Introduction

The stock corporation (AG) is one of the best-known legal forms for companies. It allows capital to be raised through the sale of shares while providing a clear structure for corporate governance. In this article we will examine the characteristics, structure, formation, advantages and disadvantages of an AG, as well as the relevant legal aspects.

What is a stock corporation (AG)?

A stock corporation is a corporation in which the share capital is divided into shares. The liability of shareholders is limited to their capital contribution. The AG is a legal entity and therefore has rights and obligations.

AG structure

Annual General Meeting

The Annual General Meeting is the supreme body of an AG and consists of the shareholders. It makes decisions on fundamental matters such as the election of the Supervisory Board, the appropriation of net income, and amendments to the Articles of Association.

Supervisory Board

The Supervisory Board monitors and advises the Executive Board. It is elected by the Annual General Meeting and generally consists of representatives of the shareholders and employees.

Board of Directors

The Board of Directors is responsible for the management of the company. He is appointed by the Supervisory Board and represents the AG externally.

Establishment of an AG

The formation of an AG requires a notarized partnership agreement (articles of association) and entry in the commercial register. The minimum share capital is 50,000 euros and half of this must be paid in when the company is founded.

Advantages and disadvantages of an AG

Advantages

Raising capital

The AG can easily raise capital by issuing shares.

Limited liability

The liability of shareholders is limited to their capital contribution.

Reputation and trust

The legal form of the AG often enjoys a high reputation and trust among business partners and customers.

Disadvantages

Complexity and costs

The formation and management of an AG is more complex and costly than for other legal forms.

Publicity obligation

The AG is subject to strict disclosure requirements and must publish annual financial statements.

Legal aspects

German Stock Corporation Act (AktG)

The German Stock Corporation Act (Aktiengesetz) governs the formation, organization, and liability of an AG in Germany.

Commercial Code (HGB)

The AG must also comply with the provisions of the Commercial Code, in particular in the area of bookkeeping and accounting.

Capital Market Law

If the shares of an AG are traded on a stock exchange, the provisions of capital market law also apply.

Practical considerations when establishing an AG

Choice of legal form

The decision in favor of the legal form of the AG should be carefully considered, as it is associated with considerable obligations and costs.

Raising capital

The AG should have a clear plan for raising capital, including issuing shares and raising investments.

Corporate Governance

Good corporate governance, including effective cooperation between the Executive Board and the Supervisory Board, is crucial to the success of an AG.

Legal compliance

The AG must ensure that it complies with all relevant laws and regulations, including the German Stock Corporation Act, the German Commercial Code and, where applicable, capital market law.

Conclusion

The stock corporation is a sophisticated legal form suitable for larger companies with complex capital structures. It provides the opportunity to raise capital through the sale of shares, while protecting shareholders through limited liability. However, establishing and running an AG involves significant costs and obligations, and companies must ensure that they comply with the legal requirements. For companies that are planning to expand and are ready to take on the challenges this entails, the AG may be a suitable legal form.