Category Archives: Politics Law Society

Politics Law Society

BGH: Notarized agreement decisive, not the draft agreement

BGH: Notarized agreement decisive, not the draft agreement

BGH: Notarized agreement decisive, not the draft agreement

In cases of doubt, it is the notarized agreement that counts and not a draft contract whose content deviates from the former. That was the verdict of the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court, in its judgment of June 10, 2016 (Az.: V ZR 295/14).

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: A purchase agreement for real estate needs to be certified by a notary. Should a dispute arise regarding the content of the purchase agreement, it is the wording of the notarized document that is decisive and not that of the draft agreement whose content deviates from the former. This has been confirmed by the BGH.

In the instant case, the plaintiff had acquired land with a hall built on it from the defendant. Before the agreement was definitively concluded, the notary sent both parties a draft version of the agreement pertaining to the real estate purchase. The draft stated, among other things, that the land had a hall built on it and that the buyer was purchasing the land in its present age-related condition. The notary was more specific in the notarized purchase agreement. For instance, he specified the size of the hall as 640 m². Furthermore, the buyer was to acquire the property together with the furnishings.

The buyer ultimately demanded payment of damages from the seller, justifying this with reference to the hall being only 540 m² and claiming that the fitted kitchen had been removed before the property was handed over. The claim was unsuccessful before the courts of lower instance, as the parties were said to have made no arrangements indicating a specific size for the hall or concerning the sale of furnishings. The BGH, on the other hand, reached a different conclusion.

The Karlsruhe judges ruled that the text of the notarized purchase agreement was of paramount importance. They held that the notarized purchase agreement was a public deed, and that these kinds of documents testify that the statements made correspond with the written content. They also stated that there is a presumption that the deed is complete and accurate. The Court went on to say that this presumption is not rebutted by presenting a contrary draft agreement, since this would contradict the purpose of notarial certification. It concluded that a draft is not sufficient as a conclusive record of the parties“ intentions.

With this ruling, the BGH has once again clearly emphasised the significance of certification by a notary. Before a notarized purchase agreement is signed, its content should therefore be carefully reviewed. Lawyers who are versed in the field of sales of goods law can offer advice.

https://www.grprainer.com/en/legal-advice/commercial-law/sale-of-goods-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

Expiration of holiday entitlements: BAG appeals to European Court of Justice

Expiration of holiday entitlements: BAG appeals to European Court of Justice

Expiration of holiday entitlements: BAG appeals to European Court of Justice

It is common for disputes to arise under employment law concerning compensation in lieu of holiday entitlements. According to German law, holidays that have not been taken expire at the end of the reference period.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: In principle, employees are entitled to a certain number of holidays per year. The issue of whether employees are entitled to compensation of lieu of this if they do not take full advantage of their right to apply for leave of absence is contentious.

According to German law, employees need to request leave of absence for holidays if this entitlement is not to expire without being replaced at the end of the reference period. The employer, on the other hand, is not obligated to set holidays for the employee of its own accord. Having said that, the Bundesarbeitsgericht (BAG), Germany“s Federal Labour Court, has raised the issue of whether European regulations preclude the application of this national rule and appealed to the Court of Justice of the European Union (CJEU) to clarify the matter.

The case in question concerns a worker who was employed for more than 12 years in total as a researcher on the basis of several fixed-term employment contracts. A few weeks before the employment relationship finally came to an end, the employer prompted the researcher to make use of his outstanding holiday entitlement. However, the latter only spent two days on vacation and asked his employer to cash out or compensate him for the remaining 51 holidays.

The courts of lower instance granted his claim for payment in lieu of holidays. The Bundesarbeitsgericht, on the other hand, expressed doubts, stating that according to German case law holiday entitlements expire at the end of the leave year. It went on to say that holiday entitlements generally lapse in the absence of grounds justifying their transfer pursuant to sec. 7 para. 3 sent. 2 of the Bundesurlaubsgesetz (BurlG), Germany“s Federal Holiday Act. Moreover, the employer is not obliged to grant leave of absence if no request for leave is made, or force the employee to go on holiday. The Court held that whether European law precludes the application of these rules under German law has yet to be clarified by the CJEU. The CJEU has since been called on to provide definitive clarity in relation to this issue.

