News and Press - Lawyers Attorneys Tax Advisors GRP Rainer Germany - Cologne Berlin Bonn Düsseldorf Frankfurt Hamburg Munich Stuttgart London UK https://www.grprainer.com/en/ News and Press releases of Lawyers Attorneys Tax Advisors GRP Rainer Germany Cologne Berlin Bonn Düsseldorf Frankfurt Hamburg Munich Stuttgart London UK en GRP-Rainer Wed, 21 Nov 2018 02:45:51 +0100 Wed, 21 Nov 2018 02:45:51 +0100 TYPO3 news-3378 Tue, 20 Nov 2018 08:42:32 +0100 EGC: A word mark consisting of two letters can be registered as an EU trade mark https://www.grprainer.com/en/news-and-press/detail/news/egc-a-word-mark-consisting-of-two-letters-can-be-registered-as-an-eu-trade-mark.html It is possible even for a word mark consisting solely of two letters to be registered as an EU trade mark. This was confirmed by the EGC in rulings from 24 April 2018 (Az.: T-207/17 and T-208/17).

We at the commercial law firm GRP Rainer Rechtsanwälte note that commercial symbols need to be sufficiently distinct from the products and services of other providers in order for them to be capable of being registered as a trade mark and to benefit from the protection that comes with trade mark registration. The General Court of the European Union (EGC) has now ruled that it is possible for a word mark to have the required distinctive character even if it consists of only two letters.

A US company had successfully applied to register a word mark made up of two letters in conjunction with a figurative mark with the European Union Intellectual Property Office (EUIPO) as an EU trade mark for various goods and services, including printers and cartridges. A Polish company requested that this mark be declared invalid, arguing that it was descriptive and lacked distinctive character. The petition was rejected by the EUIPO and the claim dismissed by the EGC.

The line of reasoning employed by the Polish company bringing the claim, i.e. that it is especially common in the field of technology for short combinations of letters to be used as descriptions for products and services, failed to convince. The EGC held that a mark is not considered to only have descriptive character simply because it consists of two letters. It found that the contested combination of letters is not often used and nor is it perceived as a designation that lacks distinctive character. The mark was also said to serve as an indication of the origin of the products to the relevant audience. Moreover, the plaintiff had failed to demonstrate that at the time of the mark’s registration another business made use of similar or identical marks to market their products. The Court therefore concluded that the registered EU trade mark need not be declared invalid.

Trade marks are of considerable value to businesses because they give rise to a high degree of brand recognition among consumers. Consequently, trade mark protection is also important. However, before a commercial mark can be registered as a trade mark, it needs to be assessed whether the necessary requirements for registration have been met and whether or not rights associated with existing trade marks would be infringed. Lawyers who are experienced in the field of intellectual property law can advise on matters relating to trade mark registration and protection.

For more informations:

https://www.grprainer.com/en/legal-advice/ip-law/trademark-law.html

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MarkenrechtPressemitteilungen
news-3376 Mon, 19 Nov 2018 09:47:54 +0100 OLG Düsseldorf imposes large fine in response to vertical price fixing https://www.grprainer.com/en/news-and-press/detail/news/olg-duesseldorf-imposes-large-fine-in-response-to-vertical-price-fixing.html The Oberlandesgericht (OLG) Düsseldorf, the Higher Regional Court of Düsseldorf, has imposed a fine of 30 million euros on a drugstore chain and in doing so significantly increased the fine set by the Bundeskartellamt, Germany’s Federal Cartel Office.

Price-fixing agreements are normally in breach of antitrust law. These types of arrangements are not only illegal in the context of horizontal relationships between competitors but also with respect to vertical relationships between producers and distributors. We at the commercial law firm GRP Rainer Rechtsanwälte note that price-fixing arrangements of this kind restrict competition and thus violate the Gesetz gegen Wettbewerbsbeschränkungen (GWB), Germany’s Act Against Restraints of Competition.

In the instant case, the Bundeskartellamt had already imposed a fine of around five million euros on the drugstore chain as early as December of 2015 due to vertical price-fixing arrangements in relation to the distribution of roast coffee. These investigations were part of a larger series of proceedings dealing with vertical price-fixing agreements between a coffee roaster and various retailers, including the drugstore chain in question. On 1 March 2018, the Bundeskartellamt announced that the OLG Düsseldorf had increased the fine to 30 million euros (Az.: V-4 Kart 3/17 OWi).

The OLG Düsseldorf found that there was sufficient evidence indicating that between 2005 and 2008 the drugstore chain had been party to relevant the price control system, pursuant to which the businesses were said to have agreed on supply prices in particular. Consequently, the producer was protected from price abuses on the part of the drugstore, which in turn received information regarding its competitors’ pricing behaviour. The Court concluded that these vertical price-fixing arrangements ultimately also had horizontal implications at the national level for the sale of an important commodity such as coffee.

The OLG Düsseldorf’s ruling is not yet final. The drugstore chain already announced on 12 March 2018 that it had filed an appeal on a point of law with the Bundesgerichtshof, Germany’s Federal Supreme Court, and that it cannot fathom the allegations of illegal price fixing.

Violations of antitrust law or competition law can be met with severe penalties. However, violations are by no means always as obvious as in the case of illegal price-fixing arrangements. Even seemingly insignificant contractual clauses can give rise to a violation and lead to certain consequences. Lawyers who are experienced in the fields of antitrust law and competition law can offer businesses advice.

For more informations:

https://www.grprainer.com/en/legal-advice/antitrust-law.html

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KartellrechtPressemitteilungen
news-3374 Fri, 16 Nov 2018 11:29:11 +0100 Unfair exploitation of a product’s reputation by imitating its well-known design https://www.grprainer.com/en/news-and-press/detail/news/unfair-exploitation-of-a-products-reputation-by-imitating-its-well-known-design.html A product’s good reputation can be deemed to have been unfairly exploited even if the presentation of the product has been imitated but the word mark has not been infringed. That was the verdict of the Oberlandesgericht (OLG) Frankfurt, the Higher Regional Court of Frankfurt.

We at the commercial law firm GRP Rainer Rechtsanwälte note that if goods or services are offered that are an imitation of a competitor’s products, this constitutes a violation of the Gesetz gegen den unlauteren Wettbewerb (UWG), Germany’s Unfair Competition Act. According to a ruling of the Oberlandesgericht Frankfurt from 28 February 2018, imitating the features of a well-known product may constitute unfair exploitation of the latter even if the word mark on the counterfeit product is distinct from the one featured on the imitated product (Az.: 6 W 14/18).

In the case in question, a company from Malaysia had presented an adhesive at a specialist trade fair, the presentation and colour scheme of which bore a strong resemblance to a well-known product made by a German manufacturer. The only thing distinguishing the products was the different inscriptions on the tubes. The OLG Frankfurt ruled that the German company was entitled to sue for an injunction.

The Court held that the German manufacturer’s product had competitive originality. It went on to explain that this kind of originality presupposes that the product’s specific form or certain characteristics are capable of informing consumers about its commercial origin or special features. The Court noted that it is the overall impression created by the design that matters. These requirements were found to have been met in the case of the adhesive, whose overall impression was said to be influenced mainly by the shape of the tube, the colour scheme and the screw cap. The OLG ruled that these features are familiar to consumers, stating that the characteristic combination of colours and shape give rise to a high degree of brand recognition independent of the word mark. It expanded on this point by noting that it is possible to identify the product even if the writing is not yet legible.

The OLG concluded that the Asian company’s product was an imitation because it featured the imitated product’s defining characteristics such as the shape of the tube and colour scheme in a very similar form. All in all, the Asian company was deemed to be unfairly exploiting the good reputation enjoyed by its German competitor’s product. To this end, the Court held that it is sufficient for consumers to project the original product’s good reputation onto the imitation.

