Tag Archives: Lawyers

Politics Law Society

Bundeskartellamt imposes fines for illegal price-fixing agreements

Bundeskartellamt imposes fines for illegal price-fixing agreements

Bundeskartellamt imposes fines for illegal price-fixing agreements

Germany“s Federal Cartel Office, the Bundeskartellamt, has imposed fines totaling 13.2 million euros on two packaging firms due to illegal price-fixing agreements. The companies had been supplying a commercial chain.

According to the Gesetz gegen Wettbewerbsbeschränkungen (GWB), the German Act Against Restraints of Competition, agreements between companies or „undertakings“ that restrict or prevent competition are prohibited. We at the commercial law firm GRP Rainer Rechtsanwälte note that this ban generally encompasses price-fixing arrangements.

On 3 May 2018, the Bundeskartellamt disclosed that it had imposed fines amounting to a total of 13.2 million euros on two packaging companies due to illegal pricing agreements. Both companies had been supplying a commercial chain with potatoes and onions. According to the Bundeskartellamt, the two companies had been fixing wholesale prices when calculating their weekly offers and in doing so effectively eliminated price competition between the two main suppliers to the chain.

From at least 2005 until the practice was first introduced in May of 2013, the two companies were said to have been regularly in contact by telephone prior to submitting their weekly offers. It was said that they informed each other of their respective wholesale prices for potatoes and onions as well as agreed to a uniform commodity price during these phone calls. The offer directed to the commercial chain was then calculated on the basis of this commodity price. The Bundeskartellamt went on to state that the same or almost the same values were fixed for other cost items as well.

It also noted that when setting the fines, account was taken of the fact that one company cooperated fully with the Bundeskartellamt. It is still possible for appeals to be lodged against the fine notices.

Violations of competition or antitrust law can give rise to severe penalties. These violations need not necessarily be blatant as in the case of illegal price-fixing arrangements. Even certain provisions in contractual clauses can be in violation of antitrust law and sanctioned accordingly. That is why it is advisable to have contracts checked by lawyers who are experienced in the fields of competition and antitrust law with a view to their implications from the perspective of these legal fields. Legal expertise is also necessary if violations of antitrust or competition law have already been committed and claims need to be fended off or enforced.

https://www.grprainer.com/en/legal-advice/antitrust-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.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

LAG Köln – Managing directors cannot claim protection against unfair dismissal

LAG Köln – Managing directors cannot claim protection against unfair dismissal

LAG Köln - Managing directors cannot claim protection against unfair dismissal

A managing director cannot claim protection against unfair dismissal if he or she is under no power of direction when working. In that case, he or she is not to be classified as an employee according to a ruling of the Landesarbeitsgericht (LAG) Köln, Cologne“s Regional Labour Court.

Managing directors are appointed to and removed from their post by way of a shareholders“ resolution. At the same time, they have an employment relationship with the company. Notwithstanding this, they are not automatically classified as employees. An employee is usually bound by instructions. Managing directors, on the other hand, often work independently and can, for instance, decide for themselves where and when they work. We at the commercial law firm GRP Rainer Rechtsanwälte note that if this is the case, they cannot normally be classified as employees and the Kündigungsschutzgesetz, Germany“s Employment Protection Act, does not apply.

In the case before the Landesarbeitsgericht Köln, a managing director and senior partner at an international management consultancy brought an action against termination of his executive employment contract. The action was dismissed at first and second instance.

The plaintiff was hired by the management consultancy in 2004 as „vice president“ (partner) having come from an entirely different field of work. A year later, the parties concluded a transfer agreement, pursuant to which the plaintiff was appointed to the position of managing director and obtained executive status in lieu of his previous employment status. At the same time, the employment relationship that had been in place until then was explicitly terminated. The management consultancy firm had appointed around 100 partners as managing directors, yet initially no entry was made in the commercial register.

The plaintiff had been able to decide where he worked and no fixed timeframe had been prescribed for weekly working hours. He did not need to have his extensive travels approved; they just needed to be handled in accordance with the defendant“s travel guidelines. In 2015, the defendant terminated contractual relations with the plaintiff after the ordinary notice period for termination expired. The latter considered his dismissal unwarranted in social terms according to the provisions of the Kündigungsschutzgesetz.

The LAG dismissed the action in a ruling from 18 January 2018 and refused leave to appeal (Az.: 7 Sa 292/17). The Court held that the plaintiff could not be considered an employee and therefore could not claim protection against unfair dismissal. It went on to state that the employment relationship was explicitly terminated in 2005 and an executive managing director relationship established. Moreover, there was said to be no evidence that the managing director had been bound by instructions as is typical in the case of a standard employment relationship.

