Stock Corporation Law

Stock cor­por­a­tion law as a field of law re­quires law­yers to have a high level of ex­pert­ise and ex­tens­ive ex­per­i­ence in cor­por­ate law, eco­nom­ics, and tax law. Legal ad­vice on stock cor­por­a­tion law is one of our law firm’s areas of out­stand­ing ex­pert­ise. We ad­vise our cli­ents on all mat­ters re­lat­ing to stock cor­por­a­tion law – from the form­a­tion of a stock cor­por­a­tion to ad­vising the man­age­ment board and su­per­vis­ory board to ad­vising share­hold­ers and investors.

Key areas of our work in stock corporation law:

• Ad­vice and sup­port in the form­a­tion of a stock corporation
• Ad­vice and rep­res­ent­a­tion of stock cor­por­a­tions, e.g., in tax matters
• Sup­port in draft­ing com­pany art­icles of association
• Legal ad­vice to the man­age­ment board
• Legal ad­vice to the su­per­vis­ory board
• Legal rep­res­ent­a­tion in li­ab­il­ity issues
• Ad­vice and sup­port in draft­ing man­age­ment board contracts
• Sup­port for su­per­vis­ory board mem­bers in ex­er­cising their in­form­a­tion rights
• Sup­port in pre­par­ing an­nual gen­eral meetings
• Legal sup­port for share­hold­ers, in­vestors, and other in­vestors, e.g., in en­for­cing their prop­erty or man­age­ment rights
• Fil­ing li­ab­il­ity suits and ini­ti­at­ing pro­ceed­ings for the ad­mis­sion of suits

The stock corporation as a form of company

As a form of com­pany, the AG (stock cor­por­a­tion) is fun­da­ment­ally cap­ital market-​oriented. And al­though every AG is fun­da­ment­ally eli­gible for list­ing on the stock ex­change, only very few AGs are ac­tu­ally lis­ted. The de­nom­in­a­tion and high fun­gib­il­ity of the cap­ital are par­tic­u­larly at­tract­ive for com­pan­ies. As with a GmbH, Ger­man stock cor­por­a­tion law does not provide for per­sonal li­ab­il­ity of the share­hold­ers in an AG. How­ever, the ap­plic­able cap­ital main­ten­ance rules are much stricter for an AG.

When found­ing an AG, it should be noted that the op­tions for struc­tur­ing the art­icles of as­so­ci­ation are sig­ni­fic­antly more lim­ited than those for a GmbH. This is also re­ferred to as “strict art­icles of as­so­ci­ation.” With re­gard to stock cor­por­a­tion law, spe­cial legal ex­per­i­ence is re­quired here in or­der to make op­timal use of the avail­able op­tions for cor­por­ate structuring.

An­other spe­cial fea­ture of the AG is its three-​part or­gan­iz­a­tional struc­ture, which con­sists of a man­age­ment board, a su­per­vis­ory board, and a gen­eral meet­ing. In ad­di­tion, there are the share­hold­ers, in­vestors, and other stakeholders:

1. Executive Board

The Ex­ec­ut­ive Board is re­spons­ible for man­aging the stock cor­por­a­tion and rep­res­ents it in and out of court. Un­der Ger­man stock cor­por­a­tion law, the Ex­ec­ut­ive Board is not sub­ject to any in­struc­tions from the An­nual Gen­eral Meet­ing, the share­hold­ers, or the Su­per­vis­ory Board. As rep­res­ent­at­ives of the com­pany within the mean­ing of stock cor­por­a­tion law, the Ex­ec­ut­ive Board has a num­ber of rights and ob­lig­a­tions that must be ob­served and com­plied with. There­fore, ad­vising and sup­port­ing mem­bers of the Ex­ec­ut­ive Board — es­pe­cially at the be­gin­ning and end of their term of of­fice and on is­sues of li­ab­il­ity — is one of the fo­cal points of our work in the area of stock cor­por­a­tion law.

2. Supervisory Board

The su­per­vis­ory board is re­spons­ible for mon­it­or­ing the man­age­ment board – it ap­points and dis­misses the man­age­ment board, con­cludes and ter­min­ates man­age­ment board con­tracts, and en­forces the stock corporation’s claims against the man­age­ment board. In ad­di­tion, the su­per­vis­ory board has an ad­vis­ory func­tion and, un­der Ger­man stock cor­por­a­tion law, must ap­prove cer­tain meas­ures taken by the man­age­ment board be­fore they can be im­ple­men­ted. All mem­bers of the su­per­vis­ory board are equal and have the same rights and ob­lig­a­tions. In the area of stock cor­por­a­tion law, we ad­vise su­per­vis­ory board mem­bers on ex­er­cising their rights to in­form­a­tion and par­ti­cip­a­tion, as well as on is­sues of li­ab­il­ity and remuneration.

3. Annual General Meeting

The third pil­lar of a stock cor­por­a­tion is the An­nual Gen­eral Meet­ing. This is where the share­hold­ers of the AG are rep­res­en­ted. The An­nual Gen­eral Meet­ing is par­tic­u­larly im­port­ant for share­hold­ers, as it is the only place where they have cer­tain op­por­tun­it­ies to ex­ert in­flu­ence un­der stock cor­por­a­tion law that in­di­vidual in­vestors do not have. The An­nual Gen­eral Meet­ing is con­vened by the Man­age­ment Board and of­ten fol­lows a com­plex pro­ced­ure. It is there­fore ad­vis­able to have it pre­pared by a spe­cial­ist law­yer for stock cor­por­a­tion law. The cor­res­pond­ing man­date must be is­sued by the man­age­ment board.

Shareholders and investors

Un­der Ger­man stock cor­por­a­tion law, in­vestors and in­vestors are en­titled to nu­mer­ous mem­ber­ship rights, re­gard­less of whether the com­pany in ques­tion is a lis­ted stock cor­por­a­tion or not. The rights of in­vestors can be roughly di­vided into prop­erty rights (di­vidends and sub­scrip­tion rights) and ad­min­is­trat­ive rights (vot­ing and in­form­a­tion rights). How­ever, in­di­vidual in­vestors or share­hold­ers can usu­ally only as­sert these rights at the an­nual gen­eral meet­ing. De­pend­ing on the size of their share­hold­ing, share­hold­ers may also have fur­ther rights un­der stock cor­por­a­tion law, such as the right to re­quest a spe­cial audit by an ex­ternal aud­itor. In ad­di­tion, in the event of dis­putes, share­hold­ers also have the op­tion of bring­ing a li­ab­il­ity ac­tion (e.g., in the con­text of pro­ceed­ings for leave to sue) against mem­bers of the man­age­ment board or su­per­vis­ory board.