Corporate Law – Glossary

Stock Corporation Law

Stock corporation law is a special corporate law of the stock corporation and the actors involved. It is regulated, among other things, by the Stock Corporation Act. Legal advice ranges from the formation of a stock corporation to all questions of company law in the course of its existence. This can concern shareholders and partners, forms of shares, management, supervisory board, executive board, general meetings (ordinary and extraordinary), company purchases and sales as well as the handling of interests of individuals against an AG or the defence of management bodies and the AG against such positions.

Banking Law

From the preparation of banking and financing transactions, we advise and support the avoidance and elimination of problem areas. We are active in the area of deposits and credit transactions in credit security law, with a focus on guarantees and surety law, leasing, factoring and all variants. In our dealings with banks, we examine general terms and conditions, current account relationships as well as securities, issue and investment transactions. We have always advised on capital investment law and also represent injured investors here with investment companies of all economic levels worldwide.


According to § 43 GmbHG, the managing directors must exercise the diligence of a prudent businessman in the affairs of the company. This results, for example, in the following obligations: To run the business of the GmbH profitably in the long run, not to damage the name and reputation of the GmbH, but to improve it, to act entrepreneurially, but not to take every business risk, to put one’s own interests at the back and always to protect the advantage of the GmbH in conflicts of interest. If the managing director violates his duties, he is obliged to pay compensation to the GmbH. Liability towards the GmbH is excluded if the managing director acts on the express instruction of the shareholders, unless the instruction violates a legal prohibition or morality.

Corporate Forms

Company law regulates the internal and external relationships of associations of persons for specific purposes. Companies are divided into partnerships and corporations. Partnerships include:

  • GbR Civil law partnership
  • PartG Partnership
  • OHG General partnership
  • Partner shipping company
  • EEIG European Economic Interest Grouping
  • KG Limited partnership
  • Still Partnership

“Stock Corporation” includes:

  • GmbH Limited liability company
  • UG (limited liability) Entrepreneurial company
  • AG Stock corporation
  • KGaA Limited partnership limited by shares
  • SE European Company
  • eG registered cooperative
  • Corporations of foreign origin (Ltd – Limited, PLC – Public Liability Company, S.A. – French/Spanish AG etc.).
  • There are also mixed companies such as corporations and partnerships (e.g. GmbH & Co KG).

Formation of a Company

A merger of individuals into a company raises many questions. A choice between various forms of company is necessary. The overall concept under company law requires an optimal orientation also in the foundation phase in order to lay the foundations for a successful business model.

Corporate Law

A particularly important focus of our law firm is corporate law. Our activities range from the formation of companies, management consulting – for example, in the conversion, acquisition and sale of companies – to inheritance law, including succession planning. Our advisory services cover all types of companies, from civil law partnerships, limited partnerships, general partnerships, limited liability companies and stock corporations to associations and cooperatives. Its activities also include advice on restructuring, company agreements, domination agreements, amendments to articles of association, mergers and spin-offs. This creative activity is supplemented by many years of forensic experience in the field of corporate law disputes, both in the relationship between managing directors/executives and the companies they represent and in disputes between shareholders. In order to optimise the business management services of a company at the interface of company law and tax law, we cooperate with a network which also includes tax consultants and auditors. In addition, we cooperate with notaries’ offices specialized in company law.

Shareholder & Managing Director Stakeholders – Disputes

Shareholder and/or managing director disputes often concern fundamental questions of company law, if equally fundamental actual problems exist. These problem situations often also have something to do with financial issues. As a result, either legally sound compromises can be negotiated or at least one participating managing director or shareholder leaves the company – voluntarily or involuntarily. We advise and represent shareholders, managing directors or the corresponding members in management bodies or owners of the companies, regardless of the legal form of the respective company. A shareholder dispute could exists primarily in companies such as GbR, OHG, KG or GmbH with only a few shareholders. Nevertheless, similar disputes can also arise among significant shareholders.

