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Modernising the German GmbH — Mere Window Dressing or Fundamental Redesign?

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Abstract

Even though the GmbH is an established legal entity that has remained (largely) unchanged for over a century, recent abuses and the pressure of foreign competition has caused the German government to propose significant changes. While not opting for a fundamental and groundbreaking reform, it has put forward a number of smaller modifications that will change the face of the GmbH.

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References

  1. As reported by Wilhelm von Oechelhäuser, a member of the German parliament, who would later be referred to as the ‘father’ of the German GmbH statute in 1888.

  2. See the official website at: http://www.dti.gov.uk/bbf/co-act-2006/index.html. For a detailed description, see Alistair Alcock, John Bird and Steve Gale, Companies Act 2006: The New Law (Bristol, Jordans 2007); for critical comments (especially regarding the size of the reform, which contains approximately 1,300 sections and 16 schedules), see also by David Bennett, ‘The Companies Act 2006 — A Megalosaurus in Holborn?’, 83 Bus. L.B. (2006) p. 1; Sandy Shandro and Paul Sidle, ‘Reforms to English Company Law’, 26 Am. Bankr. Inst. J. (2007) p. 34; Andrew Harvey, ‘The director’s cut’, 104 L.S.G. (2007) p. 32.

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  3. ECJ, Case C-167/01 Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art Ltd [2003] ECR I-10155; see also ECJ, Case C-208/00 Überseering BV v. Nordic Construction Company Baumanagement [2002] ECR I-9919; ECJ, Case C-212/97 Centros Ltd v. Erhvervsog Selskabsstyrelsen [1999] ECR I-1459.

  4. There have been few changes to the GmbHG (GmbH statute) since then, the largest reform occurring in the early 1980s, see in detail Klaus J. Müller, The GmbH — A Guide to the German Limited Liability Company (Munich, Beck 2006) p. 32 et seq.

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  5. Most recently, an important assembly of German lawyers, the Deutscher Juristentag, discussed GmbH reform in 2006. The results of the discussion are available at: http://www.djt.de/files/djt/66/66_DJT_Beschluesse.pdf.

  6. Gesetz zur Modernisierung des GmbH-Rechts und zur Bekämpfung von Missbräuchen [Law on the modernisation of the law of private limited liability companies and to combat abuses], available on the website of the German Federal Ministry of Justice at: http://www.bmj.bund.de/media/archive/1236.pdf.

  7. Gesetz zur Bekämpfung von Mißbräuchen, zur Neuregelung der Kapitalaufbringung und zur Förderung der Transparenz im GmbH-Recht [Law to combat abuses, to restructure the raising of capital and to strengthen transparency in the law of private limited liability companies], draft of 30 November 2004.

  8. Regierungsentwurf of 23 May 2007.

  9. The initial draft hoped for an even earlier date in October 2007.

  10. This is in stark contrast to the law of corporations, which was not only fundamentally revised in 1937 and 1965 but has also been undergoing a ‘permanent reform’ (see Wolfgang Zöllner, ‘Aktienrechtsreform in Permanenz — Was wird aus den Rechten des Aktionärs?’, 39 AG (1994) p. 330 et seq.) since 1994 (Gesetz für kleine Aktiengesellschaften und zur Deregulierung des Aktiensrechts), 1998 (Gesetz zur Kontrolle und Transparenz im Unternehmensbereich), 2001 (Gesetz zur Namensaktie und zur Erleichterung der Stimmrechtsausübung), 2002 (Gesetz zur weiteren Reform des Aktien- und Bilanzrechts, zu Transparenz und Publizität im Unternehmen) and 2005 (Gesetz zur Unternehmensintegrität und Modernisierung des Anfechtungsrechts).