Lawyers who are experienced in the field of competition law can advise on matters pertaining to trademark law as well as in relation to violations of the UWG.

For more informations:

https://www.grprainer.com/en/legal-advice/competition-law.html

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WettbewerbsrechtPressemitteilungen
news-3369 Mon, 12 Nov 2018 08:58:06 +0100 OLG München – Extraordinary termination of a commercial agency agreement https://www.grprainer.com/en/news-and-press/detail/news/olg-muenchen-extraordinary-termination-of-a-commercial-agency-agreement.html It is possible for a commercial agency agreement to be extraordinarily terminated for good cause if the relationship of trust between the parties has broken down. That was the verdict of the Oberlandesgericht (OLG) München, the Higher Regional Court of Munich.

A commercial agency agreement can be terminated by any party to the agreement if there is good cause for doing so. We at the commercial law firm GRP Rainer Rechtsanwälte note that sec. 89a of the Handelsgesetzbuch (HGB), Germany’s Commercial Code, provides that this right cannot be excluded or limited. However, the legislature left open the definition of what exactly constitutes good cause. According to a ruling of the OLG München from 8 February 2018, there is deemed to be good cause justifying termination of a commercial agency agreement if the relationship of trust between the parties has irretrievably broken down and it is no longer reasonable to expect further cooperation in consideration of all factors relevant to the circumstances of the specific case (Az.: 23 U 1932/17).

In the instant case, the plaintiff had entered into a commercial agency agreement with the defendant, according to which it was amicably settled that activities relating to the role of the commercial agent would be carried out by the plaintiff’s husband. When the latter downloaded extensive data records onto his private computer without permission, the company issued extraordinary notice of termination. The plaintiff took action against this, demanding, among other things, payment of commission, bonuses and a commercial agency settlement.

The OLG München held that the extraordinary notice of termination had been justified, ruling that downloading and saving the data records had not been necessary for the purposes of carrying out activities relating to the role of the commercial agent and that the plaintiff could be held responsible for her husband’s conduct in this regard. The OLG München took the view that downloading the data without permission was so serious that the relationship of trust between the parties had irretrievably broken down and it was no longer reasonable to expect the contractual relationship to continue until the end of the ordinary notice period for termination. The Court stated that the fact that the plaintiff had worked with the company for more than 20 years changed nothing. It went on to say that it had not even been necessary to issue a prior formal warning, as the relationship of trust had been severely shaken by the impropriety, such that the former could not be restored with a successful warning.

Legal disputes between commercial agents and commercial enterprises are common. Lawyers who are experienced in the field commercial law can advise on matters ranging from drafting to terminating a commercial agency agreement.

For more informations:

https://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html

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HandelsvertreterrechtPressemitteilungen
news-3367 Fri, 09 Nov 2018 13:05:48 +0100 Bundeskartellamt imposes fines running into millions for illegal arrangements https://www.grprainer.com/en/news-and-press/detail/news/bundeskartellamt-imposes-fines-running-into-millions-for-illegal-arrangements.html The Bundeskartallemt, Germany’s Federal Cartel Office, has imposed fines totaling approx. 23 million euros in response to the collective calculation of uniform price recommendations.

According to a case report of the Bundeskartellamt from 16 March 2018, Germany’s Federal Cartel Office imposed fines amounting to about 23 million euros in total on ten businesses and an individual involved in the plumbing and heating services sector in a decision from 21 February 2018 (Az.: B5 – 139/12).

In justifying its decision to impose the fines, the Bundeskartallemt cited that the competing plumbing supplies wholesalers had collectively calculated the respective recommendations for gross list prices as detailed in their sales catalogues using internal data such as operating costs, mobility and minimum discounts. In the course of this, the highest purchase price that a plumbing supplies wholesaler was able to obtain from the manufacturer served as the basis.

The businesses, members of the costing committee for a North-Rhine Westphalia plumbing services association called “Mittelstandskreis Sanitär Nordrhein-Westfalen”, or “MKS NRW” for short, recommended using these gross list prices amongst each other as well as to other members. This frequently led to these prices being either included in the catalogues or only slightly adjusted. The Bundeskartellamt found that the common calculation basis gave rise to an anti-competitive alignment of the initial price level and thus resulted in less competition.

The exceptional derogation for recommendations made by small and medium-sized enterprises was definitively abolished when the 7th amendment to Germany’s Act Against Restraints of Competition, the Gesetz gegen Wettbewerbsbeschränkungen (GWB), entered into force. The members of the MKS NRW would therefore have been obliged to re-assess and cease their anti-competitive conduct. Instead, they continued to collectively calculate the gross list prices until the search in March of 2013. Due to the fact that those involved cooperated with the Bundeskartellamt in uncovering the cartel, they benefited from a leniency programme, which resulted in the fines being reduced.

For those adversely affected by the cartel, the Bundeskartellamt’s decision means that they can demand compensation from the cartelists. We at the commercial law firm GRP Rainer Rechtsanwälte note that it is no longer necessary to furnish evidence substantiating the violation.

We also note that violations of antitrust law or competition law are met with severe penalties, and the violations need not be obvious as in the case of illegal price-fixing arrangements. Lawyers who are experienced in the fields of antitrust law and competition law can advise businesses on enforcing or fending off claims arising from violations of antitrust law or competition law.

For more informations:

https://www.grprainer.com/en/legal-advice/antitrust-law.html

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KartellrechtPressemitteilungen
news-3363 Tue, 06 Nov 2018 08:31:46 +0100 BVerfG – Proportionality in relation to allegations of delayed filing for insolvency https://www.grprainer.com/en/news-and-press/detail/news/bverfg-proportionality-in-relation-to-allegations-of-delayed-filing-for-insolvency.html Allegations of delayed filing for insolvency are easily made, yet the investigations need to maintain a sense of proportion. A home search can just as easily overshoot the mark.

A managing director’s obligations include, among other things, filing for insolvency in due time. The application for insolvency must be submitted without undue delay, but no later than three weeks after the onset of insolvency or over-indebtedness. We at the commercial law firm GRP Rainer Rechtsanwälte note that by failing to meet this obligation, the managing director renders him- or herself liable to prosecution.

Allegations of delayed filing for insolvency are easily made. However, the public prosecutor’s office needs to maintain a sense of proportion during investigations. Searching the managing director’s private living quarters may be unconstitutional if the initial suspicion is not based on concrete facts but rather vague indications and mere supposition, as the Bundesverfassungsgericht (BVerfG), Germany’s Federal Constitutional Court, made clear in a ruling from 10 January 2018 (Az.: 2 BvR 2993/14).

In the case in question, two companies had maintained close business relations for years. When one of them, a GmbH, fell into arrears with its payments and these payments failed to materialize even after several formal reminders, the creditor lodged a criminal complaint. The competent public prosecutor’s office subsequently opened an investigation on suspicion of failure to file for insolvency in due time. During the course of the investigation, a search of the managing director’s business premises and living quarters was ordered and carried out. The managing director lodged a complaint against the search order and at the same time demanded that the seized documents be handed over, arguing that there were no indications that the company was insolvent. He further argued that it was evident from the correspondence that the asserted claims were being disputed and for this reason had not been paid. The managing director also claimed that the search order was disproportionate given the numerous other investigative measures that could have been taken that would not have violated constitutional rights to the same extent.

The seizure of the documents was later reversed and the investigation suspended. The managing director nonetheless brought a constitutional complaint due to violation of his constitutional rights. The BVerfG upheld the complaint in relation to the house search, stating that for a house search to be conducted the initial suspicion needs to be based on concrete evidence and the search must be proportionate. It went on to say that, in any event, a search is disproportionate if alternative investigative methods that would not have violated constitutional rights to the same extent are avoided without plausible cause. The Court held that in this case it should have been possible to inspect the list of debtors and the annual financial statements of the GmbH, or to request information from the account screening file.

