In a two-member OG, section 140 UGB can allow exclusion of the only co-partner instead of dissolution. The key issues are cause, standing and the claim date.
Your shareholder dispute team
Dispute team for shareholders and managing directors
A shareholder dispute calls for corporate law, litigation strategy and commercial understanding from one team. Mag. Bernhard Brandauer is responsible for the legal advice; depending on the conflict, further specialised lawyers of the firm support safeguards, evidence, negotiations and court enforcement.
Contact the teamIn a two-member Austrian general partnership, the remaining partner may avoid dissolution when the important cause lies in the person of the other partner. Section 140 UGB provides an exclusion action for that purpose. The statute allows only one partner to remain after the exclusion.
The route requires careful classification. The important cause under section 133 UGB, the action by all remaining partners, the objective of continuation and the company’s financial position on the date of the action all matter. A personal disagreement or an unclear account does not by itself establish the statutory basis.
This check considers whether exclusion of the only co-partner can be reviewed as an alternative to dissolution. The personal cause, evidence and procedural objective remain decisive.
Already know you want to get in touch? Go straight to the enquiry form.
Arrange the partnership agreement, breach, concrete consequences and continuation plan in one chronology. Then establish how the financial position on the action date will be recorded and how exclusion instead of dissolution will be claimed.
First prepare a dated overview of the duty, the conduct complained of and the effect on the OG. Add the agreement, messages, accounting records and witnesses before presenting an exclusion action with a defined claim date and continuation objective.
Separate the personal allegation from a general stalemate or a difficult financial year. Identify the essential duty, the consequences and the reason why continued cooperation is no longer workable, then compare whether another route is closer to the objective.
Record whether the business should continue or an orderly end is the priority. Section 140 UGB addresses exclusion instead of dissolution. A different objective requires a separate review of the action, the agreement and the accounting position.
Section 140(1) UGB links exclusion to a circumstance in a partner’s person that would give every other partner a right to seek dissolution under section 133 UGB. Instead of dissolving the partnership, the court may exclude the affected partner on an action by all remaining partners. In a two-member OG, the remaining partner is the only claimant because there is no further partner.
The statute expressly states that the action is not barred merely because one partner remains after exclusion. The two-member structure therefore does not close this route. It makes the objective of continuation especially important. The claimant should be able to explain why the OG can continue with that partner and how the business will be organised afterwards.
Exclusion does not follow from a unilateral statement by the remaining partner. It requires court proceedings and a sufficiently pleaded claim. The shareholder-exclusion topic page and the shareholder-exclusion assessment help organise the initial route review.
Section 133(1) UGB makes an important cause a condition for judicial dissolution of the OG. Section 133(2) gives as an example an intentional or grossly negligent breach by another partner of an essential duty under the partnership agreement. An important cause can also exist when performance of such a duty becomes impossible.
Section 140 adopts this standard because exclusion is tied to the same dissolution cause. The action should therefore identify the essential duty, the conduct or impossibility and the effect on cooperation. Disappointment with a business decision or a general wish to separate does not by itself describe the statutory basis.
The duty may arise from the partnership agreement and amendments. Resolutions, written instructions, accounts and correspondence may add context. The records should show a traceable connection between the duty, the conduct and why joint continuation has become unreasonable.
Section 140(1) UGB requires an action by all remaining partners. In a two-member OG, the remaining partner meets that condition alone. Standing follows from being the only partner who is not the subject of the alleged breach. The excluded partner cannot become a co-claimant by asking for their own exclusion.
The partnership structure should be evidenced in the proceedings. A company-register extract, the partnership agreement and its amendments show who the partners are and how management and representation are arranged. A later change in partner status can affect the procedural position and belongs in the chronology.
The relief must have a defined objective. Exclusion should take the place of dissolution. If the claimant also pursues resolution challenges, payment, injunctions or an accounting, those claims should be separated from the exclusion request. That makes clear which facts support the important cause and which documents belong to another claim.
Exclusion under section 140 UGB keeps the partnership as a legal entity. The remaining partner can continue the business if the practical and financial conditions support that plan. Dissolution under section 133 UGB leads to winding up and liquidation. Both routes rely on an important cause but pursue different objectives.
The choice requires a review of current contracts, banking relationships, staff, customers, open projects and the viability of continuation. Continuation should be supported by a concrete plan. It should show who will act, how necessary declarations will be made and how the OG’s obligations will be met.
A GmbH follows different statutory structures. The GmbH dissolution action is therefore not a direct model for a two-member OG. The legal form and cause of action must be identified correctly from the first pleading.
Section 140(2) UGB makes the partnership’s financial position at the time the exclusion action is filed decisive for the accounting between the partnership or the sole remaining partner and the excluded partner. This statutory reference point must be kept separate from the later judgment and from later developments in the OG.
The records should therefore be secured around filing. They may include current accounting, receivables and liabilities, bank balances, fixed assets, open projects and identifiable risks. The documents should describe the position at that time and record later changes as later changes.
The date answers a valuation question. It does not alone establish an important cause or prove that continuation is the appropriate objective. Those questions remain separate. GmbH compensation and valuation follow different rules, as explained in the article on compensation after exclusion from a GmbH.
A workable exclusion action connects four questions: what duty existed, what conduct is attributed to the other partner, what effect did it have on cooperation and why should the OG continue with the claimant? Each question needs its own support. The partnership agreement may show the duty, while minutes, messages, accounting records and witnesses can support the sequence and consequences.
The evidence file should be chronological. For each event, record the date, participants, conduct, affected duty and concrete consequence. Conflicting information should be marked. A later valuation cannot replace the factual basis, and a poor financial development alone does not prove a personal breach of duty.
The first safeguard checklist helps secure the initial records. For missing documents or digital evidence, the evidence-preservation checklist provides a practical starting point. Both materials leave the specific legal review of the claim objective open.
Start with a complete file containing the partnership agreement, company-register extract, authorisations, resolutions, accounting records and correspondence about the conflict. Build a chronology that makes the important cause and its effects visible. At the same time, prepare the continuation plan and the expected accounting position.
Before filing, record four decisions: exclusion instead of dissolution, the specific important cause, the action date and the method for documenting the financial position. Keep open facts in a separate list. That makes clear which evidence is still missing and which statements require careful qualification.
The exclusion action should be reviewed together with the surrounding routes. Dissolution, contractual solutions, accounting and interim measures can have different conditions. A precise allocation prevents the claim from seeking relief that its factual basis does not support.
Yes. Section 140(1) UGB requires an action by all remaining partners. With two partners, the remaining partner is the only remaining partner. The statute expressly states that the action is not barred because only one partner remains after exclusion.
Section 140 UGB refers to a cause that would allow dissolution under section 133 UGB. Section 133(2) names, in particular, an intentional or grossly negligent breach of an essential duty under the partnership agreement or the impossibility of performing that duty. The facts must satisfy that standard.
No. Under section 140 UGB, the court pronounces exclusion on the basis of an action. The claim must set out the important cause, the objective of exclusion instead of dissolution and the relevant facts in a coherent way.
Under section 140(2) UGB, the financial position at the time the exclusion action is brought determines the accounting. That date is separate from the later judgment and later business developments.
No. A share transfer is based on an agreement about transfer, consideration and form. An exclusion action is a court route under section 140 UGB that can replace dissolution of the OG when an important cause exists.
Safeguard, challenge and enforce shareholder disputes. Portal for active GmbH conflicts covering first safeguards, resolution challenge, exclusion and preliminary injunction.
Contact