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  11. Cf., Ingrid Lynn Lenhardt, ‘The Corporate and Tax Advantages of a Limited Liability Company: A German Perspective’, 64 U. Cin. L. Rev. (1996) p. 551. Admittedly, however, rules and ideas from one corporate form are often drawn upon to close gaps in the regulation of the other, for example regarding the voidability of decisions at shareholder meetings (sceptical: Wolfgang Zöllner in Adolf Baumbach and Alfred Hueck, GmbH-Gesetz, 18th edn. (Munich, Beck 2006) Anh. § 47, para. 3 et seq.) or groups of companies.

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  12. Rudolf B. Schlesinger, H. Baader, M. Damaska and P. Herzog, Comparative Law, 5th edn. (Mineola, Foundation Press 1988) p. 801 et seq.

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  13. See Martin Peltzer, Jermyn P. Brooks, Terry Hopcroft and Elizabeth A. Voight, GmbH-Gesetz — German Law Pertaining to Companies with Limited Liability, 4th edn. (Cologne, Otto Schmidt 2000) p. 1.

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  14. A general overview is provided by Müller, supra n. 4; Ulrich Seibert, ‘The Law Governing Capitalised Corporations in the Federal Republic of Germany (the AG and GmbH)’, in J. Fade, ed., Basics of German Commercial and Economic Law (Moscow, Beck 1994).

  15. See § 5, para. 1 GmbHG; see also John Armour, ‘Legal Capital: An Outdated Concept?’, 7 EBOR (2006) p. 5; Horst Eidenmüller, Barbara Grunewald and Ulrich Noack, ‘Minimum Capital in the System of Legal Capital’, in Marcus Lutter, Legal Capital in Europe (Berlin, De Gruyter 2006).

  16. Compare § 30 GmbHG to § 51 Aktiengesetz.

  17. According to § 31, para. la, distribution to any shareholder lowering assets below the stated capital leads to a duty to return such distributions immediately. Furthermore, the other shareholders (even if they were in good faith!) are liable according to § 31, para. 3 if the beneficiary is unable to perform that obligation. Furthermore, under § 24 GmbHG, shareholders are also liable for the full payment of the registered share capital by their co-investors (!) although their liability is only subordinate.

  18. See § 15, paras. 3 and 4 GmbHG.

  19. See§ 15, para. 5 GmbHG.

  20. § 23, para. 5 AktG prohibits deviations from the statute unless expressly allowed.

  21. Though such a board may be constituted voluntarily (§ 52 GmbHG) or might be required due to co-determination for over 500 employees (see Drittelbeteiligungsgesetz, MitbestG, MontanMitbestG and MitbestErgG) or due to special investor’s needs (§ 5, para. 2 InvestmG).

  22. In the Aktiengesellschaft, decisions by the shareholders’ meeting on management issues are expressly prohibited, § 119, para. 2 AktG.

  23. See Marcus Lutter, ‘Zur Entwicklung der GmbH in Europa und in der Welt’, 96 GmbHR (2005) p. 1, and the essays in Marcus Lutter, 100 Jahre GmbH-Gesetz (Cologne, Otto Schmidt 1992); see Schlesinger, et al., supra n. 12, p. 830; see in detail Burkhardt W. Meister and Martin H. Heidenhain, The German Limited Liability Company, 5th edn. (Frankfurt am Main, Fritz Knapp Verlag 1988) p. 24; Jan Thiessen, ‘Transfer von GmbH-Recht im 20. Jahrhundert — Export, Import, Binnenhandel’, in Vanessa Duss, Nikolaus Linder, Katrin Kastl, Christina Börner, Fabienne Hirt and Felix Züsli, Rechtstransfer in der Geschichte (Munich, Meidenbauer/Martin 2006) p. 446 et seq.; see also the comparative documentation by Rembert Süß and Thomas Wachter, Handbuch des internationalen GmbH-Rechts (Angelbachtal, Zerb Verlag 2006).

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  24. Even the Limited Liability Company (LLC) adopted in many States of the United States is heavily influenced by the German GmbH, see Lenhardt, supra n. 11, at p. 562, though it admittedly goes further in providing for optional member management and partnership like taxation. Interestingly, the US model replaced the German influenced GmbH structure in Japan, see Andreas Kaiser, ‘Die Regelung der Hybridgesellschaft (godo kaisha) im japanischen Gesellschaftsgesetz’, 53 RIW (2007) p. 16.

