All articles by Christoph Schmitz-Schunken

Voting prohibition of the controlling shareholder when initiating directors’ and officers’ liability claims in the controlled company; minority shareholders are not at the mercy of the majority company without protection.

On Friday, 17 November 2023, the Bundestag (German Federal Parliament) passed the “Act on Financing of Future Investments” (Financing the Future Act – ZuFinG). One of the aims of this act is to make it much easier for young and fast-growing companies to raise equity capital and access the capital market. To this end, lawmakers enabled extensive amendments and changes to the company, capital market, and tax law. The legal form of public limited companies (AG and Societas Europaea -SE- with registered office in Germany) is to be strengthened by, among other things, the (re-) authorization of multi-voting shares and the promotion of employee share ownership to be expanded.

The Civil Partnership (GbR – short for Gesellschaft bürgerlichen Rechts) is German law’s most popular form of parnership. After all, no share capital is required to set it up. A notarized partnership agreement is also not required, nor is an entry in the company register. However, the MoPeG (“Gesetz zur Modernisierung des Personengesellschaftsrechts” – Act on the Modernisation of Partnership Law) is now comprehensively modernizing GbRs as of 01.01.2024. But what does this mean for the GbR – for new formations and existing civil law partnerships?

It is undisputed: Bureaucratic hurdles make life enormously more difficult for private individuals, but above all for companies. The fact that the German government is now addressing the issue of bureaucracy reduction – as announced in the coalition agreement – is therefore very welcome in principle: after the summer break, the Cabinet adopted critical points for a fourth Bureaucracy Reduction Act (BEG IV). It thus took a first step towards (further) bureaucracy reduction. However, the federal government has yet to achieve a significant breakthrough.

duties to provide information in due diligence audits that are subject to compensation

It is standard for shareholders to terminate the employment of another shareholder. There are many reasons for this: the breach of social fiduciary duties is often a reason for such a termination. But is it conceivable that the terminated shareholder has a claim to reinstatement in the company precisely because of the social duty of loyalty? That is possible. The possible claim for reinstatement alone can have legal consequences (BGH, judgment of 12.07.2022, ref.: II ZR 81/21).

Impact of the Act on the Modernization of Partnership Law (MoPEG) on real estate transfer tax

When passing a resolution on initiating a legal dispute against a third-party company or on the out-of-court assertion of claims against the third-party company, those GmbH shareholders who hold all shares in the third-party company are subject to a voting ban.

Unlike Anglo-American corporate law, the continental European corporate tradition distinguishes two boards involved in corporate governance in stock corporation law. The Management Board and the Supervisory Board are two relevant bodies. And yet, both bodies fulfill very different tasks within the company. Especially in fast-moving times like these, the Supervisory Board and the Management Board must work together efficiently to achieve the best for the company, even in difficult times.

BFH (German Federal Fiscal Court) confirms its case law on the topic of “hidden profit distribution” for loans to controlling shareholders (BFH, the judgment of 22/02/2023 – I R 27/20 -)