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9 September 2022 | Vorratsgesellschaft & Mantelgesellschaft: This is something to consider when establishing a GmbH (this article)

Regularly the establishment of a GmbH should be fast. Therefore, start-up resorts to a shelf company offered by different service providers. Alternatively, many use their own old society for cost reasons, which they no longer use. We explain how such foundations are to be assessed and what to look for.

1st shelf company and shell company: What is it?

A shelf company is a company offered by various service providers usually a GmbH. These can acquire founders in order not to have to go the long way of establishing a GmbH. Therefore, the main goal of the stock company is the rapid establishment of a GmbH. In the case of a shell company, on the other hand, an old company of the founder is newly activated. Therefore, a shell company is regularly set up for reasons of cost, in order to avoid the requirement of share capital.

In fact, therefore, in these cases there is no actual but economic new foundation. Therefore, an economic start-up always exists if a GmbH already registered in the commercial register and thus legally already existing is equipped with a company for the first time (so-called stock company) or again (so-called shell company) and starts its business operations. The Federal Court of Justice (BGH) assumes in permanent jurisprudence that the regulations applicable to the legal re-establishment are to be applied accordingly to the cases of economic re-establishment.

2nd shelf company as initial activation of a company

This jurisdiction is largely unproblematic for companies that are deliberately founded on stock and soon after their legal establishment are sold and equipped with a company for the first time. Then the rules for the protection of creditors on a legal new establishment apply accordingly. For this reason, the company’s directors must disclose the company’s initial or renewed business operations to the commercial register. The managing directors must assure that the agreed services have been provided and that the deposits are in their free disposal. If the economic formation is not disclosed or is not disclosed in time, the shareholders and directors of the company are usually personally liable for any losses. However, the existence of an economic start-up is obvious in these cases. In connection with the sale, the new economic foundation is therefore routinely disclosed to the registry court and the insurance regarding the remaining share capital is provided by the managing director in accordance with § 8(2) GmbHG.

3. shell company as re-activation of a company

The economic start-up is problematic in the cases of the shell company, since it already had a business operation other than the shelf company. Therefore, the shell company should have an economic start-up if the GmbH has not previously operated an active company and therefore only represents an empty shell. In this case, the new business operation cannot be linked to the previous activity either with significant changes or with restrictions or extensions of the area of activity.

Typical but not necessary indications for the resumption of business operations of a GmbH that has become companyless are the change in its articles of association, the change in the company, the registered office or the object of the company. The managing directors are then also regularly exchanged and shares are sold. In addition, the lack of assets is also an indication. If these indicators are available, economic start-up can therefore normally be assumed.

In practice, the existence of an economic start-up is often misunderstood in such cases. Then the corresponding disclosure and insurance vis-à-vis the registry court is also omitted. Then there may be personal liability of the parties involved.

4. legal consequences of a new economic start-up at the stock company and the shell company

4.1. Disclosure and insurance

If it can be established according to the above criteria that an economic start-up is present, the question arises as to what legal consequences follow.

First of all, at the time of reactivation of the company, the managing directors must disclose the new economic foundation to the registry court. At the same time, you must provide insurance about the raising and existence of the statutory share capital of the company. Therefore, it depends not only on the time of the company’s formation, but also on the time of the company’s activation. Consequently, business should always be commenced only after receipt of disclosure and insurance from the registry court. Violations of this obligation may result, for example, in the personal liability of the managing director. In addition, there is a liability of dealers analogous to § 11 paragraph 2 GmbHG, if the transactions were started before the publication of the new economic foundation without the shareholders having consented.

Disclosure and insurance must be done together. In view of conceivable doubts on the correctness of the insurance, it may be advisable to attach suitable proof of the company’s existing capital, for example by bank statements.

4.2 Liability of the shareholders of a stock company or shell company

For the shareholders there is a risk of being claimed by the company in accordance with the principles of pre-charge liability. In the meantime, the BGH has decided that in the case of a new economic foundation, the liability of the shareholders can be limited to the underbalance sheet. Accordingly, the underbalance sheet must be considered at the time when the economic start-up has appeared to the outside world, i.e., for example, by filing amendments to the articles of association, change of director or commencement of business. The legal status of creditors is therefore not improved by not disclosing the economic start-up.

In practice, however, the amount of the underbalance at the time of economic start-up is often difficult to determine later, so that the burden of proof is of considerable importance. In this respect, the BGH only obliges the shareholders. This is in a sense the sanction for breach of the disclosure obligation. It is therefore the responsibility of the shareholders to demonstrate and prove that there was no under-balance sheet at the time of the economic start-up. If they cannot provide this proof, they are therefore also liable for subsequent losses.

4.3. Liability of the acquirers of an interest in a shelf company

Sub-balance sheet liability is a backward performance obligation. Therefore, the purchasers of a share of the business are also liable according to § 16 paragraph 2 GmbHG. The acquirer meets this liability without fault. Before acquiring shares in GmbH, each acquirer should therefore check carefully whether the company may have started up economically in the past and whether it has been duly disclosed. Therefore, the acquirer could be guaranteed by the seller in the share purchase agreement that the company has always been entrepreneurially active since its establishment and that no new economic start-up has taken place.

5th conclusion on the stock company

In a shelf company, the problems of detecting an economic start-up do not exist as in a shell company. In the case of the latter, you must not forget to disclose the new economic foundation to the registry court and to provide the assurance that the share capital is available. If in doubt, you should therefore rather establish a new company legally for new business if possible.