  25. Wilhelm von Oechelhäuser (see supra n. 1) is quoted as saying ‘Das Land, welches die sichersten, einfachsten und mannigfaltigsten Rechtsformen für die Vereinigung von Kapital und Personen bietet, muss wirtschafthlichen Vorsprung gewinnen.’ [The country with the most secure, simplest and most varied choice of legal designs for incorporating money and persons must gain economic advantages.]

  26. In accordance with the Eleventh Company Law Directive of 21 December 1989 (Directive 89/666/EEC).

  27. Udo Kornblum, ‘Bundesweite Rechtstatsachen zum Unternehmens- und Gesellschaftsrecht, Stand 01.01.2006’, 98 GmbHR (2007) p. 25.

  28. BT-Drucks. 16/283.

  29. At the very latest due to the ECJ’s aforementioned Inspire Art decision, see Christoph Jaehne and Johan Henning, ‘The European Court of Justice and the Future of the German Private Company (Gesellschaft mit beschrankter Haftung) — Editorial’, 28 Comp. Law (2007) p. 33; but see also Benjamin Angelette, ‘The Revolution That Never Came and the Revolution Coming — De Lasteyrie du Saillant, Marks & Spencer, SEVIC Systems and the Changing Corporate Law in Europe’, 92 Va. L. Rev. (2006) p. 1189 at p. 1203 et seq. (noting that those decisions have not led to the predicted flood of foreign entities and a race to the top/bottom).

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  30. Cf., most recently, Hans-Friedrich Müller and Stephan Weiß, ‘Die private limited company aus Gläubigersicht’, AnwBl (2007) p. 247; Volker Römermann, ‘Die Limited in Deutschland — eine Alternative zur GmbH’, 59 NJW (2006) p. 2065; Volker Triebel and Sabine Otte, ‘20 Vorschläge für eine GmbH-Reform — Welche Lektion kann der deutsche Gesetzgeber vom englischen lernen?’, 27 ZIP (2006) p. 311.

  31. See the detailed analysis of Marco Ventoruzzo, ‘“Cost-Based” and “Rules-Based” Regulatory Competition: Markets for Corporate Charters in the U.S. and in the E.U.’, 3 N.Y.U. J. L. & Bus. (2006) p. 91.

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  32. Or as Ulrich Seibert, ‘Close Corporations — Reforming Private Company Law: European and International Perspectives’, 8 EBOR (2007) p. 83 at p. 85 puts it: ‘If you can’t beat them — join them’.

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  33. Unlike France, Sweden and Spain, see Thomas Karst, ‘Die GmbH französischen Rechts’, NotBZ (2006) p. 119; Malcolm Wiberg, ‘Sweden: Company Law — Reform’, 21(3) J.I.B.L.R. (2006) N19; Carl Sverniov, ‘Sweden: Company Law — Reform’, 15(6) I.C.C.L.R. (2004) N55-56.

  34. e. g., Marco Becht, Colin Mayer and Hannes F. Wagner, Where Do Firms Incorporate?, ECGI Law Working Paper No. 70/2006 (September 2006), available at: http://ssrn.com/abstract=906066.

  35. This is one of the main goals of the recent Company Law Act 2006, for example by dropping the requirement for a company secretary, annual general meetings, written decisions by simple majority and electronic communications. See UK Department of Trade and Industry, ‘Companies Act 2006 — A Summary of What It Means for Private Companies’ (February 2007), available at: http://www.dti.gov.uk/files/file37956.pdf.

  36. This goal is also emphasised by Dieter Leuering, ‘Die GmbH und der internationale Wettbewerb der Rechtsformen’, 39 ZRP (2006) p. 201.

