Corporate Law

Question 1

What is the role of a managing director and which liabilities does he have?

Answer 1

Main representative of a corporate body
- Appointed by statute or shareholders meeting
- can be recalled at any time
- does not have to be a shareholder himself
-Personally liable during foundation phase (until registration as corporate body)
-> Afterwards only liable for damage to the company if breach of duty of care

Question 2

Describe the main characteristics of a GbR (Gesellschaft bürgerlichen Rechts).

Answer 2

Civil partnership which is jointly represented by its shareholders who are liable with their personal assets.

• It is an unincorporated business structure, meaning it has no legal identity separate from its owners
• It is owned by at least two partners with unlimited personal liability for the partnership’s debts and obligations
• Partners have joint and several liability, meaning each partner is individually responsible for all partnership debts
• Decision-making and management is the joint responsibility of all partners
• A written agreement between partners is advisable but not mandatory
• The partnership’s income is taxed as personal income of the partners
  There is no minimum capital requirement for a GbR.

Question 3

Describe the main characteristics of a General partnership (offene Handelsgesellschaft, OHG).

Answer 3

Special form of partnership under commercial law

• At least two partners who are personally liable without limitations
• Day to day operation usually conducted by one or more partners designated as managing partners
• Shareholders have non-compete obligation (§112 HGB)
• Partners share profits and losses equally, unless otherwise agreed
• The partnership has a separate legal entity from its partners
• The OHG has the ability to enter into contracts and own property in its own name
• The OHG must have a business name that includes the names of all partners and the words “Offene Handelsgesellschaft”.

Question 4

Describe the main characteristics of a Limited liability company GmbH).

Answer 4

• Limited liability to company assets
• Separation of Ownership and Management
• Requirement to assign a managing director
• Capital requirement of 25k

Question 5

Describe the main characteristics of an UG (Unternehmergesellschaft).

Answer 5

• “mini-GmbH”
• Limited liability to company assets
• Single person management possible
• 25% of profits need to be established as reserves until company assets exceed 25K
• Can be conversed into a normal GmbH once capital requirement is reached

Question 6

Which liabilities to shareholders have in the different forms of partnerships and corporations (GbR, OHG, GmbH, UG)?

Answer 6

GbR - Unlimited liability
OHG - Unlimited liability
GmbH - Limited to company assets
UG - Limited to company assets

Question 7

Distinguish the two company forms partnership and corporate bodies.

Answer 7

Partnerships:
- designed for a small number of members
- based on personal trust between shareholders
- Personal liability and self-organisation

Corporate bodies:
- designed for large memberships
- not necessarily based on personal trust
- Limited liability and a foreign legal body

Question 8

What are the prerequisites for the formation of the GmbH?

Answer 8

• Min. one shareholder and managing director
• Shareholder Agreement (Satzung)
• Share capital (>25k€)
• Registered office in Germany and registered in commercial registry
• Notarized certificate of incorporation

Question 9

Which organs does a GmbH have?

Answer 9

• Managing Director
• Shareholders meeting
• Supervisory board (mandatory from 500 employees)