Facts
The Togal Group consists of Togal AG and the Togal plants in Lugano, Vienna and Munich. Since 1965, two-thirds of the share capital of Togal AG has been in the hands of its Chairman of the Board of Directors, Gerhard Smith, while his brother Günther Schmidt holds the remaining one-third. Since the early 1960s, there have been disputes between Günther Schmidt (minority shareholder) and Gerhard Smith, mainly concerning whether the rights of the minority shareholder are adequately protected. In 1970, Günther Schmidt filed a lawsuit with the Commercial Court of the Canton of Zurich for the dissolution of Togal AG based on Art. 736 No. 4 CO.
The Federal Court dismissed the appeal of Togal AG against the judgment of the Commercial Court, which had upheld the claim. It concluded that Smith as the majority shareholder had severely and persistently disregarded the control rights of the plaintiff as the minority shareholder and the provisions on the convening of the General Meeting, and had also abused his position of power to his own financial advantage and to the detriment of the plaintiff.
Considerations
The Federal Court stated that under Art. 736 No. 4 CO, the joint-stock company is dissolved by a court judgment if shareholders representing at least one-fifth of the share capital demand dissolution for good cause.
The court conducted a balancing of interests and concluded that the severe and persistent disregard of the minority shareholder's control rights and…