Lawyer Overview of Corporate Law – In Germany, corporate law is a separate area of law. It is about groups of people who come together under private law to get something done through a legal transaction.
Business and company law have been around since the 12th century. At that time, trade got going again, and in many places, merchants got their own laws. But the ban on interest had an effect on business law and company law in the High Middle Ages. Because of this, company law was used to find ways to deal with it.
Topics in our legal advice
Today, commercial and corporate law mostly affects founders (alone or with partners), partners, companies, and entrepreneurs, as well as managing directors and board members, investors, and Start-ups.
on questions about starting a business, running it, and closing it down.
But what does the law say about a company? A partnership agreement explains who each partner is and how they work together to make a company. Also, this merger must be for a legal reason, which the new company should support.
Corporate law firm
All corporations can use our legal advice services:
- Limited liability company (GmbH)
- Public limited company (AG)
- Entrepreneurial company (UG)
- partnership limited by shares (KGaA)
- Registered cooperative (eG)
- Real Estate Investment Trust (REIT)
- European Cooperative Society (SCE)
- European Company (SE)
- Civil law partnership (GbR)
- limited liability company (Gesellschaft mit beschränkter Haftung & Compagnie) limited partnership (GmbH & Co. KG)
- General partnership (oHG)
- Limited partnership (KG)
- partnership company (PartG)
- dormant partnership (StGes)
- European Economic Interest Grouping (EEIG)
What does company law regulate?
Most of company law came from how businesses worked. Since business and making money are not limited by borders, commercial law is often focused on international traffic.
Company law grew out of commercial law and is based on the idea that everyone involved is responsible for their own actions. Company law sets rules for how companies interact with each other and with the outside world.
Corporate law and commercial law
Commercial law is a type of private law that has to do with business, industry, and crafts in particular. It is also called the “private special law of merchants.” The Commercial Code, among other things, sets out the rules for commercial law.
The HGB only applies if all the things that a merchant needs to have are present. 1 of the HGB says that a craft business must first be run. This kind of business is a commercial enterprise that, based on its size and type, needs a separate commercial activity that is also carried out as planned.
As a general rule, this must be permanent and be something that is legal. A trade can also only happen if the person doing it wants to make money from it.
Where is company law regulated?
In commercial and company law, there are different legal forms for each type of company. These are some of the most important legal sources in company law:
- Public limited companies: AktG (German Stock Corporation Act)
- Cooperatives: GenG (Cooperative Act)
- GbR: §§ 705 ff. BGB (German Civil Code)
- Limited liability companies: GmbHG (Limited Liability Companies Act)
- Partnership companies: PartGG (Law on Partnership Companies of Members of Liberal Professions)
- Commercial partnerships (OHG & KG): §§ 105 ff. HGB (Commercial Code)
- Associations: §§ 21 ff. BGB
Partnerships and corporations
The laws and rules that apply depend on the type of business:
Company Law – Partnerships
A partnership is not a “person” under the law. But it can be a source of rights and responsibilities.
According to German company law, the following business types are partnerships:
- GbR (so-called GbR/BGB-Gesellschaft) as the basic form of OHG, § 705 ff. BGB
- General partnership (OHG), also known as GmbH & Co. OHG
- Limited partnership (KG), also as GmbH & Co. KG
- Partnership company (liberal professions)
- dormant partnership
- European Economic Interest Grouping (EEIG)
Company Law – Corporations as Legal Entities
Corporations are private law entities that are made up of people who agree to work together. The members of the corporation work toward a common goal, which is usually economic.
Corporations are the following types of business:
- AG – public limited company
- GmbH – limited liability company
- UG (haftungsbeschränkt) – entrepreneurial company
- KGaA – partnership limited by shares
- eG – registered cooperative (mixed form)
- REIT-AG – public limited company, exclusively active in the real estate sector (Real Estate Investment Trust)
- SCE – European Cooperative Society
- SE – European public limited company
Areas of law in corporate law
A lawyer or a lawyer who specializes in business and company law has to deal with questions from many different areas of law every day. So, the Herfurtner law firm thinks of itself as a full-service business and corporate law firm.