If allegations of delayed filing for insolvency are made or insolvency is imminent, lawyers who are experienced in the field of company law can serve as professional advisers.

For more informations:

https://www.grprainer.com/en/legal-advice/company-law/restructuring-insolvency.html

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Restrukturierung InsolvenzPressemitteilungen
news-3360 Fri, 02 Nov 2018 08:42:23 +0100 ECJ – Commercial agents can claim compensation for termination during probationary period https://www.grprainer.com/en/news-and-press/detail/news/ecj-commercial-agents-can-claim-compensation-for-termination-during-probationary-period.html Even if a commercial agency agreement is terminated during the probationary period, the commercial agent may still be entitled to claim compensation or damages. That was the verdict of the ECJ.

After a commercial agency agreement is terminated, the commercial agent is normally entitled to claim compensation. We at the commercial law firm GRP Rainer Rechtsanwälte note that this may not be the case if, for instance, the commercial agent was the one who terminated the agreement or the termination is attributable to wrongful acts committed by the commercial agent. Having said that, termination of the commercial agency agreement during the probationary period is not grounds for the right to claim compensation lapsing. That was the verdict of the Court of Justice of the European Union in a ruling from 19 April 2018 (Az.: C-645/16).

In the instant case, the company and the commercial agent had settled on a twelve-month probationary period in the agreement. Both parties were entitled to terminate the agreement within this timeframe allowing for a certain notice period. Because the commercial agent fell well short of the contractually agreed target, the company issued notice of termination within the probationary period. The commercial agent subsequently asserted a claim for payment of compensation for the loss associated with the termination of the agreement. The point of contention was then whether such a claim can be made even if the contractual relationship is terminated during the probationary period.

Commercial agents’ rights to claim compensation are laid out in an EU directive. The Court of Justice held that the rights provided for in the directive to claim compensation and damages are not meant to serve as a sanction against terminating an agreement but rather as a means for compensating the commercial agent both for services he or she performed which the company continues to benefit from as well as for any costs and expenses he or she incurs. The Court of Justice went on to state that if the conditions set out in the directive are fulfilled, the right to compensation cannot be denied solely on the basis that the agreement was terminated during the probationary period; the right to claim compensation is equally applicable during the probationary period.

The case before the ECJ concerned a legal dispute in France. However, the ruling also has implications for German commercial agency law. The relevant German provisions are closely aligned with the EU directive. As such, it is not possible to circumvent commercial agents’ rights to claim compensation by terminating the agreement during the probationary period.

Lawyers who are experienced in the field of commercial law can serve as professional advisers to businesses and commercial agents, advising on matters ranging from drafting agreements to enforcing claims or fending off those brought by contractual partners.

For more informations:

https://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html

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HandelsvertreterrechtPressemitteilungen
news-3359 Thu, 01 Nov 2018 09:00:16 +0100 OLG München – Commercial agent’s right to be issued with excerpt from the accounts https://www.grprainer.com/en/news-and-press/detail/news/olg-muenchen-commercial-agents-right-to-be-issued-with-excerpt-from-the-accounts.html The limitation period for a commercial agent’s right to be issued with an excerpt from the accounts normally begins at the close of the year in which he or she received a final commission settlement.

When calculating the commission due, a commercial agent can demand an excerpt from the accounts concerning all transactions in relation to which he or she is entitled to commission. We at the commercial law firm GRP Rainer Rechtsanwälte note that based on this excerpt, the commercial agent is then able to review each and every transaction subject to commission in order to check whether the settlement is correct and complete.

In a judgment from 21 December 2017, the Oberlandesgericht (OLG) München, the Higher Regional Court of Munich, reaffirmed that the limitation period for this right normally begins at the close of the year in which the business issued the commercial agent with a final commission settlement (Az.: 23 U 1488/17). The Court then noted that a three-year limitation period is to be expected. This was said to be equally applicable in principle to insurance agents. The OLG went on to state that even if the brokered contracts are subject to an indemnity period in case of cancellation, this does not preclude the acceptance of a final commission settlement, as the insurance agent knows which amounts have been withheld as reserves in case of cancellation when receiving the settlement.

The Court ruled that the excerpt from the books must include a complete, orderly and clear presentation of all the information relevant to the commission as well as any information required by the commercial agent for the purposes of assessing his or her commission claims. Whether information pertaining to transactions is relevant to the commission in a given case depends on the commission scheme in place between the business and the commercial agent. The OLG München further stated that this can be ascertained mainly from the commission agreement in addition to mandatory statutory provisions, including sec. 87a paras. 2-4 of the Handelsgesetzbuch (HGB), Germany’s Commercial Code.

Legal disputes between commercial agents and businesses concerning claims for commission or compensation as well as non-compete obligations are common. To avoid these kinds of disputes, the main points ought to have already been settled in the commercial agency agreement in a clear and detailed manner. Lawyers who are experienced in the field of commercial law can serve as professional advisers to businesses and commercial agents, advising on matters ranging from drafting agreements to enforcing claims or fending off those brought contractual partners.

For more informations:

https://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html

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HandelsvertreterrechtPressemitteilungen
news-3354 Fri, 26 Oct 2018 08:58:13 +0200 Removing the costs associated with forming a GmbH from its articles of association https://www.grprainer.com/en/news-and-press/detail/news/removing-the-costs-associated-with-forming-a-gmbh-from-its-articles-of-association.html According to a ruling of the Oberlandesgericht (OLG) Celle, the Higher Regional Court of Celle, the provisions in a GmbH’s articles of association concerning who bears the costs associated with forming the company must not be removed before a period of ten years has passed since the company was initially registered.

In addition to the company’s share capital, there are other costs which need to be taken into account when forming a GmbH. These include, for instance, costs arising from notarization and registration in the commercial register. Naturally, it is often in the shareholders’ interest for these costs to be borne by the company, especially since this gives rise to tax benefits. We at the commercial law firm GRP Rainer Rechtsanwälte note that if the intention is for the GmbH to bear the costs associated with forming the company, it then becomes strictly necessary to include a provision to this effect in the articles of association.

If the company has been in existence for several years, it is common for the shareholders to conclude that the provisions dealing with the formation costs are superfluous. However, these cannot be readily removed. In a ruling from 2 February 2018, the OLG Celle held that the provisions in a GmbH’s articles of association regarding who is to bear the costs associated with forming the company must not be removed before a period of ten years has passed since the company was first registered (Az.: 9 W 15/18).

The OLG Celle justified its decision with reference to the need to ensure that information interests in legal relations are upheld for a minimum period. The prevailing statutory limitation periods under GmbH law serve as a guide here. The Court went on to state that the waiting period for retaining the provisions in the articles of association dealing with the costs associated with forming the company must therefore amount to a minimum of ten years starting from when the company was first registered.

It is nonetheless generally beneficial for shareholders to transfer the costs associated with forming the company, as these are tax deductible as business expenses. However, there needs to be a provision to this effect in the articles of association. This is because these costs do not constitute business expenses but rather a hidden distribution of profits to the shareholders if they are borne by the GmbH despite the latter not being obligated to assume this responsibility.

A lot of factors need to be considered when forming a company, including aspects of tax law. Lawyers who are experienced in the field of company law can offer advice.

For more informations:

https://www.grprainer.com/en/legal-advice/company-law.html

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GesellschaftsrechtPressemitteilungen
news-3351 Wed, 24 Oct 2018 08:11:16 +0200 GRP Rainer Rechtsanwälte – Report on mandatory social security contributions for managing directors https://www.grprainer.com/en/news-and-press/detail/news/grp-rainer-rechtsanwaelte-report-on-mandatory-social-security-contributions-for-managing-directors.html Mandatory social security contributions for managing directors is a controversial topic that continues to rear its head and ought not to be underestimated, as businesses can potentially be faced with large back payments.

