Assuming a shareholders’ agreement provides for a severance clause, this clause will be deemed invalid if it would cause an exiting shareholder to be paid a severance amount that is grossly disproportionate to the actual company value.
In the case to be adjudicated, the clause in question limited the severance amount in the event of a shareholder exiting the company due to grave cause. As a consequence, a shareholder withdrawing from the company for grave cause stood to receive a contractually predefined severance payment that was grossly disproportionate to what his or her severance claim would be if it had been calculated on the basis of the company’s current market value.
The court held that this clause was invalid because it served to unreasonably restrict a shareholder’s right to leave the company.
Source: Ruling of the Landgericht (LG, Regional Court) of Freiburg dated December 1st, 2014, 12 O 59/13.