Meaning
A corporate governance rule grants shareholders the right to dismiss a managing director at any time. Under section 38 gmbhg, this revocation of appointment does not depend on the presence of a special cause unless the articles of association state otherwise. This ensures that shareholders retain ultimate control over the management of the company.
It balances executive power with investor protection.
Revocation Autonomy
Shareholders can execute a dismissal through a simple majority vote at a general meeting. Under section 38 gmbhg, this decision takes immediate effect and terminates the director’s corporate power to act on behalf of the company. The removal must be registered with the commercial register to inform third parties.
Contractual Separation
The corporate dismissal does not automatically terminate the underlying employment or service contract of the director. Section 38 gmbhg protects the contractual claims of the director, meaning they may still be entitled to their salary or severance payments unless there is a valid cause for immediate termination of the contract itself.
Corporate Protection
Immediate removal prevents a director from causing further financial harm or making unauthorized commitments. Section 38 gmbhg provides a vital tool for shareholders facing mismanagement or conflicts of interest.