Our experience at the commercial law firm GRP Rainer Rechtsanwälte shows that businesses often underestimate the obligation to pay social security contributions in relation to managing directors. This is particularly true in the case of shareholder-managing directors, who are also not automatically presumed to be self-employed. We at GRP Rainer Rechtsanwälte note that, in fact, the Bundessozialgericht (BSG), Germany’s federal court for matters pertaining to social security, has set high standards for recognizing a managing director as self-employed.

In two rulings from 14 March 2018, the Bundessozialgericht held that managing directors of a GmbH are generally deemed to be employees of the company and therefore subject to mandatory social security contributions (Az.: B 12 KR 13/17 R and B 12 R 5/16 R). The BSG ruled that shareholder-managing directors are only deemed not to be employees if they have the legal authority to determine the fate of the company by influencing the general meeting the shareholders. This is normally the case if the managing director holds more than 50 per cent of the shares in the authorized capital as the majority shareholder. If the managing director owns exactly 50 per cent of the shares in the authorized capital or less than that, an employee relationship can then only be ruled out if the articles of association include explicit provisions conferring a full blocking minority on him or her, and he or she is able to obstruct the general meeting of the shareholders from issuing instructions.

The Court went on to state that when it comes to the issue of mandatory social security obligations, it is also not a matter of whether a managing director has extensive powers and freedom in their relations with third parties. Instead, the crucial factor is the scope of their ability to influence resolutions of the general meeting of the shareholders by legal means.

Managing directors in an employment relationship are, as a matter of principle, subject to mandatory social security contributions. Clear indications of an employment relationship include, e.g. the managing director being subject to the instructions given by their employer in relation to working hours, the place of work as well as the type of work. This is usually the case with manager directors who are hired from outside of the company, but shareholder-managing directors can also be subject to mandatory social security contributions. For this reason, it is necessary to carry out a detailed assessment of the managing director’s status in order to avoid large back payments. Lawyers who are experienced in the field of company law can offer advice.

For more informations:

https://www.grprainer.com/en/legal-advice/company-law.html

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GesellschaftsrechtPressemitteilungen
news-3344 Tue, 16 Oct 2018 09:28:30 +0200 GRP Rainer Rechtsanwälte – Liability of managing directors for delay in filing for insolvency https://www.grprainer.com/en/news-and-press/detail/news/grp-rainer-rechtsanwaelte-liability-of-managing-directors-for-delay-in-filing-for-insolvency.html If a company is faced with imminent insolvency or over-indebtedness, the managing director must file for insolvency. Failure to do so in due time may result in him or her being held personally liable.

It is often difficult for managing directors and other governing bodies to accept that the company is facing insolvency. Understandably, every possible measure is taken to avoid insolvency in a lot of these cases. Notwithstanding this, managing directors should not under any circumstances ignore signs of imminent insolvency, as one of their duties is to file for insolvency in due time. We at the commercial law firm GRP Rainer Rechtsanwälte note that the managing director might otherwise be held personally liable for the delay in filing for insolvency. Our experience shows that many managing directors are unaware of when an insolvency petition needs to be filed and which payments can still made.

In principle, an insolvency petition must be submitted without undue delay, but no later than three weeks after the company becomes insolvent or over-indebted. A company is considered to be over-indebted if the company’s assets no longer cover its existing liabilities. In the case of insolvency, the company is no longer able to meet its payment obligations. A company is deemed to be insolvent if the vast majority of liabilities can no longer be settled, even if individual payments are still being made.

In that case, managing directors must above all take care to ensure that no payments are made that diminish the insolvency estate. Otherwise, they may be liable to pay damages. According to a ruling of the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, from 4 July 2017, payments made under these circumstances are only permissible if the compensation or return contribution offsets the reduction in the insolvency estate (Az.: II ZR 319/15). To this end, the compensation or return contribution to be added to the insolvency estate needs to be suitable for use by the creditors. The BGH noted that wages or services are generally not suitable for these purposes. The Court went on to state that if the managing director nevertheless arranges for payment of wages, he or she may be liable to make restitution.

A looming threat of insolvency may entail a high risk of personal liability for the managing director. That is why legal advice ought to be sought if there are signs that the company is on the verge of insolvency or over-indebtedness. Lawyers who are experienced in the field of company law can serve as expert advisers.

For more informations:

https://www.grprainer.com/en/legal-advice/company-law/restructuring-insolvency.html

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Restrukturierung InsolvenzPressemitteilungen
news-3342 Mon, 15 Oct 2018 08:26:44 +0200 GRP Rainer Rechtsanwälte – Experience drafting franchise agreements https://www.grprainer.com/en/news-and-press/detail/news/grp-rainer-rechtsanwaelte-experience-drafting-franchise-agreements.html A franchise agreement sets out the basic principles governing the relationship between franchisee and franchisor. For this reason, it is of great importance to both parties.

Franchising has become an established practice in many industries. It involves the franchisee running its own independent business and bearing the associated economic risks. At the same time, the franchisee uses the uniform branding of the typically already well-known franchisor in return for payment of a fee. This relationship gives rise to rights and obligations for both parties, and these are laid out in the franchise agreement. We at the commercial law firm GRP Rainer Rechtsanwälte note that experience shows that the contractual provisions ought to be as comprehensive and detailed as possible to ensure minimal room for interpretation and a stable legal basis.

Due to the fact that there is normally a gap in knowledge that favours the franchisor, it is generally viewed as the stronger contracting party. As a result, it is subject to duties of disclosure vis-à-vis its contractual partner. While the relevant requirements have yet to be fleshed out by the legislature, the franchisor cannot give the franchisee false expectations, e.g. by presenting completely unrealistic economic figures. This kind of approach can potentially lead to the franchisee bringing claims for damages.

The parties largely have free reign when drafting the franchise agreement; there are no clear legal requirements. Instead, the franchise agreement is a type of mixed contract that particularly includes elements of a purchase agreement, a lease and a loan agreement. Examples of important aspects that should absolutely be regulated by the agreement are the duration, territorial protection and marketing. In addition, the conditions pertaining to the cessation or termination of the contractual relationship should also clearly defined.

When it comes to franchise law, rules and regulations from a variety of different legal fields need to be observed. These include commercial law, competition law, antitrust law and employment law, among others. In light of these complex requirements, it is good idea to obtain comprehensive legal advice from a single source. The contracting parties’ opportunities and expectations ought to be realistically assessed and their rights and obligations precisely defined. Nevertheless, it is always possible for difficulties to arise over the course of the partnership. Lawyers who are experienced in the field of franchise law can assist in overcoming such problems and advise on matters ranging from drafting agreements to terminating the franchise relationship.

For more informations:

https://www.grprainer.com/en/legal-advice/commercial-law.html

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HandelsrechtPressemitteilungen
news-3340 Fri, 12 Oct 2018 06:53:54 +0200 GRP Rainer Rechtsanwälte – Liability of managing directors in the event of competition violations https://www.grprainer.com/en/news-and-press/detail/news/grp-rainer-rechtsanwaelte-liability-of-managing-directors-in-the-event-of-competition-violations.html A company’s legal infringements can also come back to haunt its managing director. That being said, the latter’s liability towards third parties is strictly limited.

Legal infringements are particularly common in the fields of trademark and competition law. Our experience at the commercial law firm GRP Rainer Rechtsanwälte shows that in these cases claims are often brought against the managing director of the company acting unlawfully as well. Having said that, the managing director’s personal liability towards third parties in event of competition violations is now strictly limited.

