BGH Quashes €285 Million Settlement: Formal Error in VW Shareholders' Meeting regarding the Diesel Scandal

With its judgment of September 30, 2025 (II ZR 154/23), the German Federal Court of Justice (BGH) has declared a significant coverage settlement of Volkswagen AG in the diesel scandal to be null and void. The decision impressively shows how important precise preparation and legally secure implementation of general meetings are – especially when existential corporate decisions are at stake.

Important Note: At the time of writing this post, only the BGH press release of the judgment was available. The court's considerations are so far only sketchily apparent from it. The full text of the decision is awaited with excitement, as it is expected to provide significantly more clarity on the requirements for the information scope of the agenda.

The Case: Settlements Amounting to 285 Million Euros

In June 2021, Volkswagen concluded liability settlements with two former board members and a coverage settlement with D&O insurers to settle possible claims for damages in connection with the diesel scandal. The settlements provided for:

• Personal contributions from former board members: €11.2 million and €4.1 million respectively
• Payments from D&O insurers: around €285 million
• Indemnification of board members against third-party claims by VW
• Waiver of claims against all other former and current board and supervisory board members

The General Meeting approved the settlements on July 22, 2021, with a majority of over 99%. Capital investor protection associations nevertheless successfully challenged the resolutions.

The Instances: From Success for VW to Quashing by the BGH

The Regional Court (Landgericht) of Hanover and the Higher Regional Court (OLG) of Celle fully dismissed the lawsuits and viewed the resolutions as effective. The OLG Celle held that the announcement of the agenda met the legal requirements, the essential content of the settlements was properly announced, and there was no violation of the right to information.

The BGH saw this fundamentally differently and partially set aside the decision – with far-reaching consequences for practice.

Formal Error No. 1: Violation of Section 121 para. 3 sentence 2 AktG

What was the problem?

The BGH declared the resolution on the coverage settlement null and void due to a formal error. The agenda did not comply with the requirements of Section 121 para. 3 sentence 2 of the German Stock Corporation Act (AktG).

The decisive point: the agenda did not state that the coverage settlement was associated with a waiver against all current and former organ members, which required the approval of the General Meeting under Section 93 para. 4 sentence 3 AktG or Section 117 para. 4, Section 93 para. 4 sentence 3 AktG.

Why was the board's report not sufficient?

Volkswagen had indeed provided the relevant information – but only in the board's report, not in the agenda itself. According to the press release, the BGH clarified: the corresponding statements in the board's report are not sufficient as they were no longer part of the agenda specified in the convocation.

The reasoning: the average shareholder did not have to expect that information regarding a resolution on a waiver against a large number of other organ members was contained in the further information on the relevant agenda items.

The Systematic Distinction: Agenda vs. Resolution Proposals

The law distinguishes between:

• the agenda (Section 121 para. 3 sentence 2), which forms the framework for possible resolutions
• the resolution proposals of the management (Section 124 para. 3), which do not exhaust this framework

The agenda must be clear enough in itself that shareholders can recognize which decisions of fundamental importance are pending. A waiver of organ liability claims against all organ members is such an essential point that must be recognizable in the agenda itself – not just in accompanying reports.

What the Full Text Will Clarify

The press release leaves central detailed questions open, which the full text is expected to clarify:

• Where exactly is the line between the agenda and "further information"?
• Which details must mandatorily be in the agenda itself, which may be in accompanying reports?
• How does the agenda's reference to the general meeting report affect things?
• What requirements apply to the "sufficient content fixation" for complex contract systems?

Formal Error No. 2: Violation of the Right to Ask Questions under Section 1 para. 2 COVMG a.f.

The Initial Situation

Regarding the liability settlements, the BGH set aside the OLG's decision and referred it back. The OLG had denied contestability due to a violation of the right to ask questions – wrongly, as the BGH found.

In the report of the Supervisory Board and Management Board, it was stated as a key reason for the settlements that the financial capacity of the persons being claimed against did not by far reach the damages attributable to these persons, even taking the insurance sum into account.

What the OLG Celle Argued

The OLG had held that information on the financial situation of the former board members was not "essential" for the decision, as:

• it is not the task of the shareholders to check misconduct of organ members
• shareholders should only vote on the specific contract text submitted
• economic considerations had been sufficiently set out

The Correction by the BGH

According to the press release, the BGH saw this fundamentally differently: information on the financial status of the former board members was necessary at least insofar as it concerned understanding the company's assessment of their financial capacity.