Business Fundation

A business is (almost) every independent activity with which one earns money. Traders, restaurateurs, craftsmen or producers of goods, for example, belong to the trades. On the other hand, founders who exercise a freelance activity or become self-employed in agriculture and forestry are not to considered businessmen.

Commercial Law

We play on the entire keyboard of commercial law/business law. Forms of distribution, commercial agency and sales force law are becoming increasingly important. We represent well-known national and international trading companies and advise them on the drafting of purchase, licensing, leasing and other contracts in the field of commercial law. This also includes the drafting of general terms and conditions of purchase and sale. Due to our predominantly entrepreneurial client structure, one of our areas of expertise is the drafting of national and international product-related commercial agency or franchise agreements.

Insolvency Law

Insolvency is essentially the bankrupcy of a natural or legal person. The handling of insolvencies is regulated in the Insolvency Code (InsO). The aim of insolvency proceedings is to satisfy all creditors of the insolvent debtor jointly and equally. The orderly procedure, which as a rule leads to a kind of “bankruptcy” at the debtor concerned, is intended to prevent individual creditors from being satisfied in full and other creditors from not being satisfied at all. In addition, the Insolvency Code aims to enable anyone who has failed economically despite honest efforts to make a new economic start by exempting him from his remaining liabilities.

Fundation Law

A foundation is an institution endowed with legal capacity, not organized by an association, which, with the help of assets dedicated to it, is intended to permanently promote a purpose determined by the founder. This sounds complicated and abstract at first. However, many foundations in Germany are proof that this legal form, filled with life, can be very attractive. In principle, however, all legal forms have advantages and disadvantages. Which one ultimately plays a role in the final choice depends on the entrepreneur’s ideas and goals. The advantage of a foundation is that it is not “owned” by anyone, i.e. it has no partners. A foundation cannot therefore be sold. In addition, the purpose of the foundation cannot be changed. This can play a role in individual cases, e.g. when an entrepreneur wants to prevent his heirs from selling his life’s work to the first buyer in a profit maximising way. In detail, there are many details and room for manoeuvre, so that comprehensive legal advice is recommended.

M&A – Mergers & Acquisitions

All departments of our firm can accompany a transaction. This must also be the case in order to solve the individual questions, often clarified by lawyers.

Corporate Succession & Inheritance Law

Inheritance law comprises the legal norms governing the transfer of a person’s property to one or more other persons upon their death. Every person has the fundamental right to bequeath, i.e. to regulate dispositions over property or other rights that can be sold, in order to ensure that his or her own death occurs. Beneficiaries have the right to inherit.

Society Legislation

There are many things to consider from the foundation to the ongoing operation to the termination of an association. If you want to found an association or if you want to get more information about your rights and duties as a member or organ of an association, we are happy to advise you.

Contractual Law

Horak attorneys at law are experienced in all aspects of civil and contractual law. We are accustomed to dealing with the economic concerns of our clients in order to translate them into tailor-made contractual formulations in line with their interests.

It goes without saying that we accompany the interests of our clients after a legal dispute even beyond the confines of the contractual party. We enforce the claims of our clients by way of execution or defend them against insolvency administrators. We help our clients to assert their claims with special knowledge in the field of foreclosure law and the Insolvency Code.

Restraint on Competition

A restriction of a person’s professional or commercial activities in the form of a non-compete obligation is a prohibition on acting for the benefit of another undertaking in the same or a similar line of business.

A statutory non-competition clause exists for the assistants and the Executive Board of the AG. The non-competition clause applies accordingly to the managing director of the GmbH. The non-competition clause can, however, be lifted by the approval of the supervisory board or, in the case of a GmbH, by corresponding clauses in the articles of association.

The statutory non-competition clause only applies during the activity; the so-called post-contractual non-competition clause, which is expressly agreed in the contract after termination of the corresponding contract and is also subject to further conditions of effectiveness, must be clearly distinguished from this. The poaching of customers by former employees can also be anticompetitive.