As early as 2014, the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, considerably curtailed managing directors’ liability (Az.: I ZR 242/12). The BGH distanced itself from the prevailing case law at the time, according to which managing directors’ liability came into consideration if the managing director knew of employees’ competition violations and did nothing to prevent them. The Karlsruhe judges held that the managing director’s status as a governing body and their general responsibility for the company do not by themselves give rise to an obligation on the part of the managing director to prevent competition violations in relation to external third parties. Mere knowledge of a competition violation and failure to prevent it are not enough to trigger liability on the part of the managing director.

Managing directors’ liability might nevertheless come into question if the managing director personally committed the unlawful act or ordered that it be carried out or, pursuant to the principles of tort law, a duty to intervene arises by virtue of his or her position, with the result that the managing director’s conduct can ultimately be blamed for the competition violation.

Furthermore, the managing director has a duty towards the company to ensure that legal infringements such as competition violations do not occur. If the managing director fails in this respect to fulfil their duty to manage the business in a prudent manner, he or she may still be liable towards the company. However, according to the case law of the BGH, this duty does not extend to external third parties, as general liability would impose an almost incalculable risk on the managing director.

Legal disputes are common when it comes to issues pertaining to managing directors’ liability. Lawyers who are experienced in the field of company law can provide managing directors and other executive organs as well as companies with comprehensive advice.

For more informations:

https://www.grprainer.com/en/legal-advice/company-law.html

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GesellschaftsrechtPressemitteilungen
news-3338 Thu, 11 Oct 2018 07:16:05 +0200 GRP Rainer Rechtsanwälte – Assessment of removing a shareholder-managing director for good cause https://www.grprainer.com/en/news-and-press/detail/news/grp-rainer-rechtsanwaelte-assessment-of-removing-a-shareholder-managing-director-for-good-cause.html It is possible to remove a shareholder-managing director from their post if there is good cause justifying this action, but good cause must be present at the time of the resolution’s adoption.

The general meeting of the shareholders is the main decision-making body of a GmbH, a type of German private limited liability company. It is normally responsible for deciding whether a shareholder-managing director is removed from their post as well as whether their employment contract is terminated. However, the shareholder-managing director is also personally entitled to vote, which means that he or she might potentially be able to thwart a resolution to remove them from their post. Notwithstanding this, the shareholder-managing director is not allowed to exercise their voting rights if their removal is being proposed based on good cause. We at the commercial law firm GRP Rainer Rechtsanwälte note that the assessment of whether there is in fact good cause justifying removal is therefore the decisive factor.

In practice, it has frequently been a controversial point of discussion whether it is sufficient for removal to formally take place on the basis of good cause or whether good cause requires objective and transparent underlying proof. In a judgment from 4 April 2017, the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, provided clarity (Az.: II ZR 77/16). The Court held that for the purposes of courts reviewing the validity of shareholder resolutions concerned with the removal of a GmbH shareholder-managing director or termination of their employment contract, it comes down to whether or not good cause was in fact present at the time of the resolution’s adoption. It went on to state that in the context of a legal dispute, the requirement to demonstrate and provide evidence of good cause must be met by the party whose claim relies on its existence.

In the case in question, there were differences of opinion among the shareholders of a GmbH. The general meeting of the shareholders was supposed to vote on the removal of the shareholder-managing director. However, the shareholder-managing director owned 51 per cent of the voting shares, and the attempt to remove him failed as a result.

The BGH ruled that the shareholder-managing director had been allowed to exercise his right to vote because the good cause justifying his removal and termination of his employment contract was not objectively present at the time of the resolution’s adoption. The Court noted that there is good cause if it would no longer be reasonable to expect the company to continue employing the managing director, in particular due to gross dereliction of his duties.

Disputes among shareholders are common. Lawyers who are experienced in the field of company law can advise shareholders and managing directors.

For more informations:

https://www.grprainer.com/en/legal-advice/company-law.html

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GesellschaftsrechtPressemitteilungen
news-3336 Wed, 10 Oct 2018 08:05:04 +0200 Genesis Mining terminating unprofitable contracts https://www.grprainer.com/en/news-and-press/detail/news/genesis-mining-terminating-unprofitable-contracts.html The price of Bitcoin has fallen sharply. This has put pressure on mining companies such as Genesis Mining, which is now seeking to terminate or upgrade contracts with its clients.

Last year, Bitcoin and other cryptocurrencies hit a high. Though many sought to profit from this boom, mining cryptocurrencies is energy intensive and requires a lot of computing power. This makes it difficult for individuals to profit from mining. Some have turned to mining companies such as Genesis Mining to rent computing power. The fall in the price of Bitcoin has exacerbated the problems associated with running profitable mining operations. For this reason, Genesis Mining notified its investors in August that it would be terminating open-ended contracts. As an alternative, we at the commercial law firm GRP Rainer Rechtsanwälte can report that the company is offering an upgrade to a contract with a five-year term.

Genesis Mining was established in Germany in 2013 and within a few years grew to become one of the leading cloud mining firms. The company moved its computing power to Iceland, among other places, due to cheaper electricity prices and it being easier to cool computers. The firm offers its clients various infrastructure packages for mining cryptocurrencies. Yet Bitcoin’s downward trend and the increasing difficulty associated with mining is making it more challenging to run profitable mining operations. It means that maintenance costs are higher than the returns on some contracts. These open-ended contracts are now being terminated by Genesis Mining within a 60-day period. Its clients are being offered to change their contracts as an alternative, with the new contracts featuring a reduced price per 1 TH/s of 180 US dollars, down from 285 US dollars. However, the contracts have a five-year term.

This five-year term could become a problem, as it is not possible to predict trends for cryptocurrencies, mining or legal regulations. This has become abundantly clear from the substantial fluctuations in the price of Bitcoin in recent months. Moreover, mining for cryptocurrencies is likely to become increasingly complex and require greater computing power. This might result not only in mining becoming less profitable but also major financial losses. Uncertain clients of Genesis Mining as well as other mining companies can turn to experienced lawyers.

For more informations:

https://www.grprainer.com/en/legal-advice/capital-markets-law.html

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KapitalmarktrechtPressemitteilungen
news-3334 Tue, 09 Oct 2018 09:20:03 +0200 GRP Rainer Rechtsanwälte – Assessment of shareholder’s right of access https://www.grprainer.com/en/news-and-press/detail/news/grp-rainer-rechtsanwaelte-assessment-of-shareholders-right-of-access.html The shareholders of a GmbH have extensive rights of access and inspection which go beyond the general meeting and that enable them to inform themselves about what is happening within the business. These shareholder rights cannot be restricted in the articles of association. And yet, we at the commercial law firm GRP Rainer Rechtsanwälte note that even shareholders’ requests for information are subject to limitations in exceptional circumstances.

For the purposes of assessing whether the managing director must grant a shareholder the information the latter requested, it is first necessary for the managing director to determine whether the company’s interests could be harmed by the information or whether this information could be used for non-company purposes. Should the managing director come to the conclusion that, in the interests of the company, the information ought not to be granted, the final decision is not, however, his or hers to make; it is the general meeting of the shareholders that has the final word. It is essential that the managing director be aware that final decision-making authority does not rest with him or her and that misconduct may have serious consequences for them. If he or she acts on their own authority in denying access to the information, they may even render themselves liable to pay damages and their employment contract could be terminated without notice.

The general meeting of the shareholders decides whether a shareholder needs to be granted his rights of access and inspection. The shareholder requesting the information is not allowed to take part in the vote. If the general meeting of the shareholders decides that the information should not be granted, the shareholder still has the option of enforcing his rights of access and inspection in court.

A shareholder’s rights of access and inspection cover all of the company’s legal and economic activities. This includes activities and processes that have already been completed as well as projects and proposals that are still in the planning stage. The shareholder can request access to view agreements, the accounts, logs and records etc. In doing so, the shareholder can decide for him- or herself whether they wish to exercise their right of access, their right of inspection or both. The managing director is then obliged to comply with the shareholder’s request as soon as possible assuming there are no grounds for refusing access to the information or calling a general meeting of the shareholders.