Lawyers who are experienced in the field of company law can advise companies and managing directors when drafting agreements as well as in the event of legal disputes.

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.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

BGH – Advertising featuring health claims

BGH – Advertising featuring health claims

BGH - Advertising featuring health claims

Health claims in relation to foods and foodstuffs are only permitted if they do not violate the Health Claims Regulation. This was reaffirmed by the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court (Az.: I ZR 167/16).

When it comes to advertising on foods and foodstuffs featuring health claims, businesses need to make sure that the statements comply with the Health Claims Regulation. The health claims must refer to the substance and not the product, or the positive effect claimed has to have been scientifically proven. We at the commercial law firm GRP Rainer Rechtsanwälte note that the advertising is otherwise in violation of the Health Claims Regulation as well as competition law.

In a judgment from December 6, 2017, the Bundesgerichtshof clarified once again that the term „detox“ represents a specific health claim and dismissed an appeal lodged by a tea producer against a ruling from the Oberlandesgericht (OLG) Bamberg, Bamberg“s Higher Regional Court (Az.: 3 U 32/16). The tea producer had promoted two herbal tea blends using the term „detox“. A competition association brought an action against this, arguing that the term was misleading and an impermissible health claim. The OLG Bamberg granted the action.

The Court stated that the term „detox“ would give the average consumer the impression that the tea has a detoxifying effect and improves the state of one“s health. It was said to represent a specific health claim that was impermissible in the absence of scientific evidence. The appeal against the ruling was dismissed by the BGH. It held that the term „detox“ is not merely a general reference to health benefits but rather a specific health claim.

The BGH went on to say that if consumers understand the detoxifying effect on the body attributed to the products by the term in question to be physiological in nature and there is in fact no such effect and it therefore cannot be scientifically proven, then such specific health claims are impermissible.

Regarding the question of whether marketing teas using the term „detox“ can be reconciled with the Health Claims Regulation, the BGH concluded with reference to the judgments of the OLG Celle and OLG Düsseldorf that there is now an established line of case law.

When it comes to advertising featuring health claims, violations of competition law are easily committed. These can result in formal warnings, damages claims or injunction suits. Lawyers who are versed in the field of competition law can assist businesses in fending off as well as enforcing claims arising from violations of competition law.

https://www.grprainer.com/en/legal-advice/ip-law/trademark-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.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

BGH – Resale price maintenance is an unlawful restriction of competition

BGH – Resale price maintenance is an unlawful restriction of competition

BGH - Resale price maintenance is an unlawful restriction of competition

Resale price maintenance restricts competition and therefore usually constitutes a violation of antitrust law. This was reaffirmed by the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court, in a ruling from October 17, 2017 (Az.: KZR 59/16).

In the case of resale price maintenance, manufacturers obligate their buyers to sell goods at a fixed price or not to go below a minimum price. We at the commercial law firm GRP Rainer Rechtsanwälte note that this generally constitutes a violation of the Gesetz gegen Wettbewerbsbeschränkungen (GWB), Germany“s Act against Restraints of Competition, and Art. 101 of the Treaty on the Functioning of the European Union (TFEU), according to which agreements that may affect trade between Member States are prohibited.

This was reaffirmed by the Bundesgerichtshof. In the case in question, a manufacturer of dietetic products that sold its goods in pharmacies, among other places, offered the pharmacies a 30 per cent discount provided they not undercut a certain retail price for the product. A center for protection against unfair competition brought an action against this practice. It considered the offer a minimum pricing agreement and thus a violation of the GWB and Art. 101 TFEU.

While the action for an injunction was successful at first instance, the Oberlandesgericht (OLG) Celle, Celle“s Higher Regional Court, overturned the ruling and dismissed the action. It argued that while the agreement on a lower price limit did represent resale price management and violated antitrust law, no appreciable restriction of competition could be established in the present case because the discount had a fixed term and was limited to a one-time purchase of 12 to 90 cans.

The BGH did not follow this line of reasoning and reaffirmed the ruling at first instance. The Cartel Panel held that the agreement on a minimum purchase price constituted an appreciable restriction of competition, reasoning that it leads to businesses being restricted in their freedom to set the retail price as they see fit. The Court went on to say that for the purposes of assessing whether a restriction of competition is appreciable, it does not come down to each individual intended agreement but rather their impact as a whole. The discount was found to have applied to the whole of Germany. As such, the potential order volume encompassed approx. 1.8 million cans subject to the relevant price restriction. The BGH concluded that this represented more than a minor restriction of competition.

