Key Aspects of German Business Law: A Manual for Practical Orientation PDF
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Key Aspects of German Business Law AManual for Practical Orientation Springer-Verlag Berlin Heidelberg GmbH Bernd Tremml . Bernard Buecker Editors Key Aspects of German Business Law A Manual for Practical Orientation Springer Dr. jur. M. C. J. Bernd Tremml Abrell Wendler Tremml Rechtsanwälte Martiusstraße 5/II 80802 München Germany Bernard Buecker 2201 Tower Life Building 310 S. St. Mary's San Antonio, Texas 78205 USA ISBN 978-3-662-08067-2 ISBN 978-3-662-08065-8 (eBook) DOI 10.1007/978-3-662-08065-8 Library of Congress Cataloging-in-Publication Data Die Deutsche Bibliothek - CIP-Einheitsaufnahme Key aspects of German business law: a manual for practical orientation I Bernd Tremml: Bernard Buecker ed. - Berlin: Heidelberg; New York; Barcelona; Hong Kong: London: Milan: Paris: Singapore: Tokyo: Springer, 1999 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illus trations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag. Viola !ions are liable for prosecution under the German Copyright Law. © Springer-Verlag Berlin . Heidelberg 1999 Originally published by Springer-Verlag Berlin Heidelberg New York in 1999. Softcover reprint of the hardcover 1s t edition 1999 The use of general descriptive names, registered names, trademarks, etc. in this publica tion does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Hardcover-Design: Erich Kirchner, Heidelberg SPIN 10700759 42/2202-5 4 3 2 I 0 - Printed on acid-free paper Preface This book presents ac1earandprecise overview ofthekey aspects ofGerman business law.It waswritten by attomeys involved inthedaily practiceof business law in Gennany and is aimed at people who wish to orient themselves quickly with the German legal system and the manner in which it impacts business pur chases, establishment, operations andliquidations. The first section of the book isdevoted to an explanation of the major issues to be considered in acquiring or establishing a business in Gennany, whereas the second section focuses on areas of special consideration. In both sections special attention has been paidto highlighting and explaining the differences between the German legal system and that ofthe United States, though the intention isto pro vide infonnation that will prove valuable to all foreigners, particularly business men and women and lawyersadvising c1ients with an interest indoing business in Gennany. Though it isthe object of this book to present readers with a general orienta tion and the foundation formaking infonned decisions concemingbusiness trans actions in Gennany, it cannot possibly function as a substitute for case-specific professional advice andbyno means purports todoso.Those readers who wish to foIlow upon any decisions theymayhave fonned onthe basis ofthe material pre sented here are weIl advised to seek the guidance ofqualified attomeys and tax advisors before entering intoanybinding obligations. This holds particularly true in light of the fact that aIl infonnation here is based on the laws that were ineffect inthe Federal Republic ofGennany on the first of September 1998. Due to the recent change in the ruling coalition in the Federal Govemment, legislation having considerable impact on tax laws in par ticular isexpected. Since the issuesare currently beeing debated inparliament,no estimation as to their final outcome can be anticipated at this time. We therefore wish to stress the need to seek the advice of a tax counselor before making any binding commitments. THE EDITORS Bemd Tremml Bemard Buecker Attomeyat Law AttomeyatLaw Munich, Gennany SanAntonio,Texas Contents Introduction:Overview oftheGerrnan Legal System and itsRole inLight ofGerrnany'sMembership inthe EuropeanCommunity 1 The InvestmentClimate inthe Federal RepublicofGerrnany 5 FRIEDRICH W.KUHLMANN PART I HOW TO ESTABLISH OR ACQUIRE A BUSINESS IN GERMANY Recognized ForrnsofBusinessOrganizations 9 BERNDTREMMLand BERNARDBUECKER The AcquisitionofCloselyHeld Companies 31 BERND TREMML Valuation ofBusiness Enterprises 47 BERNDTREMML PART II SPECIALIZED LAWS IMPACTING THE FORMATION, ACQUISITION AND OPERATION OF A BUSINESS IN GERMANY Taxes ApplicabletoBusinessEnterprisesandtheir DistributedProfits.....55 JOACHIM KNAPP Aspects ofGerrnan Labor Law 67 MATTHIAS ABRELL Residence and Work Perrnits 79 MICHAEL WENDLER VIII KEY ASPECTS OF GERMAN BUSINESS LAW DistributionAgreements 93 MICHAELBIHLER ComputerLaw 107 MICHAELKARGER Notaries inGermany 115 CHRISTIAN R.WOLF Real-estate Property Law inGermany 125 CHRISTIAN R. WOLF The Law ofBankruptcyand Security Interests 137 REINHARDNACKE Institutionsofthe EuropeanCommunity 147 BERNDTREMML The Euro:Its Influenceon International Private-Law Contracts 157 BERNDTREMML Antitrust Law inthe EuropeanCommunity 