Lawyers who are experienced in the field of company law can advise shareholders and managing directors.

For more informations:

https://www.grprainer.com/en/legal-advice/company-law.html

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GesellschaftsrechtPressemitteilungen
news-3331 Mon, 08 Oct 2018 08:24:27 +0200 GRP Rainer Rechtsanwälte – Assessment of claims for damages in response to kickbacks https://www.grprainer.com/en/news-and-press/detail/news/grp-rainer-rechtsanwaelte-assessment-of-claims-for-damages-in-response-to-kickbacks.html Corruption, attempted bribery and kickbacks are all commonplace in commercial life. Aggrieved parties can assert claims on account of damage caused by acts contrary to public policy.

Up until the end of the 20th century, it was still possible in Germany to claim bribes paid to foreign business partners against tax as “nützliche Aufwendungen”, i.e. beneficial expenditures. Times have changed. Kickback payments made by German firms have been punishable by law since 2002. We at the commercial law firm GRP Rechtsanwälte note that this has led to greater accountability of businesses and their managers. Kickback payments are contrary to public policy. According to sec. 826 of the Bürgerliches Gesetzbuch (BGB), the German Civil Code, a person who inflicts damage on another person in a manner contrary to public policy is liable to pay compensation for the damage.

Assessing and proving whether damage has been inflicted because of an illegal payment arrangement can sometimes prove challenging, since the party claiming compensation due to a kickback arrangement made without their knowledge must first be able to prove its existence. It is enough, however, for them to be able to present sufficient evidence indicating that a kickback agreement was concluded. In a ruling from 18 January 2018, the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, held that this would already be enough to satisfy the burden of proof (Az.: I ZR 150/15). It went on to note that the other party would then have to be able to demonstrate that the accusations are without merit and that there were no illegal arrangements.

In the instant case, a furniture dealer had engaged a forwarding company to transport furniture from Asia to Europe and granted a third party the relevant powers necessary for the purposes of supervising these transactions. In the course of this, increased freight reimbursements were reported, of which the furniture dealer knew nothing. It demanded that the freight surcharges be returned. The Oberlandesgericht (OLG) Hamburg, Hamburg’s Higher Regional Court, dismissed the claim.

The BGH delivered a different ruling. It took the view that the plaintiff had presented sufficient evidence supporting the existence of a kickback arrangement. However, the respondent then went on not only to dispute the kickback payments within the scope of its secondary burden of presentation, but also set out a completely different version of events, facts and circumstances. The BGH referred the case back the OLG, stating that the judge had not given sufficient consideration in their judgment to all aspects when hearing the evidence.

Legal advice is essential if there are accusations or suspicion of damage caused by acts contrary to public policy or kickback payments. Lawyers who are experienced in the field of commercial law can serve as expert advisers.

For more informations:

https://www.grprainer.com/en/legal-advice/business-law.html

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WirtschaftsrechtPressemitteilungen
news-3330 Fri, 05 Oct 2018 08:46:53 +0200 OLG München – Managing directors liable if they exceed the scope of their discretionary powers https://www.grprainer.com/en/news-and-press/detail/news/olg-muenchen-managing-directors-liable-if-they-exceed-the-scope-of-their-discretionary-powers.html A managing director who culpably breaches his or her duties may be liable to pay damages to the company. This was confirmed by a ruling of the Oberlandesgericht (OLG) München, Munich’s Higher Regional Court.

A managing director may be liable to pay damages not only to third parties but also the company if he or she culpably breaches his or her duties. We at the commercial law firm GRP Rainer Rechtsanwälte note that this means that the managing director needs to have acted intentionally or negligently and caused harm to the company in doing so. The managing director’s conduct might already amount to a breach of duty of this kind if he or she concludes a new framework agreement and this does not include a customer protection (exclusivity) clause in contrast to the original agreement. In a ruling from 8 February 2018, the Oberlandesgericht München held that under these circumstances the managing director is deemed to have exceeded his or her discretionary commercial powers (Az.: 23 U 2913/17).

Companies include a customer protection clause to prevent a contractual partner from directly benefiting from the former’s business relationships and using the contacts to expand their own client base, thereby effectively poaching the company’s clients. In the instant case, a company had an agreement with a business partner that included a customer protection clause. This was later removed when the managing director renegotiated the framework agreement with said business partner. The managing director justified this by stating that the contractual relationship would otherwise have been terminated and he had therefore acted in the interests of the company.

The latter nevertheless sued him for payment of damages on the basis that removing the customer protection clause had resulted in the loss of a number of clients and thus harmed the company. The OLG München upheld the claim for damages, ruling that by concluding a new framework agreement without a customer protection clause, the managing director had acted in a manner that amounted to a breach of duty.

The Court went on to say that while a managing director does enjoy broad discretionary powers and that this entails taking commercial risks to a certain extent, he or she is deemed to have exceeded this discretion if, from the standpoint of a prudent and conscientious manager, there is undeniably a high risk of harm and, on the other hand, no reasonable economic grounds for taking this risk. The OLG concluded that by forgoing the customer protection clause, the managing director had exceeded his discretionary powers and thus committed a breach of duty.

Managing directors are faced with a great deal of responsibility and risk. Lawyers who are experienced in the field of company law can serve as competent advisors in relation to issues of manager liability.

For more informations:

https://www.grprainer.com/en/legal-advice/company-law.html

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GesellschaftsrechtPressemitteilungen
news-3328 Thu, 04 Oct 2018 08:42:38 +0200 ECJ on infringements of geographical indications https://www.grprainer.com/en/news-and-press/detail/news/ecj-on-infringements-of-geographical-indications.html According to a ruling of the Court of Justice of the European Union (ECJ) from 7 June 2018, an association with a protected indication is not by itself sufficient to infringe the registered geographical indication (Az.: C-44/17).

As in the case of word marks or figurative marks, it is also possible to obtain trade mark protection for geographical indication of origin. Consumers may make certain associations with geographical designations of origin, e.g. regarding the quality of the product. We at the commercial law firm GRP Rainer Rechtsanwälte note that while protection of designations of origin is, for this reason, important to businesses, it is not without limits.

The Court of Justice of the European Union had to rule on whether use of the term “glen” in the case of whisky from a German brewery infringes the registered trade mark “Scotch Whisky”. That is the position of the Scotch Whisky Association. It argued that the term “glen” could give consumers the wrong idea about a connection with the registered geographical indication and thus mislead them as to the origin of the whisky. The Association therefore initially lodged a claim with the Landgericht Hamburg, the Regional Court of Hamburg, which in turn appealed to the ECJ.

The ECJ clarified that “indirect commercial use” of a registered geographical indication requires that the disputed element be used in a form that is identical or phonetically and/or visually similar to this indication. It went on to say that it is not enough that the description might evoke in consumers some kind of association with the registered geographical indication or the relevant geographical area.

Whether the term “glen” alludes to the protected geographical indication was said to depend to a large extent on whether consumers are prompted by this description to make a connection between the product and the protected geographical indication. Consumers would therefore need to be thinking specifically about Scotch Whisky when they have “glen” whisky from the German brewery in front of them. This must now be re-examined by the Landgericht Hamburg in the case in question. The ECJ added that in doing so the context of the disputed element, e.g. the statements on the label regarding the true origin of the product, is not to be taken into account.

Trade mark or copyright infringements can be met with severe penalties. Lawyers who are experienced in the field of intellectual property rights can advise companies when enforcing or fending off claims.

