Karlsruhe court upholds premature dismissal of supervisory board member for good cause

COLOGNE, Germany, 2022-Oct-26 — /EPR Network/ — If it becomes unreasonable for a supervisory board and one of its members to continue their association due to the latter”s conduct, premature dismissal may be considered. That was the verdict of the Higher Regional Court of Karlsruhe – the Oberlandesgericht (OLG) Karlsruhe – in a recent ruling (case ref.: 1 W 85/21).

Members of a supervisory board can be prematurely removed from their positions for good cause. While the German legislature has not specified what constitutes good cause, the relevant case-law generally starts from the assumption that dismissal for good cause is lawful if it is no longer reasonable to continue the association with the supervisory board member. We at the commercial law firm MTR Rechtsanwälte can report that this view was affirmed by the OLG Karlsruhe in a judgment from March 1, 2022.

In October of 2021, the supervisory board member in question was dismissed by the District Court of Mannheim – the Amtsgericht (AG) Mannheim – in response to a petition filed by the supervisory board to this end. The subsequent appeal against this determination was unsuccessful before the OLG Karlsruhe.

The appellant was a member of the works council and in 2019 became a member of the supervisory board of a stock corporation as a union representative. In June of 2021, he admitted to the company that he had deleted and altered the content of emails in order to exonerate another member of the supervisory and works councils at the time from the accusation that they had taken unauthorised leave. It was not long before this came back to bite him: the employment relationship was terminated without notice and the supervisory board submitted a petition to have the appellant removed from his position by the courts.

The OLG Karlsruhe has since affirmed the conclusion of the AG Mannheim that the dismissal for good cause was lawful. The Karlsruhe court found that by deleting and tampering with emails, the appellant had destroyed the confidence in his personal integrity and reliability that was indispensable for his work as a member of the supervisory board. In doing so, he was said to have shown himself to be unfit to contribute to the work of a supervisory board, which includes oversight of the executive board. The fact that the appellant”s actions fell outside the scope of a supervisory board member”s actual duties and that he would later go on to restore the emails and make them available to the company had no bearing on this assessment. The OLG Karlsruhe concluded that the removal of the supervisory board member was justified by reasons specific to the appellant.

Lawyers with experience in the field of company law can advise both executive and supervisory boards and their members.

https://www.mtrlegal.com/en/legal-advice/company-law/executive-supervisory-board.html

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