OGH: Dismissal of a Supervisory Board Member for Important Reasons

The Austrian Supreme Court (Oberste Gerichtshof; hereinafter OGH) recently clarified whether the expert opinion of a member of the supervisory board at the expense of a shareholder constitutes an important reason to justify the dismissal of the board member. Pursuant to § 30b (5) Austrian Limited Liability Company Act (Gesetzes über Gesellschaften mit beschränkter Haftung; hereinafter GmbHG), a court may dismiss members of the supervisory board for important reasons at the request of the minority shareholders.

In the case at hand, the views diverged between the minority shareholder of a limited liability company (GmbH) on the one hand, and a majority shareholder and the law professor sitting on the supervisory board on the other. The professor had delivered several legal opinions on a certain point of dispute on behalf of the majority shareholder at the disadvantage of the minority shareholder, even though he had been appointed to the Supervisory Board: The minority shareholder considered this a conflict of interests.

At the outset, the OGH determined what constitutes an important reason to dismiss a supervisory board member. Especially, if the supervisory board member concerned had objectively acted contrary to his duties and harmed the company, the continuation of his activity would be unacceptable for the company.

In the view of the OGH, the minority shareholder could not sufficiently prove whether the expert opinion harmed the company’s interests: Even though the preparation of the expert opinion by the professor constituted a non-organ activity, he was not allowed to act actively against the interests of the company. Nonetheless, he did not have to refrain from pursuing his own interests simply because this could be detrimental to the company. In addition, the professor had explained in good time all the reasons that could give rise to concerns about his conflict of interests. Since the expert opinions in question were neither in favour nor against the interests of the minority shareholder, and the actions of the professor could not be considered unacceptable to the company, the conditions for his dismissal were not met.

OGH 6 Ob 1/19v (23.05.2019)