The information provided – in particular on income received – was not sufficient because it did not reveal to what extent any liability claims would have been covered by the former board members' own assets.

The Legal Classification: Section 243 para. 4 sentence 1 AktG

According to this provision, a challenge can only be made on the grounds of incorrect, incomplete, or refused information if an objectively judging shareholder would have regarded the provision of the information as an essential requirement for the proper exercise of their participation and membership rights.

The BGH makes it clear: if the company itself cites the lack of financial capacity as the main argument for the settlement, shareholders must be able to understand this assessment based on concrete information. General information on salaries is not enough for this.

Open Questions for the Full Text

Here too, the press release leaves important questions open:

• What specific asset information should have been provided?
• How far does the company's obligation to investigate regarding the asset situation of organ members reach?
• What limits exist for the provision of information (data protection, personal rights)?
• How detailed must economic justifications for settlements be set out?

What Remained from the First-Instance Judgment

The BGH explicitly confirmed that the resolutions were not null and void because of:

• Section 57 para. 1 AktG (Prohibition of Repayment of Contributions): The settlements do not constitute a disguised repayment of contributions, as they had economic justification in the company's interest.
• Section 93 para. 4 sentence 3 AktG (Blocking Period): The three-year blocking period was observed, as the settlements excluded all claims whose origin was less than three years ago.

Practical Consequences for German Stock Corporations

1. Transparency in the Agenda

The decision shows: the agenda must clearly name all essential resolution items. It is not enough to explain details only in accompanying reports. If a resolution contains several elements requiring approval (here: coverage settlement + waiver against all organ members), all must already be recognizable in the agenda.

Recommendation: Until the full text is available, companies should be extremely careful when formulating agenda items and, in case of doubt, include more information in the agenda itself rather than relying on accompanying reports.

2. Complete Answering of Shareholder Questions

If the company puts forward certain arguments to justify a resolution (here: lack of financial capacity), it must enable shareholders to check these arguments based on concrete information. Half-hearted information is not enough.

Recommendation: The full statement of reasons for the judgment will show exactly what depth of information is required. Companies should carefully evaluate the decision as soon as it is available.

3. The Immense Costs of Formal Errors

Volkswagen must now conduct new negotiations and risks that the contractual partners are no longer willing to agree to the same conditions. The conditions precedent of the original contracts expired long ago (Dec 31, 2021). A formal error in the convocation of the general meeting can destroy settlements over several hundred million euros.

Significance for Listed and Non-Listed German Stock Corporations

The decision does not only affect listed companies. Non-listed German stock corporations must also strictly observe the requirements for convening and conducting general meetings – especially when it comes to existential resolutions such as waivers of organ liability claims.

The central lesson: in general meeting resolutions on settlements worth millions, every detail counts. Formal errors in convocation and implementation can lead to the nullity of resolutions even with 99% approval.

How Solving Legal Supports General Meetings

Solving Legal provides comprehensive advice to listed and non-listed German stock corporations in the preparation and implementation of general meetings. Our services include:

• Review and formulation of agendas for legal security
• Design of resolution proposals and information materials
• Assistance with the proper answering of shareholder questions
• Preparation and implementation of virtual and face-to-face general meetings
• Advice on complex resolution items (organ liability, company agreements, structural measures)

Particularly in view of the further specifications to be expected from the full BGH text, careful legal guidance is essential. The VW decision impressively shows: even in billion-dollar companies with professional legal departments, formal errors can happen that cost hundreds of millions of euros.

Contact us for a legally secure design of your general meeting and avoid costly formal errors from the outset.

Conclusion

The Volkswagen case is a lesson in the importance of formal correctness in general meetings. Two central findings:

1. The agenda must clearly and completely name all essential resolution items – references to accompanying reports are not enough.
2. If the company puts forward certain economic arguments for a resolution, shareholders must be able to understand these based on concrete information.

The full text of the decision is awaited with excitement and is likely to have a lasting influence on the practice of general meeting preparation. Until then: in case of doubt, rather too much than too little information in the agenda – and for complex resolutions, definitely obtain expert advice.