When it comes to legal disputes relating to the workplace or drafting detailed employment contracts, lawyers who are experienced in the field of employment law can offer advice.

https://www.grprainer.com/en/legal-advice/employment-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

Corporate INTL Global Awards 2017: GRP Rainer receives awards for best law firm in the fields of commercial law and tax law

Corporate INTL Global Awards 2017: GRP Rainer receives awards for best law firm in the fields of commercial law and tax law

Corporate INTL Global Awards 2017: GRP Rainer receives awards for best law firm in the fields of commercial law and tax law

GRP Rainer Rechtsanwälte has once again received awards, this time for the year 2017, from Corporate INTL for best law firm in the fields of commercial law and tax law in Germany.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: The renowned British magazine Corporate INTL is one of the leading business magazines for entrepreneurs, consultants and financial service providers. The awards have been allocated annually since 2008. Law firms in a variety of legal fields are among those that receive accolades. As in 2016, the awards for best law firm in the fields of commercial law and tax law in Germany also went to GRP Rainer Rechtsanwälte in 2017. Receiving this prestigious prize for the second time is testament to the fact that GRP Rainer Rechtsanwälte has not only maintained its high level of expertise but continues to build upon this.

In addition to its core competencies in the fields of commercial law and tax law, GRP Rainer also has a great deal of experience and extensive expertise in related legal fields such as business law, corporate and company law, trademark law, antitrust law and competition law. This is the only way we can meet our commitment to provide our clientele with sound and solution-oriented advice from a single source.

The fact that GRP Rainer Rechtsanwälte has once again received these Corporate INTL Global Awards demonstrates that this approach and the commitment of the entire legal team has been well received by our clients, as satisfied clients are a prerequisite to receiving these distinctions. Strict criteria need to be met to be nominated for the awards. The law firms that make the final round of selection are then subject to another thorough review. A major factor here is, of course, the degree of professional expertise, but the quality of the service offered to clients is also assessed.

The accolades from the Global Awards 2017 are a recognition of GRP Rainer“s achievements as well as an incentive for the firm to strengthen its distinguished reputation as an international law firm and further build on its expertise. In this way, we can continue to meet the high standards in providing solid legal advice in the global economy.

https://www.grprainer.com/en/legal-advice/commercial-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

CJEU: Labour leasing through members of a sisterhood

CJEU: Labour leasing through members of a sisterhood

CJEU: Labour leasing through members of a sisterhood

The members of a sisterhood may also fall within the ambit of the regulations pertaining to what is termed labour leasing or temporary employment. That was the verdict of the Court of Justice of the European Union (CJEU) in its ruling of November 17, 2016 (Az.: C-216/15).

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: The directive on temporary employment might also apply in the event that a sisterhood lends out its members to clinics and nursing facilities. The was the verdict of the Court of Justice of the European Union.

While the sisterhood as a registered association does not aim to generate a profit, its members carry out their activities full time either at the sisterhood or within the scope of loan-out agreements in clinics as well as other healthcare and nursing facilities in return for monthly remuneration. In addition, the members receive other benefits such as holiday entitlements and continued payment of remuneration in the event of sickness.

One member of the sisterhood was supposed to be sent to provide nursing services at a hospital based on what is referred to as a „Gestellungsvertrag“ (loan-out agreement) between the clinic and the sisterhood, with the clinic bearing the staff costs and paying an administration fee. However, the works council exercised its veto against this, arguing that lending out the woman on the proposed basis was not temporary and violated Germany“s Arbeitnehmerüberlassungsgesetz (AÜG) [Temporary Employment Act]. The clinic claimed that members of the sisterhood were not employees according to national law, as no employment contract existed between them and the sisterhood.

The CJEU held that even if the members of the sisterhood were not employees under German law, there were many indications that they were employees pursuant to the directive on temporary employment. This is because the members offer their labour and receive remuneration in return. The Court ruled that there were a number of indications that also revealed that the members of the organization enjoyed the same protection as employees. It went on to say that it was irrelevant whether the sisterhood intended to turn a profit. It offers services and receives compensation in return. For this reason, the Court concluded that it could be assumed that economic activity in terms of the directive on temporary employment was being carried out. As such, the CJEU proceeded on the assumption that the directive on temporary employment was applicable here as well. The final decision needs to be made by the Bundesarbeitsgericht, Germany“s Federal Labour Court.

Labour leasing is an important factor for many businesses and industries. Lawyers who are experienced in the field of employment law can advise on issues relating to temporary employment.

https://www.grprainer.com/en/legal-advice/employment-law/temporary-employment.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

LAG Rheinland-Pfalz: Dismissal with immediate effect for causing serious offence valid

LAG Rheinland-Pfalz: Dismissal with immediate effect for causing serious offence valid

LAG Rheinland-Pfalz: Dismissal with immediate effect for causing serious offence valid

Seriously offending one“s work colleagues constitutes good cause justifying exceptional notice of dismissal with immediate effect. That was the verdict of the Landesarbeitsgericht (LAG) Rheinland-Pfalz [Regional Labour Court of Rhineland-Palatinate] (Az.: 4 Sa 350/15).