Violations of antitrust or competition law can give rise to severe penalties. Lawyers who are experienced in the fields of antitrust and competition law can advise businesses.

https://www.grprainer.com/en/legal-advice/antitrust-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.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

OLG Karlsruhe – No blanket reimbursement of commercial agents‘ „Stornoreserve“

OLG Karlsruhe – No blanket reimbursement of commercial agents‘ „Stornoreserve“

OLG Karlsruhe - No blanket reimbursement of commercial agents

Following termination of a commercial agency agreement, companies cannot blanketly retain what is referred to in Germany as the „Stornoreserve“ (or simply „cancellation reserves“), i.e. the amount withheld in the insurance sector from the commercial agent in case the policy he or she concluded is cancelled. That was the verdict of the Oberlandesgericht (OLG) Karlsruhe, Karlsruhe“s Higher Regional Court, in a judgment from September 13, 2017 (Az.: 15 U 7/17).

The Stornoreserve is used to guarantee commission payments made in advance in case the agreements concluded by the commercial agent fall through. We at the commercial law firm GRP Rainer Rechtsanwälte can report that the position of commercial agents has been strengthened by a ruling from the Oberlandesgericht Karlsruhe from September 13, 2017. According to the OLG“s judgment, companies cannot blanketly retain accumulated cancellation reserves but must instead provide specific justifications.

In the instant case, the plaintiff had asserted claims for reimbursement of commission following termination of the commercial agency agreement. The respondent, in turn, demanded payment of the Stornoreserve.

Both parties had agreed in the commercial agency agreement that performance-based commission would not be paid in full. Only 90 per cent of the expected commission was credited to a so-called „Diskont-Konto“, a „discount account“, held by the commercial agent. The remaining ten per cent was deposited in a commission reimbursement account. Cancellations were to be initially offset against this account, with any remaining balance being charged to the commercial agent“s Diskont-Konto. After the commercial agency agreement was terminated, the company asserted claims for outstanding amounts.

The OLG Karlsruhe ruled in favour of the commercial agent, stating that if the company demands reimbursement of supposedly overpaid commission or advance payments then it bears the burden of proof. This means that it must be able to provide specific justifications and, where appropriate, supporting evidence for each and every claim for repayment. Accordingly, in the event that agreements are cancelled, the company must be able to cite the reasons for why the agreement was terminated, the time and nature of the notice as well as the commercial agent“s briefing regarding the risk of cancellation, and calculate the amount of commission paid in advance to be reimbursed. The Court went on to say that the company“s burden of proof also entails that enough revisionary work have been carried out, albeit unsuccessfully, or that this have exceptionally been unnecessary. The OLG concluded that this had not been the case here.

It is not uncommon for disputes to arise after commercial agency agreements are terminated, e.g. because of claims brought by the commercial agent for compensation or, as in this case, reimbursement of commission. Lawyers who are experienced in the field of commercial law can offer advice.

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

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

Post-contractual prohibition on competition and compensation for interim period

Post-contractual prohibition on competition and compensation for interim period

Post-contractual prohibition on competition and compensation for interim period

A post-contractual prohibition on competition is a reciprocal agreement. If one party fails to perform the work or service as agreed, then the other side is entitled to rescind the agreement.

It is common for employment contracts as well as commercial agency agreements to include a post-contractual prohibition on competition. This entails the employee or commercial agent undertaking not to compete with his or her former employer or business for a certain period of time after their contract has been terminated. In return, he or she receives compensation for the interim period. A post-contractual prohibition on competition is thus a reciprocal quid pro quo agreement. We at the commercial law firm GRP Rainer Rechtsanwälte note that if one party fails to adhere to the arrangement, this entitles the other side to rescind the agreement. However, rescission would only have ex nunc effect, i.e. its effects would be limited to the period starting from when rescission takes effect onwards. This was clarified by the Bundesarbeitsgericht (BAG), Germany“s Federal Labour Court, in a judgment from January 31, 2018 (Az.: 10 AZR 392/17).

The decision to rescind a post-contractual prohibition on competition ought to be carefully considered and not made in haste, as demonstrated by the case that came before the BAG. Here, the employee terminated the employment relationship with effect from January 31. The employment contract included a three-month post-contractual prohibition on competition. In return, the employee was supposed to receive compensation for the interim period. Yet even after several weeks had passed following termination of the employment relationship and despite being requested to pay the compensation, the employer failed to do so. The ex-employee subsequently informed his former employer by email of March 8 that he no longer considered himself bound by the prohibition on competition. In addition, he sued for payment of the compensation for the agreed interim period of three months, stating that he had only rescinded the prohibition on competition out of spite.

