Entries by Ester Hahn

CAUTION: INSOLVENCY CONTESTABILITY IN THE CASE OF DEFERRING CLAIMS FROM EXCHANGE AGREEMENTS IN INTRA-GROUP RELATIONS

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In a recently published judgment (default judgment of 11 July 2019 – case no. IX ZR 210/19), the Insolvency Senate of the Federal Court of Justice [Bundesgerichtshof – BGH] affirmed that the practice of deferring claims arising from intra-group exchange contracts, which is quite common in many groups, is contestable under insolvency law – which, in view of the extensive insolvency law consequences of repayment to the insolvent assets, requires the greatest attention, particularly in times of an economic downturn.

NOT WITHOUT MY DAUGHTER! ON THE DESIGN OF SUCCESSION CLAUSES IN COMPANY AGREEMENTS (OF PARTNERSHIPS)

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In its decision of 24 January 2019 the Vienna Supreme Court [Oberster Gerichtshof – OGH] determined for the first time that so-called gender clauses in the company agreements of commercial partnerships are unethical and thus void because they violate the principle of equality guaranteed under constitutional law. The decision issued under Austrian law is considered to have a signaling effect on German corporate law. Against this background, regulations in regard to corporate succession should be critically reviewed and adjusted, if necessary.

DRAFT BILL ON CORPORATE LIABILITY LAW – THE CRIMINAL CODE FOR ENTREPRENEURS?

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The Federal Ministry of Justice and Consumer Protection presented under the name “Corporate Liability Law [Verbandssanktionengesetz]” the draft bill on combating corporate crime. If the Grand Coalition implements this draft in its planned form in the legislative process, practice will face far-reaching challenges. It is therefore advisable to already familiarize with the planned changes.

GERMAN CORPORATE GOVERNANCE CODEX 2019 – AN OVERVIEW OF THE MOST IMPORTANT CHANGES

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In May 2019, the Government Commission had already adopted a new version of the German Corporate Governance Codex (hereinafter “Codex 2019”). However, the Codex 2019 has not yet entered into force because the Government Commission initially wanted to wait for the ARUG II (Act Implementing the Second Shareholders’ Rights Directive [Gesetz zur Umsetzung der zweiten Aktionärsrechterichtlinie]) to enter into force. The Federal Parliament [Bundestag] and the Federal Council [Bundesrat] have now passed the ARUG II on 14th/19th November 2019. The act is expected to enter into force in January 2020, therefore the Codex 2019 is expected to enter into force soon. The set of rules with recommendations for the management of stock exchange-listed German companies has been fundamentally revised and contains a completely new structure and system. An overview of the most important innovations and changes.

LOSS OF SHAREHOLDER LOANS – TAX-RELEVANT OR NOT?

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The tax recognition of losses from shareholder loans has significantly changed over the past few years. While the Federal Court of Finance [Bundesfinanzhof – BFH] initially assumed that such losses could be partially deducted as subsequent acquisition costs if certain conditions were met, it allowed full deduction from capital income in 2017 with two judgments. The legislator now wants to change this. However, it is good for the taxpayer that the BFH has given consent to some legal structurings surrounding shareholder loans.

BASIC PRINCIPLES OF DEFECTIVE EMPLOYMENT RELATIONSHIP APPLICABLE TO AN EMPLOYMENT CONTRACT OF A MANAGING DIRECTOR OF A GMBH

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Our last newsletter (edition 2019|Q3) had already addressed two Supreme Court decisions concerning the employment of an externally hired managing director of a limited liability company [Gesellschaft mit beschränkter Haftung – GmbH]. This article supplements the thematic complex, because in its ruling of 20 August 2019 (case no. II ZR 121/16), the Federal Court of Justice [Bundesgerichtshof – BGH] decided what consequences would arise if an employment contract with a managing director of a GmbH was not effectively concluded.

USEFUL REGULATIONS IN AN ENTREPRENEUR’S LAST WILL

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Securing the preservation of the company, maintaining family peace and protecting the economic hedging of all family members – in order to achieve these goals, an entrepreneur should deal with succession plans at an early stage and should not rely on the statutory provisions on succession. When drafting the articles of association and then also when drafting the testamentary disposition, there are various structuring possibilities, some of which are explained below.

POOL AGREEMENTS – HOW TO OVERCOME THE INHERITANCE TAX HURDLE OF 25 %!

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Shares in corporations, except shares in non-member States, are granted tax concessions for inheritance and gift tax purposes if the testator or the donor directly held more than 25 % of the nominal capital of a company. The threshold of 25 % also applies to the question of whether so-called administrative assets are involved. Pool agreements make it possible to achieve the required quota. The German Federal Fiscal Court [BFH] clarified what needs to be considered in this respect.

AN (EXTERNALLY HIRED) MANAGING DIRECTOR OF A GMBH ACTING AS AN EMPLOYEE?

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Two current decisions are addressing the question, whether an (externally hired) managing director of a limited liability company can be regarded as employee. While being denied by the Federal Labor Court in its decision of 21 January 2019 (file no. 9 AZB 23/18), the Federal Court of Justice grants an externally hired managing director the status of an employee (decision of 26 March 2019, file no. II ZR 244/17). Nonetheless, the two decisions are not contradictory.