Latest news on exit taxation: immediate taxation of business shares upon transfer of domicile to Switzerland disproportionate according to ECJ
In spring 2019, the European Court of Justice (ECJ) decided that in certain constellations a deferral of payment of the tax payable in the event of a transfer of domicile (section 6 German Foreign Transaction Tax Act [Außensteuergesetz – AStG]) must also be granted when relocating to Switzerland, i.e. also in relation to a third […]
The transfer of all company assets of a GmbH – still subject to the participation of the shareholders’ meeting?
The Federal Court of Justice [BGH] deals in its decision dated 28 January 2019 (file no. II ZR 364/18) with the issue, whether in analogous application of section 179 German Stock Corporation Act [AktG] the transfer of all company assets of a limited liability company [GmbH] within the framework of a sale and purchase agreement […]
Provisions in the articles of association on non-competition obligation of shareholders
A non-competition clause for shareholders is intended to prevent the success of the joint company from being jeopardized by competitive activities of one or more shareholders. Since there is no statutory non-competition clause for the limited liability company [GmbH], it is all the more important to take precautions against potential conflicts of interest in the […]
In for a penny, in for a pound! On the default liability of an (interim) acquirer of a GmbH share
The “proportionate default liability of the other shareholders” for uncollectible contribution debts of co-shareholders which was significantly expanded most recently by the German Federal Court of Justice [BGH] has considerably increased their risk of becoming liable beyond the amount of their original capital contribution. Acquirers of limited liability company’s [GmbH] shares should always be aware […]
Warranty for defects and frustration of contract in a company purchase – exclusion of Section 313 BGB from SPAs required?
Share Purchase Agreements (SPA) usually contain a – negotiated in detail, more or less extensive – catalog of guarantee declarations of the seller in connection with agreements on the legal consequences in the event of an incorrectness of a guarantee declaration. The statutory liability of the seller which generally exists in addition is usually excluded […]
Prohibition of execution and gun-jumping in M&A transactions – risks of sanctions under antitrust law
In the recent past, decisions of the EU Commission as well as the European Court of Justice (ECJ) pertaining to so-called gun-jumpings (pre-merger coordination) within M&A transactions drew attention, in particular at European level. Especially with respect to the record fine imposed by the EU Commission these decision deserve special attention. On the other hand, […]
Review of foreign investments: experiences since 2017 and further tightening as of 2019
Following the extension of the scope of the review of foreign investments in Germany in July 2017, the German Federal Cabinet [Bundeskabinett] has resolved on another tightening of the scope of investment reviews on December 19, 2018. In addition, an EU-wide legislative procedure in this field is about to be finalized.
Jurisdiction clauses and applicable law in business transactions
As soon as two parties are domiciled in different countries, the contract should contain terms on applicable law and jurisdiction. Using the example of company acquisitions, the following article examines the risks arising from the absence of such contract terms and outlines what needs to be taken into account when drawing up such agreements.
Redemption of GmbH shares – BGH passes judgment after 18 years!
If a GmbH [limited liability company] share is to be redeemed against the will of the person concerned, it is necessary to set an important course already in statutes but also while drawing up a redemption resolution. The Federal Court of Justice [BGH] has found in its decision of 26 June 2018 the nullity of […]
LIABILITY GAP FOR D&O INSURANCES – ADDITIONAL CONDITIONS REQUIRED!
In its decision of 20 July 2018, the Fourth Senate of the Düsseldorf Higher Regional Court [OLG] ruled as follows: D&O insurance does not cover payments made by a managing director after the company has reached insolvency maturity and for which he is held liable under section 64 German Law on Limited Liability Companies [GmbHG]. […]