Danosa Decision to Revolutionize German Board System
European Court of Justice (ECJ) has redefined the legal relationship between the boards and their respective corporations (GmbH and AG) by means of its decision of November 11th, 2010 in the Danosa case (C-232/09). ECJ has made clear that he regards as decisive for the legal Status of the board of directors of a Lithuanian LLC whether or not the respective director is submitted to decisions or control by statutes or other boards or persons. In the Danosa case ECJ found such control by the existing supervisory board and by the existing internal rules of procedure and the statutes of the LLC. Consequently, the ECJ ruled that Ms Danosa must be regarded as regular employee and therefore entitled to Lithuanian maternity protection which does not apply to self-employed directors.
The decision is a milestone for German board law as all members of German boards Aufsichtsrat, Vorstand and Geschäftsführung have to be regarded as employees according to the Danosa ruling. This results from the fact that German Geschäftsführer is always subject to the control of Gesellschafterversammlung (shareholders’ assembly) and the statutes (eventually also the internal rules of procedure), the chief executives of a stock corporation are subject to control by the supervisory board, by the statutes and the internal rules of procedure and the supervisory board members are subject to the control of the general Meeting, the statutes an the internal rules of procedure. As a result, according to the ruling of ECJ only the members of the general meeting an of the shareholders’ meeting (which means: the true ownders of these corporations) have to be regarded as non-employees. This logic seems to be very clear as a person working in a company can only be boss or employee so that a double role – as maintained by the traditional German law opinion – seems to have no basis any longer.