text form to the resolution or to casting votes in writing (Section 48(2) GmbHG). The GbR is free in its choice of form. Details are on Decisions and meetings.

Second, information. A shared data room holding contracts, figures and minutes satisfies information rights before anyone has to assert them. Whoever need not ask need not mistrust.

Third, the law. Partners in different countries should settle which law governs their shareholders’ agreement and where disputes will be heard; the law governing the company itself follows its own rules (see Across borders).

Relevant phases

Read on: Management as cooperation · Shareholders and management

Limits of this overview

This page outlines German law, mainly for the GmbH, GbR and Verein. Partly different rules apply to other forms, and every arrangement depends on the individual case.

As at 30 September 2026