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  37. See Ulrich Seibert, ‘Die rechtsmissbräuchliche Verwendung der GmbH in der Krise — Stellungnahmen zu einer Umfrage des Bundesministeriums der Justiz’, in Georg Crezelius, Heribert Hirte and Klaus Vieweg, eds., Festschrift für Volker Röhricht (Cologne, Schmidt 2005) p. 585 at p. 588 et seq.

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  38. Further suggestions regarding competition between company law regulators can be found in Christian Kirchner, Richard W. Painter and Wulf A. Kaal, ‘Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware’s Product for Europe’, ECFLR (2005) p. 159 et seq.; Harm-Jan de Kluiver, ‘Inspiring a New European Company Law? Observations on the ECJ’s Decision in Inspire Art from a Dutch Perspective and the Imminent Competition for Corporate Charters between EC Member States’, ECFLR (2004) p. 121.

  39. For more details on the current capital structure of the GmbH, see Frank Dornseifer, ‘Germany’, in Frank Dornseifer, ed., Corporate Business Forms in Europe, 1st edn. (Berne, Staempfli 2005) p. 311 et seq. It is only slightly more flexible than the system for public corporations under the Second Directive that was largely modelled after German public corporation law.

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  40. For details, see infra section 2.1.2.2 on the Unternehmergesellschaft (haftungsbeschränkt), a special type of GmbH with a minimum stated capital of €1; on the general debate, see the essays in Lutter, supra n. 15 (dealing with public corporations) and the essays in 7(1) EBOR (2006).

  41. See Seibert, supra n. 32, at p. 84.

  42. e. g., § 36 GmbHG, which exactly mirrored a rule under § 164 of the German Civil Code (BGB) but was deemed necessary in 1892, eight years before Germany even received a Civil Code.

  43. e. g., the term Stammeinlage, referring to the value of the share of the total capital held by a shareholder, will be replaced by the term ‘share’ or ‘share value’ respectively.

  44. Cf., Gesetz zur Modernisierung des Schuldrechts of 26 November 2001, BGBl. I 2001, 3138.

  45. Including the incompatibility rules regarding managers (infra section 3.1.1), international mobility (infra section 2.3), increased management liability for distributions to members/shareholders (infra section 3.1.1) and rules regarding loans by members/shareholders (infra section 3.2).

  46. See § 4a, para. 2 GmbHG, requiring the seat to be the place of actual operations; for a more detailed analysis, see infra section 2.3.

  47. ECJ, Case 81/87 The Queen v. H.M. Treasury and Commissioners of Inland Revenue, ex parte Daily Mail and General Trust plc. [1988] ECR 5483, at para. 24: ‘… Articles 52 and 58 of the Treaty cannot be interpreted as conferring on companies incorporated under the law of a Member State a right to transfer their central management and control and their central administration to another Member State while retaining their status as companies incorporated under the legislation of the first Member State.’

  48. See supra n. 3.

  49. See supra n. 3.

  50. At least this result is implied by various authors emphasising the need for adaptation to English company law (see n. 25 supra).

  51. This is also emphasised by Seibert, supra n. 32.

  52. Indeed, the formation of a Spanish SLNE (sociedad limitada nueva empresa) is supposed to take no more than 48 hours, thus providing a stark contrast to the German GmbH, whose formation usually takes months.

  53. e. g., a study by Becht, supra n. 34; see also Seibert, supra n. 32, at p. 85.

  54. § 2 GmbHG.

  55. § 9c GmbHG.

  56. § 8, para. 1, No. 6 GmbHG.

  57. Cf., § 11 GmbHG.

  58. § 5, para. 1 GmbHG.

  59. § 7, para. 2, sentence 2 GmbHG.

  60. § 7, para. 2, sentence 3 GmbHG.

  61. § 7, para. 3, § 5, para. 4 and § 9, para. 1, sentence 2 GmbHG.