The BAG nonetheless held that this did not render the rescission invalid. It went on to say that the plaintiff had been entitled to withdraw from the agreement because of the other party“s failure to pay the compensation agreed for the interim period and that the rescission had ex nunc effect. This meant that the plaintiff was entitled to pro rata compensation for the period from February 1 to March 8, but not for the remaining weeks.

Lawyers who are experienced in the field of employment law can offer advice when drafting agreements and post-contractual prohibitions on competition.

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.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

CJEU – Selective prohibition on sale of luxury items

CJEU – Selective prohibition on sale of luxury items

CJEU - Selective prohibition on sale of luxury items

In a ruling from December 6, 2017, the Court of Justice of European Union (CJEU) held that a selective distribution system for luxury items does not constitute a violation of the prohibition on restrictive practices under EU law if certain conditions are fulfilled.

Suppliers of luxury items can prohibit their authorized dealers from selling items online via third-party platforms such as Amazon or eBay. In a judgment from December 6 of 2017, the Court of Justice of the European Union established that this does not constitute a violation of competition law or the prohibition on restrictive practices under EU law (Az.: C-230/16). The CJEU ruled that a selective distribution system for luxury items that is designed primarily to maintain a luxury image is acceptable as long as certain conditions are fulfilled.

According to the ruling, the prohibition on restrictive practices under EU law is considered not to have been violated if the resellers are selected on the basis of objective criteria of a qualitative nature, and these are applied consistently to all resellers under consideration without discrimination. At the same time, the CJEU ruled that the established criteria cannot extend beyond what is necessary.

The case before the CJEU concerned the sale of luxury items via third-party platforms online. The business sold luxury cosmetics in Germany. To maintain the luxury image of some of its brands, these cosmetics are sold through a selective distribution network. To this end, the authorized dealers must meet certain requirements regarding the environment, facilities and equipment. While they are allowed to sell the luxury items online on their own homepage, they are prohibited, on the other hand, from selling the items online via third-party platforms that are recognizable to consumers. One authorized dealer nevertheless decided to sell the items on Amazon. The company brought a legal action against this citing the contractual prohibition. However, the Oberlandesgericht (OLG) Frankfurt, Frankfurt“s Higher Regional Court, had doubts concerning whether the prohibition clause is valid or whether it violates the prohibition on competition. It therefore referred the matter to the CJEU.

The Court of Justice found the clause to be valid provided the conditions mentioned above are fulfilled. We at the commercial law firm GRP Rainer Rechtsanwälte note that the Court held that the prohibition on restrictive practices under EU law does not preclude the use of a contractual clause if it serves to maintain the luxury image of the goods in question. Notwithstanding this, the ruling likely raises questions. It will need to be clarified on a case-by-case basis where high quality ends and luxury begins. Lawyers who are versed in the fields of competition and antitrust law can offer advice in the event disputes between distributors and companies.

https://www.grprainer.com/en/legal-advice/antitrust-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.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

BGH – Managing directors acting as front men can also be held liable

BGH – Managing directors acting as front men can also be held liable

BGH - Managing directors acting as front men can also be held liable

Formal managing directors who are only appointed to act as front men are subject to criminal liability as well. This was reaffirmed by the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court, in a ruling from October 13, 2016 (Az.: 3 StR 352/16).

A managing director who fails to fulfill his or her obligations may be held liable. There are many examples in practice of companies with a de facto managing director who is not registered in the commercial register but is effectively responsible for managing the business, and a formal managing director who barely has any internal responsibilities and serves merely as a front man. The managing director acting as a front man can nonetheless be held accountable under criminal law as well. We at the commercial law firm GRP Rainer Rechtsanwälte report that this principle has been reaffirmed by the Bundesgerichtshof.

In the case in question, the accused was the formal managing director of a Gesellschaft mit beschränkter Haftung, a type of German private limited liability company commonly known and referred to as a „GmbH“. In practice, business was conducted by another person. Charges were brought against the formal managing director because of the company“s failure to ensure proper payment of social security contributions.

The accused was registered as the sole managing director and appointed by way of a shareholder resolution. The BGH held that this status as formal managing director alone justified her being held accountable as a corporate body vis-à-vis third parties, which is why it had been her duty to ensure proper payment of social security contributions. The fact that there was another person with such extensive decision-making powers and responsibilities that they were viewed as the de facto managing director did not preclude this conclusion.