For more informations:

https://www.grprainer.com/en/legal-advice/ip-law/trademark-law.html

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MarkenrechtPressemitteilungen
news-3325 Wed, 03 Oct 2018 09:09:37 +0200 ECJ – Red shoe soles can be protected as trade marks https://www.grprainer.com/en/news-and-press/detail/news/ecj-red-shoe-soles-can-be-protected-as-trade-marks.html Red shoe soles can be protected as trade marks. That was the verdict of the Court of Justice of the European Union (ECJ) in a ruling from 12 June 2018 (Az.: C-163/16). They do not fall within the ambit of the prohibition on registering shapes.

There are a number of possible obstacles to registering a trade mark. According to one EU directive, a sign cannot be protected under trade mark law if, among other things, it consists exclusively of the shape of the goods in question which results from the nature of the goods themselves or is necessary to obtain a technical effect. We at the commercial law firm GRP Rainer Rechtsanwälte note that this is also true for shapes that give substantial value to goods.

The litigation before the Court of Justice of the European Union concerned the question of whether shoes with red soles can be protected under trade mark law as a distinguishing feature. The ECJ answered this question in the affirmative.

A fashion designer created high-heeled shoes for women, all of which were characterized by their distinctive red soles. He had these registered in the Benelux countries as a trade mark for shoes in 2010 as well as for high-heeled shoes from 2013. The description of the mark explicitly states that the contour of the shoe does not form part of the mark. Similarly, in 2012, a Dutch company brought shoes with red soles to market as well, but at a considerably lower price. The fashion designer took the view that his trade mark rights had been violated. The Dutch company alleged that the registered trade mark was invalid because signs which consist exclusively of shapes that give value to goods are not eligible for registration.

The ECJ held that the term “shape” is not defined in the relevant directive and is therefore to be interpreted according to its normal usage. It went on to say that it did not follow from the ordinary meaning of the term that a colour is capable per se of representing a shape if it is not spatially delimited. The Court ruled in the instant case that the mark did not relate to a specific shape of sole since the description of the mark explicitly states that the contour of the shoe does not form part of the mark.

Lawyers who are experienced in the field of intellectual property law can serve as expert advisors when it to comes to registering and protecting a trade mark as well as asserting claims in response to violations of trade mark rights.

For more informations:

https://www.grprainer.com/en/legal-advice/ip-law/trademark-law.html

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MarkenrechtPressemitteilungen
news-3322 Tue, 02 Oct 2018 07:19:31 +0200 Bundeskartellamt imposes fines for illegal price-fixing agreements https://www.grprainer.com/en/news-and-press/detail/news/bundeskartellamt-imposes-fines-for-illegal-price-fixing-agreements.html Germany’s Federal Cartel Office, the Bundeskartellamt, has imposed fines totaling 13.2 million euros on two packaging firms due to illegal price-fixing agreements. The companies had been supplying a commercial chain.

According to the Gesetz gegen Wettbewerbsbeschränkungen (GWB), the German Act Against Restraints of Competition, agreements between companies or “undertakings” that restrict or prevent competition are prohibited. We at the commercial law firm GRP Rainer Rechtsanwälte note that this ban generally encompasses price-fixing arrangements.

On 3 May 2018, the Bundeskartellamt disclosed that it had imposed fines amounting to a total of 13.2 million euros on two packaging companies due to illegal pricing agreements. Both companies had been supplying a commercial chain with potatoes and onions. According to the Bundeskartellamt, the two companies had been fixing wholesale prices when calculating their weekly offers and in doing so effectively eliminated price competition between the two main suppliers to the chain.

From at least 2005 until the practice was first introduced in May of 2013, the two companies were said to have been regularly in contact by telephone prior to submitting their weekly offers. It was said that they informed each other of their respective wholesale prices for potatoes and onions as well as agreed to a uniform commodity price during these phone calls. The offer directed to the commercial chain was then calculated on the basis of this commodity price. The Bundeskartellamt went on to state that the same or almost the same values were fixed for other cost items as well.

It also noted that when setting the fines, account was taken of the fact that one company cooperated fully with the Bundeskartellamt. It is still possible for appeals to be lodged against the fine notices.

Violations of competition or antitrust law can give rise to severe penalties. These violations need not necessarily be blatant as in the case of illegal price-fixing arrangements. Even certain provisions in contractual clauses can be in violation of antitrust law and sanctioned accordingly. That is why it is advisable to have contracts checked by lawyers who are experienced in the fields of competition and antitrust law with a view to their implications from the perspective of these legal fields. Legal expertise is also necessary if violations of antitrust or competition law have already been committed and claims need to be fended off or enforced.

For more informations:

https://www.grprainer.com/en/legal-advice/antitrust-law.html

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KartellrechtPressemitteilungen
news-3320 Mon, 01 Oct 2018 08:30:06 +0200 LAG Köln – Managing directors cannot claim protection against unfair dismissal https://www.grprainer.com/en/news-and-press/detail/news/lag-koeln-managing-directors-cannot-claim-protection-against-unfair-dismissal.html A managing director cannot claim protection against unfair dismissal if he or she is under no power of direction when working. In that case, he or she is not to be classified as an employee according to a ruling of the Landesarbeitsgericht (LAG) Köln, Cologne’s Regional Labour Court.

Managing directors are appointed to and removed from their post by way of a shareholders’ resolution. At the same time, they have an employment relationship with the company. Notwithstanding this, they are not automatically classified as employees. An employee is usually bound by instructions. Managing directors, on the other hand, often work independently and can, for instance, decide for themselves where and when they work. We at the commercial law firm GRP Rainer Rechtsanwälte note that if this is the case, they cannot normally be classified as employees and the Kündigungsschutzgesetz, Germany’s Employment Protection Act, does not apply.

In the case before the Landesarbeitsgericht Köln, a managing director and senior partner at an international management consultancy brought an action against termination of his executive employment contract. The action was dismissed at first and second instance.

The plaintiff was hired by the management consultancy in 2004 as “vice president” (partner) having come from an entirely different field of work. A year later, the parties concluded a transfer agreement, pursuant to which the plaintiff was appointed to the position of managing director and obtained executive status in lieu of his previous employment status. At the same time, the employment relationship that had been in place until then was explicitly terminated. The management consultancy firm had appointed around 100 partners as managing directors, yet initially no entry was made in the commercial register.

The plaintiff had been able to decide where he worked and no fixed timeframe had been prescribed for weekly working hours. He did not need to have his extensive travels approved; they just needed to be handled in accordance with the defendant’s travel guidelines. In 2015, the defendant terminated contractual relations with the plaintiff after the ordinary notice period for termination expired. The latter considered his dismissal unwarranted in social terms according to the provisions of the Kündigungsschutzgesetz.

The LAG dismissed the action in a ruling from 18 January 2018 and refused leave to appeal (Az.: 7 Sa 292/17). The Court held that the plaintiff could not be considered an employee and therefore could not claim protection against unfair dismissal. It went on to state that the employment relationship was explicitly terminated in 2005 and an executive managing director relationship established. Moreover, there was said to be no evidence that the managing director had been bound by instructions as is typical in the case of a standard employment relationship.

Lawyers who are experienced in the field of company law can advise companies and managing directors when drafting agreements as well as in the event of legal disputes.

For more informations:

https://www.grprainer.com/en/legal-advice/company-law.html

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GesellschaftsrechtPressemitteilungen
news-3318 Fri, 28 Sep 2018 08:23:00 +0200 BGH – Advertising featuring health claims https://www.grprainer.com/en/news-and-press/detail/news/bgh-advertising-featuring-health-claims.html Health claims in relation to foods and foodstuffs are only permitted if they do not violate the Health Claims Regulation. This was reaffirmed by the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court (Az.: I ZR 167/16).

When it comes to advertising on foods and foodstuffs featuring health claims, businesses need to make sure that the statements comply with the Health Claims Regulation. The health claims must refer to the substance and not the product, or the positive effect claimed has to have been scientifically proven. We at the commercial law firm GRP Rainer Rechtsanwälte note that the advertising is otherwise in violation of the Health Claims Regulation as well as competition law.

