Stock Corporation: Aktienrecht

What does company or stock law cover?

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

What are the special features to be considered when setting up an AG?

Due to the strictness of the articles of incorporation, the possibilities for designing the articles of incorporation of a stock corporation are limited. The AG has a share capital divided into shares. The share capital serves to secure the creditors. At least one person as founder must establish a statute (articles of association of the AG). The foundation must be notarised. The certificate of incorporation must state the founders, in the case of par value shares the nominal amount, in the case of no-par value shares the number, the issue amount and the class of the shares each founder takes over as well as the paid-up amount of the share capital.

The articles of association must include at least the following:

the name and registered office of the company;

the object of the company;

the amount of the share capital;

the division of the share capital into shares with a fixed or no par value, the number and class of the shares;

whether they are bearer shares or registered shares;

the number of members of the Management Board or the rule according to which this number is determined;

provisions on the form of the Company’s announcement;

the total expenditure incurred by the company in establishing the joint stock company.

Following the amendment of the Companies Act in mid-1994 (“small public limited company”), even in the case of formation, a minimum number of shareholders is no longer required. The formation of a one-man AG is also possible. Founders of an AG can be natural and legal persons, including foreign ones, and commercial partnerships (oHG, KG and EEIG).

The share capital of an AG is at least 50,000 euros, regardless of whether the capital market is used. The capital can be provided in the form of cash or non-cash contributions. According to § 27 I AktG, contributions in kind must already be specified in the articles of association.

An AG can pursue almost all purposes that are legally permissible. By law, the AG is always considered a commercial company regardless of the purpose actually pursued (form trader).

The company name is the name under which the AG is registered in the commercial register and under which it appears in business dealings. The company name of the AG can either be borrowed from the activity of the enterprise (factual company), contain the name of one or more partners (name company) or an imaginary name. Combinations of these elements are also possible, but in all cases the company name must contain an individualising addition. In all cases, the addition “Aktiengesellschaft” or the abbreviation “AG” must be added to the company name.

A trademark and company name search is indispensable for finding a company.

All founders and members of the management board and supervisory board must apply to the court of registration for registration of the company in the commercial register. The application is made by the certifying notary public and is accompanied by the articles of association and the deed in which the articles of association have been established, a calculation of the formation expenses to be borne by the company, documents concerning the appointment of the management board and supervisory board as well as the formation report and audit report and, if applicable, the report of the external formation auditors.

What are the rights and duties of the board?

The management board represents the stock corporation in and out of court and conducts the business. The members of the management board need not be shareholders (external body). The composition of the management board is governed by the articles of association. It can consist of one or more persons. The employment contract of the members of the AG’s management board is a service contract.

The actual management of the company is the sole responsibility of the management board. It acts on its own responsibility. The power of management is in principle unlimited (unless the approval of the Supervisory Board is required). The Executive Board represents the AG externally. The power of representation is in principle unrestricted.

The members of the Management Board are not liable to third parties for the company’s liabilities, nor do they have to reimburse the company internally for losses incurred during the period of their management. The entrepreneurial risk is borne solely by the company. However, the members of the Management Board are legally obliged to conduct business with the diligence of a prudent businessman. If a member of the Management Board violates this obligation in relation to the Company, this may result in claims for damages by the Company.

What rights and duties does the supervisory board have?

The main function of the Supervisory Board is to appoint, recall and monitor the Management Board in its management of the company (control function). It is responsible for convening the Annual General Meeting, if the welfare of the company so requires, for examining the annual financial statements, the management report and the proposal for the distribution of profits. The Supervisory Board consists of at least three members. The articles of association may provide for more members, but the number must be divisible by three. In principle, any natural person is eligible for election. The members of the Supervisory Board are published in the Commercial Register. The Supervisory Board itself may neither perform management actions nor issue instructions to the Executive Board. All members of the supervisory board, whether as representatives of the shareholders or as such of the workforce, have the same rights and duties. We also advise members of the Supervisory Board on how to exercise their rights of participation, in compensation matters and liability cases.

What does the Annual General Meeting do?

The Annual General Meeting is the voice of the shareholders. It is therefore the body of shareholders in which they exercise their rights in relation to the AG. The Executive Board is responsible for convening the Annual General Meeting. A number of formalities must be observed when convening and holding the Annual General Meeting. The General Meeting can only decide on management issues if the Management Board so requests. It may not issue instructions to it. The General Meeting only has an influence on the management to the extent that it elects the shareholder representatives for the Supervisory Board. In addition, the Annual General Meeting elects the auditor and decides on the appropriation of the net profit. It grants discharge to the Management Board and Supervisory Board. Conflicts under stock corporation law often arise in connection with a general meeting