  62. As evidenced in the decisions of the Deutsche Juristentag, see supra n. 5.

  63. In accordance with First Council Directive 68/151/EEC of 9 March 1968 on coordination of safeguards which, for the protection of the interests of members and others, are required of companies (as amended by Directive 2003/58/EC), thus similar to the other European Union Member States.

  64. See for example: http://www.go-limited.de, http://www.Limited24.de and http://www.Iimited4you.de.

  65. See: http://www.go-limited.de/preise/preise-und-agb.html.

  66. As required by the Eleventh Company Law Directive of 21 December 1989 (Directive 89/666/EEC).

  67. In this regard, it remains to be seen whether there is indeed room for a ‘Delaware effect’ regarding small enterprises or whether the traditional domestic systems will eventually be upheld. Fundamental reforms like the MoMiG, however, might eliminate the advantages of tradition and case law, see infra section 4.

  68. See Seibert, supra n. 32, at p. 85.

  69. Like in Switzerland, where a recent reform replaced notarisation by a mere written agreement.

  70. Unlike most LLC statutes in the United States, German law does not distinguish between the bylaws and articles of organisation. A single document discussing both the core elements and the details of internal structures (Satzung) is filed with the State and published according to the First Directive.

  71. While others might argue that the notaries were only successful in their lobbying efforts.

  72. In the United States, it is customary to state the purpose as ‘to engage in any lawful act or activity for which corporations may be organised and to exercise powers granted under corporate law’.

  73. See Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures.

  74. In fact, a proposal shifting the burden of review upon the notaries was clearly declined at the Juristentag, see supra n. 5.

  75. This was and is the core argument for the introduction of the new SLNE in Spain, see Fernando Juan-Mateu, ‘The Private Company in Spain — Some Recent Developments’, 1 ECFR (2004) p. 60.

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  76. § 1, para. 1 Handwerksordnung [Trade Regulation]; § 2, para. 1 Gaststättengesetz [Law on the regulation of inns and pubs].

  77. Gesetz über elektronische Handelsregister und Genossenschaftsregister sowie das Unternehmensregister (EHUG) [Act on electronic registers of trade and co-operative societies and company registers], BGBl. 12006, 2553.

  78. As all Member States are required to provide such electronic registers under Directive 2003/58/EC of 15 July 2003 amending Council Directive 68/151/EEC as regards disclosure requirements in respect of certain types of companies, OJ 2003 L 221/13.

  79. But see the decision of the German Federal Supreme Court of 7 July 2003 — II ZB 4/02 — applying the (liability) rules of formation to such transactions if there are insufficient assets available to the company at the time of purchase.

  80. In fact, it was the core change proposed in the earlier draft of a reform bill of 2005, upon which the current proposal is based.

  81. Wolfgang Zöllner, ‘Konkurrenz für inländische Kapitalgesellschaften durch ausländische Rechtsträger, insbesondere durch die englische Private Limited Company’, 97 GmbHR (2006) p. 1 at p. 5; Wilhelm Happ and Lorenz Holler, ‘Limited statt GmbH?’, 42 DStR (2004) p. 730 at p. 732; Rüdiger Wilhelmi, ‘Das Mindestkapital als Mindestschutz — eine Apologie im Hinblick auf die Diskussion um eine Reform der GmbH angesichts der englischen Limited’, 97 GmbHR (2006) p. 13 at p. 21 et seq.

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  82. T6-0023/2007 of 1 February 2007.

  83. Under the Second Company Law Directive, this requirement is common to all EU Member States.

  84. See Hans-Joachim Priester, ‘Mindestkapital und Sacheinlageregeln’, in VGR, ed., Die GmbH-Reform in der Diskussion (Cologne, Otto Schmidt 2006).

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  85. See Lutter, supra n. 15.

  86. United Kingdom (Ltd), Ireland (PLC) and France (SARL) — both the Netherlands and Spain intend to follow suit.

  87. In fact, it has been argued that the amount should therefore have been (significantly) increased, see Priester, supra n. 84, p. 1 (extrapolating 25,000 Reichsmark in 1892 to its current value).