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: Even if there is a relaxed atmosphere at a given workplace, boundaries still need to be observed. Seriously offending work colleagues, for instance, cannot be justified with reference to an easy-going atmosphere. On the contrary, it may result in exceptional notice of dismissal with immediate effect, as demonstrated by a ruling of the Landesarbeitsgericht Mainz from May 18, 2016.

In the instant case, a nurse had received both exceptional notice of dismissal with immediate effect and, in the alternative, ordinary notice of dismissal. She had seriously offended a colleague multiple times in a text. This wasn“t the first time that the nurse had drawn attention to herself, having already received a formal written warning for causing offence, among other things. Her action for unfair dismissal was unsuccessful.

The LAG Rheinland-Pfalz held that there had been good cause rendering dismissal with immediate effect effective, stating that seriously insulting one“s work colleagues could constitute a severe violation of an employee“s duties and is in and of itself sufficient to justify exceptional notice of dismissal with immediate effect. The Court ruled that in view of the severity of the breach of duty, the present case did not require a previous formal warning. Nonetheless, the nurse had already received a formal warning for similar conduct. Moreover, after weighing up the respective interests, there was still no grounds for precluding exceptional notice of dismissal. The Court went on to say that while the nurse“s nearly 20 years with the employer spoke in her favour, an employer cannot be expected to tolerate causing serious affront to work colleagues. It stated that the nurse“s conduct was liable to irreparably damage peace within the workplace. Taking into account all of the circumstances, the Court concluded that it was no longer reasonable to expect the employer to continue the employment relationship, not even until the notice period of dismissal had expired.

Notwithstanding this, whether exceptional notice of dismissal with immediate effect is effective is always a decision that is made on a case-by-case basis. The decisive factor is the weighing up of interests. If more weight ought to be given to the employer“s interest in terminating the employment relationship, it is possible for exceptional notice of dismissal to be effective. That is why notice of dismissal should always be well prepared. Lawyers who are experienced in the field of employment law can advise employers on matters relating to dismissal as well as other legal issues.

https://www.grprainer.com/en/legal-advice/employment-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

Removal and dismissal of a GmbH managing director

Removal and dismissal of a GmbH managing director

Removal and dismissal of a GmbH managing director

If a GmbH, a type of German private limited company, wishes to part company with a manging director, simply dismissing him won“t cut it. The managing director also needs to be removed from his post.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: The managing director of a GmbH is not comparable with a „normal“ employee. From a legal perspective, he fulfils a dual function. This dual function also needs to be borne in mind for the purposes of dismissal.

The GmbH managing director represents an executive body of the company and has corresponding rights and duties. He is appointed to and dismissed from his post by the shareholders, or rather the general meeting of the shareholders. The managing director“s appointment can be revoked at any time. By removing him from his post, the managing director“s status as an executive body is brought to an end. However, this alone does not complete the managing director“s disassociation.

This is because the managing director also has an employment relationship. His duties and responsibilities are normally laid out in the management agreement. This agreement needs to be terminated by issuing ordinary or exceptional notice as well for the reciprocal contractual claims to lapse. As in the case of removing a managing director from his post, the shareholders, or rather the general meeting of the shareholders, are entitled to dismiss him.

In the case of exceptional notice of dismissal with immediate effect, there needs to be good cause for notice to be effectively issued. There may be good cause, e.g. if the managing director regularly disregards the shareholders“ instructions, it is possible to prove that he committed criminal conduct, or a serious breach of trust was committed in some other manner. Ultimately, there needs to be good cause rendering it impossible for the company to continue to work together with the managing director until expiry of the notice period for dismissal.

The notice periods for dismissal are generally relatively short, but they can vary. This is particularly true if the managing director is not one of the shareholders. In that case, the statutory notice periods for dismissal need to be observed. Notwithstanding this, notice periods for dismissal can also be agreed to in the management agreement.