Our lawyers have a lot of experience in their fields and can help you with a lot of different things. On our homepage, you can also find more information about the other areas where we are also involved.
In the business world, things like tax law and inheritance law are also very important. A tax attorney or tax consultant can tell you more about this. Getting tax advice or an initial assessment may be a good idea, especially when it comes to passing on a business and leaving an inheritance.
Our lawyers in Munich, Hamburg, and Frankfurt are especially happy to talk to you about the following things:
Stock corporation law
The Stock Corporation Act defines and sets rules for how a public limited company is set up, what its rights and responsibilities are, and what to do with company shares that have been given out.
In addition to general rules, stock corporation law also covers how a company is made, the legal relationship between the company and its shareholders, and how the AG is made.
This includes things like registering and entering the business in the commercial register, making contracts and articles of association, and giving advice to and being represented by the executive and supervisory boards. We also represent companies at general meetings, in shareholder lawsuits, and when buying shares and securities.
Cooperatives are groups of people or businesses that work together to do something profitable or to help each other financially or socially through joint economic business operations.
The company law lawyers at the Herfurtner law firm can give advice on the best legal form. In addition, they help with the formation, writing of the articles of association, joining of a cooperative law auditing association, and other questions that come up during the process of setting up a cooperative.
Management – legal background Company law
When it comes to company law, “management” means running the business of the company. Its other job is to stand up for the company in and out of court.
The management board is in charge of figuring out what the company wants to do and what its goals are. It also makes the strategic decisions that go along with those goals. The management is also in charge of organizing, controlling, and planning for the business as a whole.
But a company’s executive body can’t do anything on its own. So, a company’s executive officers must be real people, according to company law. These people are called managing directors, and they are the company’s legal representatives.
Managing director of a GmbH: resignation, dismissal, resignation from office
The management board is the governing body of the company. So, without management, it wouldn’t be able to do anything. If a managing director quits or is fired, it can hurt the company if this leaves a “vacuum.”
Also, the general meeting of shareholders can fire the management if they want to. The GmbH law says that a worker can be fired at any time and for no particular reason. But this rule can be changed by a passage in the articles of association that says something similar.
If the right reasons are there, a person can be fired for cause at any time.
A lawyer or a lawyer who focuses on business and company law can help get rid of or fire a managing director. Also on the list of possible actions are getting advice ahead of time and writing the resignation agreement or the formal preparation of resolutions or shareholders’ meetings.
Also, managing directors or companies can be represented in and out of court if a dispute is caused by a termination or dismissal.
Managing director liability
If the managing director of the company doesn’t act with the care that a smart businessperson would, the company can sue him. If there are more than one managing director, they are all responsible.
But company law recognizes that a director’s liability may be limited if the damage happened in a part of the business that is not his or her responsibility.
If there is a reason for insolvency, like not having enough money or being too in debt, the managing director is responsible for all payments made after that. But there is one exception: the payments are in line with what a smart businessman would have done at the time.
The management is responsible to third parties, such as if it intentionally violates someone else’s rights or if it doesn’t pay wages or social security contributions.
It is also responsible if it doesn’t file for bankruptcy when it’s supposed to, if it favors creditors, if assets are stolen during over-debt or bankruptcy, if taxes are evaded or tax evasion is committed, or if tax obligations aren’t met.
A lawyer or a lawyer who specializes in company law can give advice on how to get the management to pay for damages. He also helps companies and managing directors reduce their liability by defending them against liability claims or writing contracts that reduce their liability.
Contract with the managing director
The agreement with the managing director is very important because the managing directors of a GmbH or UG are not like other employees. The management is chosen based on the articles of association, from among the shareholders or from outside the company.
When writing the contract for the managing director, either as an outside managing director or as a shareholder-managing director, there are a number of things to keep in mind.
It should be clear who has the right to manage and speak for the company, how transactions that need approval are handled, what the rules are for transactions with oneself ( 181 of the German Civil Code), the duties, responsibilities, and liability of the managing director, as well as things like non-competition or second jobs.
A corporate law firm helps companies make new contracts. It also looks at and improves drafts that have already been made for tax, social security, or labor law issues.
