Membership : chapter 6

• Pages: 102-117
• Published date: 01 January 2008
• Date: 01 January 2008
• DOI: 10.10520/EJC74089
• Author: Christoph Jaehne

102

CHAPTER 6

MEMBERSHIP

6.1 Introduction

Keeping their different origins in mind, the GmbH being a ‘Kapitalge-

sellschaft’ and the close corporation relying on partnership features,

it will be interesting to see if this causes differences regarding mem-

bership in the respective entities. Modelled as entities for smaller

entrepreneurs, the question of restrictions on the number of members

and of who may become a member will be of relevance here. To dis-

cuss is also how membership is being expressed in the GmbH and

the close corporation.

Ref‌lecting the closeness of the entities it will be interesting to see if dif-

ferences exist through which ways membership can be acquired. Also

being discussed is how changes in membership might occur and how

membership can be lost. Of relevance in this context is also the ques-

tion if the entities can assist in the acquisition of members’ interests.

6.2 Rules regarding the number of members in a GmbH and

close corporation

Both business entities can be founded by one member, but while this

was intended for the close corporation right from the outset, for the

GmbH under previous legislation a minimum of two shareholders was

required for the formation. The courts had, however, long since acknow-

ledged that once formed, a GmbH could continue to exist with only one

shareholder once the shares of all other shareholders were transferred

over to him. Accordingly, except for the purely formative stage, the one-

man GmbH had long been accepted. A 1980 amendment has made it

possible to form a one-man GmbH from the outset.1

Having this in common, both entities interestingly differ substantially

with regard to their maximum number of members. While the maxi-

mum number in the GmbH is unlimited, the close corporation is re-

stricted to ten members.2

6.3 Rules regarding the question of who can become a

member of a GmbH and close corporation

Both entities also differ regarding the question of who can become a

member.

1 See chapter 15, ‘One-man GmbH’.

2 §1 GmbHG; s 2 (1) CCA.

103

6.3.1 GmbH

The possibility of becoming a member is extensive in the GmbH. Mem-

bership is open to natural3 and juristic persons alike. The commercial

partnerships OHG and KG4 can also become members of a GmbH.

Even though OHG and KG are not legal entities separate from their

partners, the HGB gives them some features also found in legal enti-

ties. They may, under their f‌irm name, acquire rights and incur obli-

gations, acquire property and other real rights in land, may sue and

be sued in the courts.5

In the meantime, the ‘Bundesgerichtshof’ has also declared a civil law

partnership6 capable of becoming a founder of a GmbH.7

6.3.2 Close corporation

The ‘closeness’ of the close corporation does not stop with the maxi-

mum number of ten.8 The close corporation is, generally speaking

only open to natural persons. No other juristic person can become a

member and neither can a trust or a trustee of a trust inter vivos nor

a partnership.9

The holding of a member’s interest on behalf of a juristic person by

means of nominees is expressly forbidden. A person holding mem-

bership for the benef‌it of a trust inter vivos as from before 13 April

1987 may continue to do so subject to certain limitations in terms of

3 Minors or persons with a disability must be represented by their guard-

ian, who in the GmbH might need the authorization of a special court

(‘Vormund schaftsgericht’), §§1643, 1822 No.3 BGB. In the GmbH mar-

ried persons need to be aware of §1365 BGB (dealing with the dis-

posal of all wealth).

4 ‘Offene Handelsgesellschaft’ (OHG) resembles an unlimited/general part-

nership; ‘Kommanditgesellschaft’ (KG) resembles a limited partnership.

5 Cf. §§124 (1), 161 (2) HGB.

6 ‘BGB-Gesellschaft’.

7 BGHZ 78, 311. With regard to membership in general, compare Baum-

bach/Hueck, GmbHG §1, note 22 et seqq; at note 34 regarding ‘nich-

trechtsfähiger Verein’; Scholz-Emmerich, GmbHG §2, note 40 et seqq.

8 However, see De Koker and Henning showing the possibility of a close

corporation having more than ten members, “Enkele aspekte van die

statutêre beheer oor die maksimum ledetal van ’n beslote korporasie”,

1990, THRHR 547, dealing with this aspect before the clarif‌ication

through s 15(c) of the Close Corporations Amendment Act 26 of 1997.

In this context it is interesting to note that also the corresponding li-

ability provision in s 63 (c) CCA was deleted to leave no doubt that

‘close corporations cannot have more than the maximum number of

ten members”, Close Corporations Service, 6.02.

9 S 29 (1) CCA.