To ensure that the parting of ways between the GmbH and the managing director goes smoothly and is in the interests of both parties, important points ought to be regulated in the management agreement. Lawyers who are versed in the field of company law can advise shareholders and managing directors.

https://www.grprainer.com/en/legal-advice/company-law/managing-director.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

GRP Rainer Rechtsanwälte: Experience dealing with liability claims against GmbH managing directors

GRP Rainer Rechtsanwälte: Experience dealing with liability claims against GmbH managing directors

GRP Rainer Rechtsanwälte: Experience dealing with liability claims against GmbH managing directors

The managing director of a GmbH, a type of German private limited company, is exposed to considerable liability risks. Legal advice ought to be urgently sought to minimize these risks as well as in the event of something happening that raises the issue of liability.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: One of the reasons businessmen frequently opt for the GmbH as their chosen corporate form is the comparatively low risk of liability associated with it. Notwithstanding this, GmbH managing directors are faced with significant personal liability risks. The law firm GRP Rainer Rechtsanwälte has a great deal of experience in the field of company law in addition to related legal fields, and can utilize its expires to minimize a GmbH managing director“s risk of liability.

GmbH managing directors can be faced with liability claims from two sides. On the one hand, they may be liable to the company itself (internal liability). On the other hand, third parties may bring claims against them (external liability).

A managing directors is essentially obligated to manage the company properly, i.e. he must exercise the care of a prudent businessman. If he violates his duties, this may give rise to liability claims against him brought by the company. Breach of duty entails culpability, whether this involves an intentional or standard violation of duty. Poor business decisions do not constitute a breach of duty.

The managing director“s duties also include ensuring that taxes and social security contributions are properly paid and timely filing for insolvency in the event that the company is faced with the imminent prospect of insolvency or over-indebtedness. If he breaches these duties, this may give rise to third-party liability claims.

It is possible to take various different preventative measures to minimize these private liability risks. Particular attention ought to be paid here to the way in which agreements are drafted. Moreover, it is advisable to take out a D&O insurance policy with sufficient coverage. The insurance policy should be tailored to the specific liability risks in question.

With its experience and high level of expertise, GRP Rechtsanwälte can advise on drafting agreements and concluding liability insurance for managers and thus exclude or at least minimize major liability risks. If, however, the worst does come to pass and claims are asserted against the managing director, it is also possible to assess whether the managing director violated one of his duties in the first place and ideally fend of the claims or reach an out-of-court settlement between the parties.

https://www.grprainer.com/en/legal-advice/company-law/managing-director.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

Company officially removed from commercial register due to lack of assets

Company officially removed from commercial register due to lack of assets

Company officially removed from commercial register due to lack of assets

It is possible for the removal of a company from the commercial register to be instigated by the competent authorities due to a lack of assets. Those who wish to oppose such a move should act immediately.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: Should a company no longer have any assets that can be drawn on for the purposes of satisfying creditors or distributing among shareholders, the company may be officially removed from the commercial register. If the shareholders take the view that there are in fact still assets available, they ought to take timely action and adduce evidence to this end. This was demonstrated by a ruling of the Kammergericht (KG) Berlin, Berlin“s Higher Regional Court (Az.: 22 W 43/15).

In the case in question, the removal of a GmbH, a type of private limited company in Germany, was instigated by the relevant authorities because of a lack of assets. One shareholder“s objection to the removal was unsuccessful, as he failed to submit any documents proving the existence of assets despite being asked to do so repeatedly. Around ten years after the company“s removal from the commercial register, the shareholders resolved to continue the business. However, their attempt to re-enter the company in the commercial register failed.

The KG Berlin held that if a GmbH was removed due to a lack of assets, this entry should not be removed again solely because assets were still available at the time the decision was made to remove the company from the register.

The Court stated that while it is possible to re-enter a company in the commercial register, this can only happen if an essential condition had not been met for the purposes of removing the company due to a lack of funds. This was said not to be the case here. The Court went on to say that the shareholders had been granted sufficient time to react and lodge an appeal, but this did not occur. It ruled that the fact that assets were available at the time the company was removed from the register did not itself mean that the removal was erroneous. This is true not only if undetected assets were available, but also if they could not be ascertained in the course of the orderly investigation. This would only not be the case if the company had still been commercially active, meaning that the official application for removal would have been erroneous. Moreover, the Court noted that the company had been removed from the register for about ten years and measures long since put in place to wind up the company.

Lawyers who are experienced in the field of company law can advise on all issues concerning companies, from their founding to their dissolution.

https://www.grprainer.com/en/legal-advice/company-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

BGH: GbR can terminate tenancy agreement if there is a need to make personal use of the property

BGH: GbR can terminate tenancy agreement if there is a need to make personal use of the property

BGH: GbR can terminate tenancy agreement if there is a need to make personal use of the property

A Gesellschaft bürgerlichen Rechts (GbR) [a type of German partnership constituted under civil law] is able to terminate a tenancy agreement if it needs to make use of the property itself. That was the verdict of the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court, in its judgment of December 14, 2016 (Az.: VIII ZR 232/15).

