A trust relationship can be used in company law for various design purposes. Especially for the corporate forms of GmbH, GmbH & Co. KG and AG, Treuhand offers various useful application options. The following article deals with the principles of the trust agreement and presents the areas of application of company law.

1st definition of ‘Trust Contract’

First of all, the trust agreement is not independently regulated in German law. Nevertheless, the legal principles are generally accepted. The trustee is characterized in that the trustee makes available to the trustee a thing which the trustee administers for him in his own name. For this purpose, the trustee either transfers the civil ownership of the trust to the trustee or empowers him to dispose of the object as an owner. In the external relationship (trustee – third party), the trustee is hereby completely free as civil owner (or authorized disposer) in his decision-making power with regard to the trust. In the internal relationship (trustee – trustee), however, the trust agreement regulates – in the best case in detail – what the trustee is entitled and obliged to do in detail. A breach of the contractual provisions does not, however, lead to the ineffectiveness of the act of the trustee in the external relationship. However, due to a breach of contract, the trustee is usually liable for damages in his internal relationship with the trustor.

The trust relationship can fulfill various purposes in company law. In particular, three reasons have emerged in practice as main application cases.

2.1.1. Concealment of participation by a trust

The trust relationship can be used in company law to hide the economic participation of a person in a company. For this purpose, shareholders of a commercial company must be entered without exception in the commercial register responsible for the company. However, the commercial register is generally visible to everyone. This leads to the fact that every creation of a shareholder is public by entering it in the commercial register. However, different starting points may lead to an interest in not disclosing a participation in a company.

Exactly for this purpose, a trustee as a middleman can be useful. Here, the trustee manages the shareholding for the trustor in accordance with its specifications. In addition, he transmits the income from the shareholding to the trustee. As shareholder, however, only the trustee acts externally. This is therefore also to be entered in the commercial register – the trust relationship remains completely unrecognized. Although this fact does not apply to the Transparency Register, unlike the Commercial Register, this is not universally visible.

2.1.2. Simplification of the participation structure

Especially in open public companies or extensive family companies, complicated participation and / or voting relationships can occur due to the participation of numerous investors / family members. In this context, the trust can act as a capital collection and administrative unit. A single trustee can manage the shareholdings of a large number of loyal investors according to their basic requirements. In this case, he is responsible, among other things, for exercising the voting rights in the context of the shareholders’ meeting as well as the company law control rights. The trust relationship often leads to a win-win situation in these constellations. The company benefits from the fact that it has a knowledgeable and familiar contact person, while the trustees can have their shareholdings managed by the trustee according to their specifications without great effort.

2.1.3. Avoidance of exclusion of shareholders

In addition, the trust relationship can be used to avoid the exclusion of a shareholder. This design variant becomes particularly relevant in conflict situations between co-partners. If one wants to avoid the radical method of exclusion of a disruptive co-partner or if the exclusion is not feasible in individual cases according to the articles of association, a trustee can be used to ensure the targeted and company-oriented management of the disruptive co-partner's shareholding. Although this continues to be economically involved in the company, a corresponding concept of the trust agreement can enable the trustee to manage the company's shareholding largely without influence.

2.1.4. Other areas of application

In addition to the three above-mentioned main areas of application of the trust relationship in company law, other situations are considered in which the inclusion of a trustee can make sense. This applies, for example, in connection with the role of the managing director.

2.2 Creation of the trust relationship

The trust relationship can – depending on the initial situation – be justified in different ways.

2.2.1. Agreement Trustee

For the establishment of a trust relationship, the mere agreement of the trust agreement is sufficient as long as the trustee was the civil owner of the shareholding before the conclusion of the contract. Under the trust agreement, the trustee undertakes from now on to administer the shareholding for the trustee. Since the trust agreement also includes the obligation of the trustee to transfer the shareholding to the trustor after termination of the trust relationship, the conclusion of an agreement trust is notarized for GmbH shareholders (see § 15 paragraph 4 GmbHG).

2.2.2.

If the future trustee is the owner of the shareholding, he must also transfer the civil property to the trustee in order to establish the trust relationship, in addition to concluding the trust agreement. Thus, the trustee himself becomes a shareholder, but is obliged by the trust agreement to administer the participation in accordance with the regulations therein. Because ownership of the company shares is transferred directly within the framework of the (transfer) trust agreement, this conclusion of the contract with regard to GmbH shares must also be notarized (cf. § 15 paragraph 3 GmbHG). An underfall of the transmission scattering hand is the empowerment scattering hand. In this constellation, the ownership of the shares is not transferred, but the trustee empowers the trustee to dispose of the shares as an owner. However, the trustee himself remains the owner of the shareholding and thus the shareholder.

2.2.3. Acquisition trust

In addition, a trust relationship can also be established in such a way that the trustee is contractually obliged to the trustor to acquire a shareholding in the framework of the company formation in his own name and to administer it for the trustor. If the Treuhandvertrag GmbH shares, it is usually also in this case subject to the notarial deed obligation (see § 15 paragraph 4 GmbHG), since the contract again contains the obligation to retransfer after termination of the trust relationship. An exception to the notarization requirement of the trust contract shall, however, apply in particular if the partnership agreement of the GmbH, in which the shares are to be acquired by the trustee, has not itself been notarized. However, since the validity of the formal requirement in cases of earnings trust and similar constellations is not clear in detail, one can only advise to check each fact concretely.

Conclusion on the trust as a design model