Company and partnership law
The coming together of several people to carry out together an economic activity results, from the legal point of view, in relationships being formed between the persons involved that are subject to company or partnership law.
Even at this stage the choice of the most appropriate legal structure for the planned common activity is significant. In this connection not only do tax aspects play a part, but also considerations as to how power should be distributed, the decisions that should be taken jointly, the obligation to provide capital and, last but not least, as to questions of liability.
Because initially tax aspects are often at the forefront of people's minds, many business people go only to their tax adviser even in relation company and partnership law questions without dealing with the underlying legal problems. For example, it often happens that partners in a partnership think that they are carrying on a partnership under the German Civil Code (Gesellschaft bürgerlichen Rechts), whereas it is in fact a general partnership (offene Handelsgesellschaft).
Many problems in this connection appear only after there is a business crisis or after disputes between the partners have arisen. Conflicts at the partner level remain but these are, because of the structure of a partnership, practically unavoidable.
A partnership agreement that has been drafted bearing in mind the problems that can arise may, in this connection, be more important than the conclusion of a marriage contract.
Conflict is frequently caused by the problem of apportioning assets and liabilities of the partnership when a partner leaves, whether as a result of the partnership agreement being terminated or a partner being expelled.
Other problems arise when a German limited company (GmbH) is formed or acquired. Here the important point is that a director is subject to certain legal obligations that non-lawyers generally do not know about. In addition, via the German law relating to limited companies, the case law of the German Federal Supreme Court as well as the German Supreme Tax Court, there exist for a director of a limited company considerable liability risks that can become especially acute when the company gets into a crisis. It is essential that a director of a limited company has a general idea of his company law obligations, so as to protect himself against unpleasant surprises.
Moreover, the rules applying to the conduct of shareholder meetings are little-known and often disregarded. The firm of bjw lawyers can comprehensively advise and support you in the areas of company and partnership law.
Contact:
Dr Roland Wiester, German lawyer