  88. See § 5, para. 1 GmbHG as amended by the MoMiG.

  89. See, e. g., Barbara Grunewald and Ulrich Noack, ‘Zur Zukunft des Kapitalsystems der GmbH — Die Ein-Euro-GmbH in Deutschland’, 96 GmbHR (2005) p. 189 at p. 190; see also the opinion of Advocate General Alber in Case C-167/01 Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art Ltd [2003] ECR I-10155, para. 142: ‘[M]inimum capital rules … deter individuals from light-headedly forming companies’.

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  90. See Jochen Vetter, ‘Reform des gesellschaftsrechtlichen Gläubigerschutzes’, in Beratungen des 66. Deutschen Juristentages (Munich, Beck 2006) p. 82.

  91. Eidenmüller, supra n. 15, pp. 17, 23 et seq.

  92. Holger Altmeppen, ‘Änderungen der Kapitalersatz- und Insolvenzverschleppungshaftung aus “deutsch-europäischer” Sicht’, 58 NJW (2005) p. 1911 at p. 1912; Hans-Joachim Priester, ‘Die deutsche GmbH nach “Inspire Art”: brauchen wir eine neue? Bemerkungen zur “Entrümpelungs”-Debatte’ (EuGH, U. v. 30.09.2003 — Rs. C-167/01), 58 DB (2005) p. 1315 at p. 1317; Priester, supra n. 84.

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  93. See Horst Eidenmüller, ‘Die GmbH im Wettbewerb der Rechtsformen’, 36 ZGR (2007) p. 168; Triebel and Otte, supra n. 30; Tim Drygala, ‘Stammkapital heute — Zum veränderten Verständnis von System des festen Kapitals und seinen Konsequenzen’, ZGR (2005) p. 587 at p. 598 et seq.; Eidenmüller, Grunewald and Noack, supra n. 15, p. 189 at p. 193.

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  94. Seibert, supra n. 32, at p. 87; it is also identical to the amount proposed for the EPC by the European Parliament in its Resolution with recommendations to the Commission on the European private company statute, T6-0023/2007 of 1 February 2007.

  95. Wilhelm Niemeier, ‘GmbH und Limited im Markt der Unternehmensrechtsträger. Marktdaten zur Reformdebatte’, 27 ZIP (2006) p. 2237.

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  96. See Seibert, supra n. 32, at p. 89 mentions France and Spain as examples.

  97. The proposal was influenced by a draft bill suggested on March 2007 by Jürgen Gehb (MP), see: http://www.gehb.de/positionen/ugg/Arbeitsentwurf-UGG.pdf.

  98. § 7, para. 2 will be completely eliminated.

  99. Twelfth Council Company Law Directive 89/667/EEC of 21 December 1989 on single-member private limited-liability companies, OJ 1989 L 395/40.

  100. § 5, para. 4 GmbHG; § 9c, para. 1, sentence 2 GmbHG.

  101. Since BGH case No. II ZR 54/80 of 3 September 1981.

  102. § 9c GmbHG.

  103. See Seibert, supra n. 32, at p. 89.

  104. § 19, para. 4 GmbHG.

  105. § 30, para. 1 GmbHG.

  106. § 30, para. 1 GmbHG, as amended by the proposed reform bill.

  107. BGH case No. II ZR 171/01 of 24 November 2003.

  108. § 5, paras. 1 and 3 GmbHG.

  109. § 5, para. 2 GmbHG.

  110. § 17 GmbHG.

  111. By eliminating the aforementioned rules regarding formation in § 5 GmbHG and simplifying the procedure for splitting shares in § 17 GmbHG.

  112. See official report on the GmbHG of 11 February 1892: ‘… denn die formalen Voraussetzungen der Uebertragung müssen in erster Linie Gewähr dafür bieten, daß die Anteilsrecht der neuen Gesellschaften nicht zu einem Gegenstande des Handelsverkehrs werden.’ [‘… the formal requirements on transfer must primarily warrant that the shares of the new companies do not become a subject of trade.’]