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: It is common knowledge that landlords are able to terminate a tenancy agreement if they need to make use of the property themselves. The point at issue in the case in question was whether a GbR is also allowed to terminate a tenancy agreement for the same reason. The BGH has since clearly addressed this issue with its recent ruling. According to this, a GbR is able to terminate a tenancy arrangement if one of the partners or one of his relatives needs to make personal use of the property.

In the instant case, a GbR consisting of four shareholders had terminated a tenancy agreement and justified this with reference to the daughter of one of the shareholders needing to make personal use of the property. However, the tenants who had hitherto been living in the five-room apartment refused to accept the termination. The dispute was heard by various courts. Both the Amtsgericht and the Landgericht München (District and Regional Courts of Munich) dismissed the action for eviction, stating on the one hand that the GbR had omitted to offer the tenants a vacant two-room apartment and that a GbR is prohibited for reasons relating to the protection of tenants from terminating a tenancy agreement because of a personal need to make use of the property.

Nonetheless, the BGH took a different view. The fact that the two-room apartment had not been offered as an alternative did no render termination ineffective. It went on to say that this merely constituted a breach of contractual obligations, which could potentially give rise to damages claims.

The Court also held that a GbR is entitled to terminate if there is a need to make personal use of the property. It ruled that a GbR partner declaring that he needs to make personal use of a property is comparable to joint ownership or a community of heirs on the key points, it also being possible to issue notice of termination in relation to these due to a need to make personal use of the property. The Court concluded that even a lack of clarity regarding the circumstances of the partnership could not justify placing a GbR in a less favourable position than a co-owner or community of heirs.

This ruling delivered by the BGH has bolstered the rights of GbRs. At the same time, it has also opened another door to communities of heirs. When properties are passed on to communities of heirs, this frequently gives rise to problems. Establishing a company or partnership can potentially make it significantly easier to manage the properties, as the provisions of company law afford more possibilities here.

Lawyers who are versed in the fields of company law and succession law can offer advice.

https://www.grprainer.com/en/legal-advice/company-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

Exemption from liability for GmbH managing directors

Exemption from liability for GmbH managing directors

Exemption from liability for GmbH managing directors

The managing director of a Gesellschaft mit beschränkter Haftung (GmbH), a type of private limited company in Germany, may be faced with liability claims if he breaches his obligations. That being said, it is possible under certain circumstances for him to request a full exemption from liability.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: The managing director of a GmbH can be held personally liable if, for instance, he breaches his duty of cure to the company or fails to ensure proper payment of public charges such as taxes. Personal liability looms particularly large if he does not file for insolvency on time.

However, in this regard, the managing director can also end up between a rock and a hard place. This might be the case, e.g. if he highlights the company“s impending over-indebtedness or insolvency to the shareholders, who subsequently prohibit him from filing for insolvency on behalf of the company. To see off this risk, he may then be able to request that the shareholders grant him a full exemption from liability. The Landgericht (LG) München [Regional Court of Munich] recognized this claim in its ruling of May 22, 2015 (Az.: 14 HK O 867/14).

The Landgericht München held that the managing director of a GmbH can request a full exemption from liability to see off any risks he might be faced with, particularly with reference to sec. 64 of the GmbHG (act regulating GmbHs), if the shareholders of the GmbH refuse to approve the managing director“s wish to file for insolvency at the point when insolvency is an imminent prospect. In this context, it is possible to establish „imminent insolvency“ by citing evidence.

The LG München went on to say that even if insolvency is imminent, the managing director is only free from risk when filing for insolvency if the shareholders approve this motion. Failing this, he risks rendering himself liable to pay damages vis-à-vis the company. Having said that, impending insolvency can quickly progress to actual solvency. The Court stated that the managing director is then subject to unlimited personal liability, whereas the shareholders are only liable to the value of their investment.

To this extent, claiming exemption from liability offsets the constant risk of being faced with personal liability as a managing director if insolvency goes from an imminent prospect to a reality.

Agreements between shareholders and managing directors ought to be prepared in as much detail as possible and a satisfactory D&O (directors and officers) insurance policy taken out to prevent legal disputes from occurring. Lawyers who are experienced in the field of company law can advise and represent shareholders and managing directors.

https://www.grprainer.com/en/legal-advice/company-law/managing-director.html

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