The Court went on to say that even if the formal managing director has no significant internal responsibilities and serves merely as a front man, this does not absolve him or her of criminal liability. A person who is formally appointed as managing director was said to have the capacity, both in law and in practice, to carry out the full scope of actions associated with this position at all times, with accountability stemming from his or her status as a corporate body. The BGH further ruled that even a managing director who is appointed only as a matter of form is not incapable of ensuring proper payment of social security contributions despite lacking responsibilities; if necessary, the managing director acting as a front man would have to turn to the courts for help in exercising his or her rights. Otherwise, he or she would have to resign from their post.

Lawyers who are experienced in the field of company law can serve as qualified advisors in relation to matters concerning the liability of managing directors.

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.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

GRP Rainer Rechtsanwälte – Experience suggests planning for business succession early on

GRP Rainer Rechtsanwälte – Experience suggests planning for business succession early on

GRP Rainer Rechtsanwälte - Experience suggests planning for business succession early on

Business succession is an issue that preys on the minds of many small and medium-sized enterprises and family-run businesses. Yet finding a suitable successor can prove challenging.

In the coming years, business succession will be on the agenda of a lot of small and medium-sized companies and family-owned businesses. While searching for a suitable successor to manage the company at the highest level is of utmost importance for the survival of the business, our experience at the commercial law firm GRP Rainer Rechtsanwälte suggests there is a tendency to kick the matter into the long grass. There are several reasons for this: One the one hand, the uncertainty resulting from tax reforms is increasingly playing a role, and on the other hand, emotional reasons can make it difficult for those in charge of companies to entrust others with the fate of their business.

Demographic trends are also making it harder to find a suitable successor. More and more bosses are set to retire. At the same time, there are fewer and fewer young people available to take up the reigns. It is therefore all the more important to make plans for business succession and implement these in good time.

In the case of family-run businesses, the expectation is often for the baton to be passed on to the next generation. In doing so, it is important to consider the implications both from a tax perspective as well as with respect to succession law. One also needs to address the issue of whether, for instance, one“s own children are even interested in continuing the business, or whether they have the necessary qualifications.

Another option is to sell the business. Preparations ought to be made well in advance of the sale. In addition to searching for a potential buyer, priority should also be given to valuating the business in order to determine an appropriate selling price. It is equally important to account for existing employment contracts and inheritance claims. Depending on its corporate form, the business could also potentially be sold to a fellow partner or shareholder.

Business succession is a complex subject in relation to which a number of legal aspects need to be considered. Long-term and forward-looking planning is therefore essential. Lawyers who are experienced in the field of company law can offer advice when searching for a suitable successor and ensure a smooth transition.

https://www.grprainer.com/en/legal-advice/private-clients/law-of-succession/business-succession.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.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politik Recht Gesellschaft

GRP Rainer Rechtsanwälte – Experience in resolving shareholder disputes

GRP Rainer Rechtsanwälte – Experience in resolving shareholder disputes

GRP Rainer Rechtsanwälte - Experience in resolving shareholder disputes

If a dispute among shareholders cannot be resolved, it is in the interests of all parties involved to come to a solution that does not jeopardize the company“s existence.

While shareholders are usually in agreement about the strategy and objectives of the business when the company is being established, this harmony can give way to differences of opinion between the shareholders as the years go by, e.g. regarding the company“s future direction or filling the position of managing director. If both sides remain stubborn and the dispute cannot be resolved, it becomes necessary to find suitable solutions for the benefit of the company.

Our experience at the commercial law firm GRP Rainer Rechtsanwälte shows that two options typically present themselves as a way of ending a shareholder dispute: redemption of a shareholder“s shares or removal of the managing director. A company“s central decision-making body is the general meeting of the shareholders, and it is here that shareholders“ voting rights play a pivotal role.

Removing a shareholder-managing director can prove problematic, since he or she is also entitled to vote and may thus be able to prevent his or her removal. To prevent him or her from exercising their right to vote, the removal needs to proceed on the basis of good cause or the shareholder-managing director must be clearly incapable of properly conducting business. One example of good cause justifying removal is a gross dereliction of duty by the managing director, for instance in the form of balance sheet manipulation, accepting bribes, tax evasion, unauthorized use or disposal of company assets, or persistent disregard of instructions from the shareholders. Mere mistrust of the shareholder-managing director does not justify loss of his or her voting rights.

Redemption of a shareholder“s shares requires objective justification based on grounds incorporated into the articles of association. Examples of relevant grounds include the shareholder becoming insolvent, compulsory execution being levied against his or her shares, or divesting shares to ineligible persons under the articles of association.

Complex legal regulations need to be observed in the context of a dispute among shareholders. It is equally important not to ignore tax implications. Lawyers who are experienced in the field of company law can serve as competent advisors in trying to find appropriate solutions.

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