  113. This was recently changed in Switzerland, see Matthias Abrell, ‘Die Schweiz ermöglicht privatschriftliche Verfügungen über Geschäftsanteile’, NZG (2007) p. 60.

  114. See § 15, paras. 3 and 4 GmbHG.

  115. §40 GmbHG.

  116. The central search mechanism of the commercial registers administered by the Länder, available at: http://www.handelsregister.de; the central federal register, providing access to the commercial registers, available at: http://www.unternehmensregister.de.

  117. § 7b JVKostO in connection with part 4 of the attached fee schedule.

  118. § 16, para. 1 GmbHG, as amended by the proposed reform bill.

  119. See Seibert, supra n. 32, at p. 90.

  120. § 16, para. 3 GmbHG, as amended by the proposed reform bill; highly sceptical: Carsten Peetz, ‘Anmeldung einer Anteilsübertragung — eine eher unscheinbare Norm’, GmbHR (2006) p. 852.

  121. § 16, para. 3, option 2 GmbHG, as amended, evidently trying to copy the idea of the real estate registers (Grundbuch).

  122. See Martin Schockenhoff and Andreas Höder, ‘Gutgläubiger Erwerb von GmbH-Anteilen nach dem MoMiG: Nachbesserungsbedarf aus Sicht der M&A-Praxis’, 27 ZIP (2006) p. 1841 et seq. (discussing a previous draft).

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  123. It is debatable whether the EC Treaty does in fact provide for the freedom to move a corporation to another Member State if that State does not expressly allow it, see ECJ, Case 81/87 The Queen v. H.M. Treasury and Commissioners of Inland Revenue, ex parte Daily Mail and General Trust plc. [1988] ECR 5483, at para. 24: ‘… Articles 52 and 58 of the Treaty cannot be interpreted as conferring on companies incorporated under the law of a Member State a right to transfer their central management and control and their central administration to another Member State while retaining their status as companies incorporated under the legislation of the first Member State’.

  124. See already, e. g., RGZ 7, 69 f; RGZ 88, 55; RGZ 107, 97; BGHZ 19, 105; BGHZ 29, 328.

  125. § 4a, para. 2 GmbHG; § 5 Aktiengesetz.

  126. See Kilian Baelz and Teresa Baldwin, ‘The End of the Real Seat Theory (Sitztheorie): The European Court of Justice Decision in Ueberseering of 5 November 2002 and its Impact on German and European Company Law’, 3 German Law Journal (2002).

  127. See Nicola Preuß, ‘Die Wahl des Satzungssitzes im geltenden Gesellschaftsrecht und nach dem MoMiG-Entwurf’, 98 GmbHR (2007) p. 57.

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  128. § 4a, para. 1 GmbHG, as amended by the proposed reform bill.

  129. See Ulrich Noack and Dirk Zetzsche, Germany’s Corporate and Financial Law 2007: (Getting) Ready For Competition, Center for Business and Corporate Law (CBC) Working Paper No. 28 (2007), available at: http://ssrn.com/abstract=986357.

  130. See Articles 2(1) and 60 of Council Regulation (EC) No. 44/2001 of 22 December 2000 on the jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

  131. Highly sceptical: Eidenmüller, supra n. 93, at p. 205 et seq.

  132. See p. 33 of the current proposal.

  133. § 64 GmbHG.

  134. See BGHZ 29,100,102 ff.; BGHZ 138, 211, 214.

  135. Seibert, supra n. 32, at p. 92.

  136. However, replacing the strict formal rule of § 30 GmbHG, which prohibits any distribution that would lower available assets below the stated capital, with a flexible solvency test is also not planned and was actually voted down by a strong majority at last year’s meeting of German legal professionals (Deutscher Juristentag).

  137. Eidenmüller, supra n. 93, at p. 182, who assumes two strictly alternative systems without any reason for combination.

