The social contract is the basis for the establishment of a company. It also serves to avoid legal problems within society. The social contract must have different contents for the individual legal forms and can also be adopted in several ways. All this and the legal nature of the social contract are explained here in our contribution.

The first step in establishing a company is the conclusion of a social contract. This determines how the company is structured and what rights and obligations the shareholders have to each other. In addition, it serves as an important and reliable basis for business decisions. In particular, the social contract regulates how the shareholders will work together in the future.

Accordingly, the social contract has a two-sided legal nature. It contains, on the one hand, contractual obligations components and, on the other hand, contractual organisation components which establish a Community. The contractual nature of the contract is based on the fact that the contract of association imposes a wide variety of obligations on the shareholders, while the establishment of the independent, organizational unit as a result of the contract of association illustrates the contractual nature of the contract of association.

The conclusion of the social contract requires concordant declarations of intent of all parties involved. The same rules apply to the amendment of the shareholder contract as to the conclusion. Accordingly, unanimity is essential. However, it may be provided in the shareholder contract that decisions are made by a majority vote. However, if the articles of association are subject to errors, then at least in the case of partnerships the principles of the faulty company are decisive.

Every company needs a social contract in order to be effectively founded. However, this can be concluded in some companies implicitly, i.e. by coherent action. Often there is no written copy. But then it is often not clear what applies to legal problems and disputes. Therefore, you should draw up a written social contract.

When concluding a company contract, the termination of the company or the change of shareholdings is not regularly considered. Often, therefore, the social contract does not contain any corresponding regulation. This can be devastating if the shareholders have disagreed and can no longer agree whether the company will now be continued or terminated. Clauses on severance payments or the departure of a shareholder are therefore recommended

The articles of association of a company under civil law (GbR) must contain the purpose of the company and the contribution obligations of the shareholders. In the case of a GbR, the company agreement can also be concluded implicitly. Also the lack of consciousness to close a GbR is inconsiderable. Due to the lack of formal requirements, there may even be an implied change in the contract, in that all shareholders accept the change without contradiction over a longer period of time. However, a formal requirement may arise from other standards. For example, the articles of association pursuant to § 311b (1) sentence 1 BGB must be notarized if a shareholder undertakes to contribute a property to the company assets. The same also applies if the company pursues the purpose of acquiring a property and the conclusion of the contract already establishes an obligation to acquire it. An obligation for notarial deed also exists in accordance with § 15 paragraph 4 GmbHG if a shareholder undertakes to contribute a share of the GmbH business.

The articles of association of an open commercial company (OHG) are intended to establish a company whose purpose is to operate a commercial trade. For the shareholders, this results in particular in the obligation to promote the purpose of the shareholder and to provide the promised contributions. In addition, it may contain regulations that change the legal provisions. For OHG, too, the conclusion is form-free and therefore implicitly possible.

The content of the articles of association of a limited partnership (KG) corresponds to that of an OHG. In addition, the articles of association must stipulate that at least one person has limited liability. The social contract also determines which contribution the limited partner has to make in the internal relationship and determines the amount liable. The latter means the extent to which he is to be liable against the company creditors. In this case, the amount and content of the deposit and the liability sum may differ from one another.

However, a limited partnership is not regularly created by a new foundation, but by amending the social contract of a GbR or OHG. It is stipulated that at least one person with limited liability may be a former shareholder of the previously existing company or a newly entering shareholder.

A special case of the creation of a KG from an OHG is regulated in § 139 HGB. Accordingly, if a succession clause exists, the heir of a shareholder can make his stay in the limited partnership conditional on him receiving the position of limited partner. The condition for this is the approval of the other shareholders. If, on the other hand, they do not agree, there is the possibility for the heir to leave the company without notice or to become a fully liable shareholder of OHG.

The Articles of Association of a Limited Liability Company (GmbH) require notarization in accordance with § 2 (1) GmbHG. The same applies to its amendment. If the social contract contains a defect in form, it is null and void according to § 125 BGB. Then the company is not registered in the commercial register according to § 9c (1) sentence 1 GmbHG. However, then, as with partnerships, the rules about the faulty company apply.

A simplified and possibly more cost-effective procedure is provided for in § 2 paragraph 1a GmbHG. If the company has no more than three shareholders and only one managing director, it may be established using a model protocol which is also to be notarized. The model protocol almost composes statutes, director appointment and shareholder list.

The right to a GmbH’s social contract is largely dispositive and can therefore be regulated differently in the social contract. The minimum content of the social contract is specified in § 3 GmbHG. Accordingly, the articles of association must first provide information about the company and the registered office of the company. The seat may be located at any domestic location. Consequently, there is no link to an establishment or similar. Accordingly, a company with registered office in Germany may transfer all its business activities abroad.

Furthermore, the object of the company must be described in the company agreement. This refers to the type and field of entrepreneurship. Consequently, the object of the undertaking does not concern its object. The area of activity should be identified as precisely and individually as possible in order to protect the participating shareholders. Therefore, designations, the operation of commercial transactions or the production of goods of all kinds are insufficient. However, they may choose the business line of their company to describe the field of activity.

In addition, the articles of association must specify the amount of the share capital and list parts of the business which shareholders take over against contribution to the share capital. According to § 5 (3) GmbHG, the amount of the nominal amounts of the individual shares can be determined differently. However, the sum of the nominal amounts of all shares must correspond to the share capital. If the contribution is to be made in whole or in part in kind, this must be expressly stipulated in the articles of association. In addition, the company itself may not make a contribution. This prohibition is called the prohibition of self-designation.

In addition to this minimum content, further provisions can be laid down in the social contract. Often, therefore, there are provisions on the appointment, the power of representation, the rights and obligations as well as the removal of the directors. This is usually to reduce their power and give the shareholders more rights. Special regulations are often also made regarding the relationship between the shareholders and special supervisory bodies. With regard to the latter, a supervisory board or advisory board is sometimes appointed.

We clarify how you analyse the social contract and corporate structure.

The provisions in the social contract can be structured differently. First of all, they may concern the shareholders and the rights and obligations associated with their participation as such and independently of the person concerned. Then the regulation is linked to the share of the business and therefore also binds subsequent shareholders. On the other hand, the provisions made can also apply only to the partners concluding the contract. In the event of the arrival or departure of a shareholder, the provisions shall then initially not apply with regard to the new shareholder. Rather, it is necessary to assume the rights or obligations according to general civil law principles.

In the case of Aktiengesellschaft (AG) the company contract is called in accordance with § 23 AktG Statute. This is agreed by the founders and established by notarization. Founders are the shareholders who take over shares of the company for deposits. The Articles of Association shall, in accordance with § 23 (3), paragraph 4 AktG company and registered office, specify the object of the company, the amount of the share capital and the way in which it is divided into shares, as well as regulations for the number of members of the company’s board of directors and provisions on the form of company notices. It is important to realize that the law on the public limited company is usually mandatory. Therefore, § 23 (5) AktG stipulates that the regulations may only be deviated from if this is expressly permitted.

The Articles of Association may be amended by resolution of the General Meeting. However, this requires a qualified majority of three quarters of the share capital represented in accordance with § 179 (1), (2) AktG.