Corporate law is a fundamental area of law dealing with the legal aspects of the formation, management and dissolution of companies. It regulates the relations between companies, their shareholders, directors and third parties. In this article, we will discuss in detail the corporate law, the related legal issues and the laws involved.
Definition of company law
Corporate law includes the legal regulations that affect the structure, management and conduct of legal entities, especially companies and corporations. It defines the rights and obligations of the parties involved in a company and provides a framework for resolving conflicts.
Types of companies
There are different types of companies, each of which is subject to different legal regulations:
- Stock corporation (AG): A company in which the share capital is divided into shares. The liability of shareholders is limited to their capital contribution.
- Limited liability company (GmbH): A company in which the liability of the shareholders is limited to their capital contributions.
- General partnership (OHG): A company in which two or more persons carry on a commercial business and have unlimited liability for the company’s debts.
- Limited partnership (KG): Similar to the general partnership, but with two types of partners – general partners, who have unlimited liability, and limited partners, whose liability is limited to their contribution.
- Cooperatives, associations and foundations are other forms of companies with specific legal regulations.
Legal issues in corporate law
Establishment of a company
The establishment of a company requires compliance with certain legal requirements, such as the drafting of articles of association, registration in the Commercial Register and meeting capital requirements.
Rights and duties of shareholders and managing directors
Corporate law regulates the rights and duties of shareholders and directors, including their responsibilities towards the company and third parties.
Corporate law also deals with corporate actions such as capital increases, capital decreases and the issuance of shares and bonds.
Corporate management and corporate governance
The rules and practices by which a corporation is managed and controlled are an important aspect of corporate law. This also includes protecting the rights of minority shareholders.
Restructuring and M&A
Company law also regulates the restructuring of companies, including mergers, acquisitions, divisions and transformations.
Dissolution and insolvency
The dissolution of a company and insolvency proceedings are also governed by company law. This includes liquidation of the company’s assets and distribution to creditors and shareholders.
German Commercial Code (HGB) in Germany
The Commercial Code contains basic regulations for commercial companies, including OHG and KG.
German Stock Corporation Act (AktG) in Germany
The Stock Corporation Act regulates the formation, organization and liability of stock corporations.
Law on Limited Liability Companies (GmbHG) in Germany
The Limited Liability Companies Act contains specific regulations for the establishment and management of limited liability companies.
Insolvency Code (InsO) in Germany
The Insolvency Code regulates insolvency proceedings for companies and individuals.
European laws and directives
At the European level, there are also laws and directives that affect company law, such as the Directive on Certain Aspects of Company Law (2017/1132).
Corporate law is a complex and multifaceted area of law that is critical to the functioning of the economy. It provides the legal framework for the formation, management and dissolution of companies and regulates the relationships between the various parties involved. It is important for entrepreneurs, investors, directors and other stakeholders to understand the basics of corporate law and seek legal advice when needed. Corporate law is constantly evolving to meet changing economic conditions and challenges.