Corporate Law.

Corporate law regulates the formation, organization, management, liability, and termination of companies, as well as the rights and obligations of shareholders and corporate bodies.

Partnerships (Personengesellschaften) prioritize the acting individuals and are liable — depending on the legal form — personally or with their company assets. From a tax perspective, they are transparent, meaning income is directly attributed to the partners and taxed at their level. Corporations (Kapitalgesellschaften), on the other hand, have their own legal personality, and liability is generally limited to the company's assets. From a tax perspective, they are opaque, as the company itself is the taxpayer and profits are taxed at the company level; distributions are additionally subject to taxation at the shareholder level.

Common legal forms include GbR, OHG, KG (partnerships) as well as GmbH, UG (haftungsbeschränkt), and AG (corporations).

Relevant criteria include liability, capital requirements, flexibility, co-determination, tax burden, investor suitability, and succession capability.

Because corporations represent their own legal entity; the entrepreneurial risk is generally limited to the company's assets.

Personal liability can arise in cases of breaches of duty, particularly violations of due diligence, legality, or insolvency filing obligations.

Corporate governance refers to the system of rules, processes, and controls for managing and overseeing a company, including responsibilities, decision-making channels, and control mechanisms.

Even smaller companies benefit from clear decision-making structures, transparency, and conflict prevention, especially with multiple shareholders.

Typical bodies include the management/executive board, the shareholders' meeting or general meeting, and — depending on the legal form — a supervisory or advisory board.

A family company is a company whose shareholder base essentially consists of family members. In terms of corporate law, they are characterized by the close link between family and business interests, which necessitates special regulations regarding succession, voting rights, share transfers, and conflict resolution.

A family constitution is a set of rules that defines the common values, goals, and decision-making processes of an entrepreneurial family. It is generally not legally binding but has an indirect effect by serving as a framework for articles of association, wills, and governance structures.

The family council is an internal body for coordination and communication within the family. It serves to form opinions, prevent conflicts, and prepare decisions, without regularly having the status of a corporate body in the corporate law sense.

The corporate body position establishes the statutory power of representation, while the service contract regulates the contractual relationship; both levels must be strictly separated legally.

In cases of breaches of duty, particularly violations of due diligence, legality, or insolvency filing obligations, personal liability can arise.

D&O insurance protects corporate officers from the financial consequences of personal liability claims arising from their position.

Intent, certain breaches of duty, or insufficient coverage amounts can lead to the insurance not applying.

Because in deadlock situations without conflict resolution mechanisms, decision-making blockades can arise, jeopardizing the company's ability to act.

Typical mechanisms include mediation clauses, casting vote, Russian Roulette or Texas Shoot-Out clauses, and clearly defined exit regulations.

The articles of association is the central instrument for regulating voting rights, vetoes, responsibilities, and conflict resolution mechanisms.

Shareholders make fundamental decisions, while management is responsible for day-to-day operations.

Through amendments to the articles, regulations on capital increases, anti-dilution protection, tag-along rights, and governance adjustments.

Investors value clear decision-making rights, exit rules, protection mechanisms, and legally sound governance structures.

Common errors include unclear responsibilities, lack of conflict resolution rules, mixed roles of shareholders and managing directors, and outdated articles of association.

Transformation law regulates the legal restructuring of companies, particularly through mergers, demergers, changes of legal form, and transfers of assets, without the company having to be economically re-established.

Existing contracts and employment relationships generally transfer by operation of law to the new legal entity, although special termination rights or consent requirements must be examined on a case-by-case basis.

Subsequent liability refers to the legally mandated liability of the transferring and acquiring legal entities for obligations established before the transformation, even if these were economically assigned to another part of the company. According to the Transformation Act, the participating legal entities are generally jointly and severally liable for old liabilities for five years, although the scope of liability may be legally limited.

Through a spin-off, business units can be legally separated to be sold specifically, without affecting the remaining part of the company.

Typical risks concern the clear allocation of assets, contracts, employees, and liabilities, as well as remaining subsequent liability risks that can influence the subsequent sale.

This is when a company changes its statutory seat to another state without giving up its legal identity; it remains economically the same company under a new legal order.

Particularly relevant are the protection of shareholders, creditors, and employees, compliance with both national legal systems, and registration and procedural requirements.

A group of companies exists when several legally independent companies are under unified management. In corporate law, a distinction is made between de facto groups, contractual groups, and integration groups, with dependency relationships, rights of instruction, and liability issues playing a central role.

The Transformation Act now contains a comprehensive legal framework for cross-border mergers, demergers, and changes of legal form within the EU, thereby creating legal certainty for international reorganizations.

A profit and loss transfer agreement obliges a dependent company to transfer all its profits to a controlling company. A control agreement goes beyond this and grants the controlling company the right to issue binding instructions to the dependent company. Both types of agreements belong to the so-called corporate agreements in group law. The tax group (Organschaft) for income tax purposes is a tax concept in which the results of the controlled company are attributed to the controlling company, so that profits and losses can be offset within the group for tax purposes. Prerequisites for this include, in particular, the conclusion of a profit and loss transfer agreement (a control agreement is not mandatory but often combined), a minimum term for the agreement, the actual implementation of the profit and loss transfer agreement, and the financial integration of the controlled company into the controlling company. Through the tax group, corporate and trade taxes are levied at the level of the controlling company, which plays a central role in tax-efficient profit management, especially for group structures.