Withdrawal and Expulsion in Germany: A Comparative Perspective on the “Close Corporation Problem”

This article will examine the German legal system’s experience with fashioning remedies for the “close corporation problem” and the underlying concepts that have shaped these remedies. Part I will trace the growth of the doctrines of withdrawal and expulsion in the context of Germany’s troubled history. Part II will compare German and U.S. approaches on both practical and conceptual levels. On one level, the focus of the article is narrow. It deals with specific, technical solutions to only the most extreme examples of the close corporation problem. Such cases are not frequently litigated. Their doctrines do, however, constitute default rules that can affect the behavior of parties. Because they ultimately balance shareholders’ obligations of good faith against their property interest in maintaining control, such doctrines provide a useful test case.