17I BERNDTREMMLand ANDREAS MEISTERERNST UnfairTerms inConsumerContracts inthe EuropeanCommunity 183 BERNDTREMMLand ANDREAS MEISTERERNST MarketingofImported Food Products inGermany 193 ALFRED HAGEN MEYER TrademarkProtection inGermanyand Europe 199 EUGEN POPP List ofAuthors 259 Glossary ofGerman Terms and Abbreviations 26I Introduction Overview ofthe German Legal System and its Role in Light ofGermany's Membership in the European Community Foreign business people interested in starting a business or investing in Ger many mightbeattracted bytheprospectofexpandingintootherEuropeanmarkets from there because ofGermany's membership inthe EC, yet they might be con cerned about the implications of the dual European and German legal systems. They may wonder whether or not a German venture requires familiarization with two, often conflicting bodies oflaw, or ifbusinesses inGermany frequently have to deal with administrative authoritiesat both the national and international levels with regard to the same transaction.The answer to such questions is"no." Given the structure of the European Community (EC) and particularly the manner in which EC institutions pass laws, an investment in Germany does not involve in vestors ina legalquagmire. Asafundamental principal,theEuropeanCommunity and itsinstitutions pos sessthe power topass legislationconcerning onlythose areas inwhich anexpress delegation of national authority exists. For this reason alone, large numbers of regulatory areas remain outside of EC contro!. For example, most civil, criminal and administrative laws remain the sole province of the Member States. In gen eral, EC authority is limited to those regulatory areas which are essential to the establishment ofacommonmarket. Furthermore,the lawsthe EChas passed have tended to take the form of "directives." As will be explained in detail in Chapter 10, directives do not, as a general principal, take effect until afterthey have been incorporated intonationallaw.Thisspecialcharacteristic ofdirectives is intended to give the Member Statesthe flexibility ofchoosing the manner inwhich the ob jectives ofa directive become law in their own country, the manner that is most compatible with their particular legal system.For individuals and business enter prises alike, itisoftennoteasytorecognizewhether ornotanational lawisbased on a European directive. In sum, EC directives do not constitute an overlay of regulations which investorsmustfamiliarizethemselves withseparately, butrather comprise an integralpartofaMember State's nationallaw. Much the same applies to those areas inwhich the EC has enacted a type of legislation known as a "regulation." A regulation does not require incorporation into national law inorder to be effective, but as a rule is implemented by the na tional authorities. For example, if a German administrative authority applies an EC regulation in its dealings with German residents and they feel an error has 2 Overview 0/theGerman LegalSystem been made, they can take action only against the national authority and, in doing so,usually operate solely within the German administrativeorjudicialsystems. For these reasons, the direct effect ofEuropean Community law on German residents or businesses is relatively small. That is not to say, however, that the EC's influence should be downplayed. The numerous areas oflaw impacting the establishment and operation ofbusinesses in Germany are often reflective of EC law. Nevertheless,for the most part EC laws have been incorporated into national law and are subject to Germany's legal system. And it is within this system that foreign investors will predominantlyconduct their business transactions. For the most part, Germany's legalsystem isstable and smooth working. It is based onthe Continental European legaltradition as opposed to Anglo-Saxon law upon which the U.S. legal system is based. The primary difference between the two systems is that the Continental European legal system is based on the codifi cation oflaws as opposed to"case law." Inaccordance with the Continental tradi tion, the German legal system consists essentially of written laws. Nearly all potentialregulatoryareas arethesubject offormal anddetailed codification. Many ofGermany's legal codes are the final product ofliterally decades upon decades ofcareful deliberation and refinement. This offers foreign entrepreneurs and in vestors considerableadvantages. German law isso clearly structuredand transpar ent that contract terms can be standardized to a very large extent. And, since all the standard practices and regulations governing the conduction of business are codified in the German Civil Code (BGB, or "Bürgerliches Gesetzbuch"), if no special terms are agreed upon between the parties,the terms and provisions ofthe BGB automatically apply. In other words, in the