Termination or expulsion of shareholders
Company law says that a shareholder loses membership if his or her shares are taken away or if the shareholder shuts down the company. A forced withdrawal of shares can only happen if the rules for doing so were already written into the articles of association before the shares were bought.
On the initiative of the shareholder, the company can end if this is clearly stated in the articles of association and the legal succession after the end is set out.
A shareholder can also leave the company if it is too hard or unfair for him to stay there. But there must be a big reason for this; a fight between shareholders is not enough.
If the shareholder agreement doesn’t say anything about severance pay, the shareholder who is leaving can ask the company for severance pay by law. So, a settlement balance sheet is made to show how much the claim is worth.
When a shareholder leaves, the company and the shareholder get advice from a lawyer or a lawyer who specializes in corporate law and business law from a law firm.
Advice about things like liability, the withdrawal agreement, defending or enforcing claims, or the value of a person’s shares in a company are all very important.
Managers are being held more and more responsible by their companies if they did or didn’t do something that hurt the company. This can cost a lot of money and hurt people in many ways. Company law says that if it can be shown that the manager did something wrong and caused damage, he is responsible for paying for it with his own money.
When writing contracts for managing directors, board members, or supervisory board members, a lawyer who specializes in corporate law can be consulted to limit or avoid liability risks. If there is a disagreement, the law firm will take action in or out of court to enforce or defend against claims for compensation or damages.
If he has the right extra training, a lawyer can act as a mediator. Unlike mediators who aren’t lawyers, a lawyer can give legal advice to the people who are negotiating and write up a contract that is legal.
Employee share ownership Corporate law
Employee ownership is a way to keep good workers on the job. This type of incentive is especially popular with new companies that can’t yet pay the same salaries as more established ones.
There are different ways for employees to take part. So, employees can take part by putting money in or getting a cut of the profits. They can also help shape internal processes and conditions.
A corporate lawyer will talk about the different ways employees can be involved and give advice on how the incentive system should be set up. The help includes everything from writing up the right contracts and putting on informational events to enforcing or defending claims that may come up because of an employee participation program.
Social security obligation for managing directors
In Germany, if an employer hires someone for a job that requires social insurance, they have to pay the employee’s share of the insurance on a regular basis.
There is health insurance, long-term care insurance, unemployment insurance, pension insurance, and accident insurance. A managing director, on the other hand, must also pay for social insurance.
One exception is if the managing director is also a shareholder and owns more than 50% of the shares. There are also more reasons to keep someone out if they are self-employed, their pay is based on how well they do their job, or they do the work for free.
Lawyers who specialize in company law check to see if a managing director’s job means he or she has to pay for social security or if the managing director can take care of himself. Advice can also be given on how to write the employment contract. In status determination proceedings, people can also get help and be represented.
Setting up a company
If you want to start a business, you have to do more than just come up with a good idea. You also have to deal with company law. This is because tax and liability issues depend on the type of legal form you choose. Company law recognizes different legal forms depending on how the business was started, alone or with a partner.
- Sole trader,
- partnership under civil law (GbR),
- Entrepreneurial company (haftungsbeschränkt) – UG,
- limited liability company (GmbH),
- GmbH & Co KG,
- general partnership (OHG) or
- limited partnership (KG).
When giving legal advice to start-ups, the lawyer will also talk about how to get the business the money it needs.
Lawyers and lawyers who specialize in business law and company law will be able to explain the differences and explain the pros and cons of each option. When buying or selling a company, it’s also a good idea to get legal advice from lawyers who specialize in company law and business law. A tax expert should also be asked for help.
Legal advice in corporate law: venture capital, M&A
In the field of venture capital, the firm gives investors and founders advice on all legal aspects of start-up projects and financing rounds.
- Choosing the right legal form
- Setting up a company
- Drawing up articles of association
- Affiliation to a cooperative auditing association
- Acquisition, sale and transformation of companies
- Transfer of shares
- Private equity
- M&A – advice on the purchase and sale of companies and company shares as an asset deal or share deal
- Conversion of companies
- Corporate succession arrangements
The lawyers at the commercial law firm are experts in corporate law, mergers and acquisitions (M&A), venture capital, and shareholder disputes and litigation.
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