  138. Seibert, supra n. 32, at p. 92.

  139. Since the rule is implemented in the Bankruptcy Code (Insolvenzordnung), it will similarly apply to the Aktiengesellschaft and any other legal entity operating in Germany.

  140. § 15a Insolvenzordnung [Bankruptcy Code], as introduced by the proposed reform bill.

  141. Both vis-à-vis the company and directly to corporate creditors (as a special form of pre-contractual liability since the creditors only contracted with the GmbH due to the assumption that it was not insolvent).

  142. Cf., Austrian law: Eigenkapitalersatz-Gesetz of 28 October 2003.

  143. See supra section 2.1.2.4.

  144. §§32a and 32b GmbHG.

  145. § 39, para. 1, No. 5 Insolvenzordnung.

  146. As opposed to the current system, which is actually based on the (vague) concept of a ‘crisis’ and therefore theoretically provides protection even before insolvency.

  147. BGHZ 75, 334; BGHZ 127, 335, 340 et seq.

  148. See Marcus Lutter and Peter Hommelhoff, GmbH-Gesetz. Kommentar, 16th edn. (Cologne, Schmidt 2004) § 32a, para. 10.

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  149. Sceptical, e. g., Peter O. Mülbert, ‘A Synthetic View of Different Concepts of Creditor Protection, or: A High-Level Framework for Corporate Creditor Protection’, 7 EBOR (2006) p. 357 at p. 397 et seq.; Horst Eidenmüller, ‘Gesellschafterdarlehen in der Insolvenz’, in A. Heldrich, et al., eds., Festschrift für Claus-Wilhelm Canaris, Book 2 (Munich, Beck 2007) p. 49; Tilman Bezzeberger, ‘Kapitalersetzende Gesellschafterdarlehen im Recht der GmbH’, in Harm Peter Westermann and Klaus Mock, Festschrift für Gerold Bezzenberger zum 70. Geburtstag (Berlin, De Gruyter 2000) p. 23.

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  150. See Seibert, supra n. 32, at p. 91.

  151. § 135 Insolvenzordnung, as amended by the proposal.

  152. See supra section 3.1.1.

  153. See supra n. 5.

  154. Cf., Marcus Lutter, ‘Für eine Unternehmer-Gesellschaft (UG) — Zur notwendigen Erweiterung der geplanten GmbH-Reform’, BB-Spezial Nr. 7/2006, p. 2 (pro); Karsten Schmidt, ‘Brüderchen und Schwesterchen für die GmbH? Eine Kritik der Vorschläge zur Vermehrung der Rechtsformen’, 59 DB (2006) p. 1096 (contra).

  155. Questioned by Seibert, supra n. 32, at p. 92.

  156. Eidenmüller, supra n. 93, at p. 181 et seq.; Schmidt, supra n. 154.

  157. Sceptical: Triebel and Otte, supra n. 30.

  158. As translated by Lenhardt, supra n. 11, at p. 553.

  159. This is also an oft-quoted reason for the lack of importance of the CISG in legal practice, see John E. Murray, Jr., ‘The Neglect of CISG: A Workable Solution’, 17 Journal of Law and Commerce (1998) p. 365: ‘Reflecting on the experience under CISG, we now face the reality that it suffers from neglect, as well as ignorance and even fear.’

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  160. In its original sense, ‘survival of the fittest’ means that the creature best suited to a certain situation will prevail under those conditions, leading to a distribution of numerous beings and not a single dominant species.

  161. As Germany did in partially considering the recent reforms in Spain and France as well as British company law.

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  1. Heinrich Heine University of Düsseldorf, Germany

    Ulrich Noack (Professor of law) & Michael Beurskens Dr. iur. (Assistant)

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  1. Ulrich Noack
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Noack, U., Beurskens, M. Modernising the German GmbH — Mere Window Dressing or Fundamental Redesign?. Eur Bus Org Law Rev 9, 97–124 (2008). https://doi.org/10.1017/S1566752908000979

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