U.S., business contracts require the clear and detailed statement ofall the terms the parties agree to; contracts in Germany tend to be considerably shorter, which lowers their drafting costs ac cordingly. As inthe U.S.,it isthe task ofthe courts to interpret the written law. Because a number ofGerman codes are more than a hundred years old, the case law per taining to certain individual provisions ofthem isvery extensive.The courts have the primary task ofinterpretingthestatutes,regulations and Constitution, and they also playa role in fiIIingin the gaps oflaws where necessary. However, the reli ance on precedence or case law plays a much smaller role in the German legal system than in American jurisprudence, since German laws are so explicitly de tailed and codified. The sharp differentiation between the various areas of law in Germany and the separate codification of them have led to a strict division of subject-matter jurisdiction among the differenttypes ofcourts.As inthe U.S., there are separate civil courts responsible for deciding legal disputes among private persons, and there are criminal courts for ruling on criminal prosecutions brought by the State against individuals. In contrast to the U.S. legal system, there are also separate court systems for administrative matters or legal disputes involving measures taken by public authorities against residents and for labor-Iaw and financial rnat ters. Germany has a special body of law governing taxation and a court system Overview0/theGermanLegalSystem 3 specialized in trying tax cases as weil. It should also be noted that, in contrast to the D.S.judicial system, there is no duality between state and federal courts. In Germany, their areas ofjurisdiction are clearly kept separate. Each ofthe various court systems has its own supreme court. The Constitutional Court is the final authorityabove each ofthem. The judges who serve onthe courts arejudges by profession and are special ized in one type oflaw. They do not rotate from one type ofcourt to another as D.S.judges do, but generally serve on only one type ofcourt throughout their ca reers. They are not elected but rather appointed by the governmentofthe particu larstate ofGermanywhere thecourt islocated.Germany does not make use ofthe jury process. In certain cases, however, the judges are assisted in making their decisions by common citizens who do not necessarily have a legal background of any kind ("Laienrichter") and who are chosen to serve on the court for a limited time period. Regardless ofwhich type ofcourt ishandling a particulardispute, the parties' trial preparation consists primarily in the drafting and presentation oflegal briefs in which evidence is presented and the issues in dispute are argued. In so doing, the parties rely on the court's special procedural rules. Each type ofcourt has its own rules determining its case procedure, the kind of evidence it will admit, etc. The courts make extensive use of independent public-appointed experts ("Sa chverständiger"), whose professional input almost always influences the ruling to a very large extent and often determines the outcome ofacase.Due inpart to the judicial system'sreliance on the parties' briefs, the reports ofindependent experts and other written submissions, the trial itself(in particular the in-court presenta tion of live testimony and other evidence) takes considerably less time and in volves less costs than U.S. court proceedings. This will be discussed extensively inChapter 14.With the exception ofcriminal cases, most trials last no longer than one ortwo days. An overview ofGermany's legalsystem would notbecomplete without afew comments about the govemmental administrative apparatus. The Federal Republic ofGermany is, as its name expresses, a federal state.That means that legislative powers are divided between the federal governrnent and each of the country's sixteen states. The most important areas of law are the exclusive domain ofthe federal governrnent. However, because the individual states ofGermany are gen erally vested with the authority to enforce federal laws and the majority ofthe administrative offices necessary to accomplish this task are established by the states, the states have an important influence on the interpretation and develop ment offederal laws. Similar to the state subdivisions in the D.S., the states of Germany are comprised of districts ("Bezirke"), counties ("Landkreise") and communities ("Gemeinde"), whereby a striking difference between the two ad ministrative systems is in many cases the higher degree ofauthority and cornpe tence exercised by the more local and regional units in Germany, which often allows them to take action and make decisions affecting both residents and busi nesses more efficientlyandquickly.
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