In a judgment from December 6, 2017, the Bundesgerichtshof clarified once again that the term “detox” represents a specific health claim and dismissed an appeal lodged by a tea producer against a ruling from the Oberlandesgericht (OLG) Bamberg, Bamberg’s Higher Regional Court (Az.: 3 U 32/16). The tea producer had promoted two herbal tea blends using the term “detox”. A competition association brought an action against this, arguing that the term was misleading and an impermissible health claim. The OLG Bamberg granted the action.

The Court stated that the term “detox” would give the average consumer the impression that the tea has a detoxifying effect and improves the state of one’s health. It was said to represent a specific health claim that was impermissible in the absence of scientific evidence. The appeal against the ruling was dismissed by the BGH. It held that the term “detox” is not merely a general reference to health benefits but rather a specific health claim.

The BGH went on to say that if consumers understand the detoxifying effect on the body attributed to the products by the term in question to be physiological in nature and there is in fact no such effect and it therefore cannot be scientifically proven, then such specific health claims are impermissible.

Regarding the question of whether marketing teas using the term “detox” can be reconciled with the Health Claims Regulation, the BGH concluded with reference to the judgments of the OLG Celle and OLG Düsseldorf that there is now an established line of case law.

When it comes to advertising featuring health claims, violations of competition law are easily committed. These can result in formal warnings, damages claims or injunction suits. Lawyers who are versed in the field of competition law can assist businesses in fending off as well as enforcing claims arising from violations of competition law.

For more informations: https://www.grprainer.com/en/legal-advice/ip-law/trademark-law.html

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PressemitteilungenWerbung
news-3317 Thu, 27 Sep 2018 08:48:00 +0200 BGH – Resale price maintenance is an unlawful restriction of competition https://www.grprainer.com/en/news-and-press/detail/news/bgh-resale-price-maintenance-is-an-unlawful-restriction-of-competition.html Resale price maintenance restricts competition and therefore usually constitutes a violation of antitrust law. This was reaffirmed by the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, in a ruling from October 17, 2017 (Az.: KZR 59/16).

In the case of resale price maintenance, manufacturers obligate their buyers to sell goods at a fixed price or not to go below a minimum price. We at the commercial law firm GRP Rainer Rechtsanwälte note that this generally constitutes a violation of the Gesetz gegen Wettbewerbsbeschränkungen (GWB), Germany’s Act against Restraints of Competition, and Art. 101 of the Treaty on the Functioning of the European Union (TFEU), according to which agreements that may affect trade between Member States are prohibited.

This was reaffirmed by the Bundesgerichtshof. In the case in question, a manufacturer of dietetic products that sold its goods in pharmacies, among other places, offered the pharmacies a 30 per cent discount provided they not undercut a certain retail price for the product. A center for protection against unfair competition brought an action against this practice. It considered the offer a minimum pricing agreement and thus a violation of the GWB and Art. 101 TFEU.

While the action for an injunction was successful at first instance, the Oberlandesgericht (OLG) Celle, Celle’s Higher Regional Court, overturned the ruling and dismissed the action. It argued that while the agreement on a lower price limit did represent resale price management and violated antitrust law, no appreciable restriction of competition could be established in the present case because the discount had a fixed term and was limited to a one-time purchase of 12 to 90 cans.

The BGH did not follow this line of reasoning and reaffirmed the ruling at first instance. The Cartel Panel held that the agreement on a minimum purchase price constituted an appreciable restriction of competition, reasoning that it leads to businesses being restricted in their freedom to set the retail price as they see fit. The Court went on to say that for the purposes of assessing whether a restriction of competition is appreciable, it does not come down to each individual intended agreement but rather their impact as a whole. The discount was found to have applied to the whole of Germany. As such, the potential order volume encompassed approx. 1.8 million cans subject to the relevant price restriction. The BGH concluded that this represented more than a minor restriction of competition.

Violations of antitrust or competition law can give rise to severe penalties. Lawyers who are experienced in the fields of antitrust and competition law can advise businesses.

For more informations: https://www.grprainer.com/en/legal-advice/antitrust-law.html

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PressemitteilungenKartellrecht
news-3316 Wed, 26 Sep 2018 07:49:00 +0200 OLG Karlsruhe – No blanket reimbursement of commercial agents’ “Stornoreserve” https://www.grprainer.com/en/news-and-press/detail/news/olg-karlsruhe-no-blanket-reimbursement-of-commercial-agents-stornoreserve.html Following termination of a commercial agency agreement, companies cannot blanketly retain what is referred to in Germany as the “Stornoreserve” (or simply “cancellation reserves”), i.e. the amount withheld in the insurance sector from the commercial agent in case the policy he or she concluded is cancelled. That was the verdict of the Oberlandesgericht (OLG) Karlsruhe, Karlsruhe’s Higher Regional Court, in a judgment from September 13, 2017 (Az.: 15 U 7/17).

The Stornoreserve is used to guarantee commission payments made in advance in case the agreements concluded by the commercial agent fall through. We at the commercial law firm GRP Rainer Rechtsanwälte can report that the position of commercial agents has been strengthened by a ruling from the Oberlandesgericht Karlsruhe from September 13, 2017. According to the OLG’s judgment, companies cannot blanketly retain accumulated cancellation reserves but must instead provide specific justifications.

In the instant case, the plaintiff had asserted claims for reimbursement of commission following termination of the commercial agency agreement. The respondent, in turn, demanded payment of the Stornoreserve.

Both parties had agreed in the commercial agency agreement that performance-based commission would not be paid in full. Only 90 per cent of the expected commission was credited to a so-called “Diskont-Konto”, a “discount account”, held by the commercial agent. The remaining ten per cent was deposited in a commission reimbursement account. Cancellations were to be initially offset against this account, with any remaining balance being charged to the commercial agent’s Diskont-Konto. After the commercial agency agreement was terminated, the company asserted claims for outstanding amounts.

The OLG Karlsruhe ruled in favour of the commercial agent, stating that if the company demands reimbursement of supposedly overpaid commission or advance payments then it bears the burden of proof. This means that it must be able to provide specific justifications and, where appropriate, supporting evidence for each and every claim for repayment. Accordingly, in the event that agreements are cancelled, the company must be able to cite the reasons for why the agreement was terminated, the time and nature of the notice as well as the commercial agent’s briefing regarding the risk of cancellation, and calculate the amount of commission paid in advance to be reimbursed. The Court went on to say that the company’s burden of proof also entails that enough revisionary work have been carried out, albeit unsuccessfully, or that this have exceptionally been unnecessary. The OLG concluded that this had not been the case here.

It is not uncommon for disputes to arise after commercial agency agreements are terminated, e.g. because of claims brought by the commercial agent for compensation or, as in this case, reimbursement of commission. Lawyers who are experienced in the field of commercial law can offer advice.

For more informations: https://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html

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PressemitteilungenHandelsvertreterrecht
news-3314 Tue, 25 Sep 2018 10:04:00 +0200 Post-contractual prohibition on competition and compensation for interim period https://www.grprainer.com/en/news-and-press/detail/news/post-contractual-prohibition-on-competition-and-compensation-for-interim-period.html A post-contractual prohibition on competition is a reciprocal agreement. If one party fails to perform the work or service as agreed, then the other side is entitled to rescind the agreement.

It is common for employment contracts as well as commercial agency agreements to include a post-contractual prohibition on competition. This entails the employee or commercial agent undertaking not to compete with his or her former employer or business for a certain period of time after their contract has been terminated. In return, he or she receives compensation for the interim period. A post-contractual prohibition on competition is thus a reciprocal quid pro quo agreement. We at the commercial law firm GRP Rainer Rechtsanwälte note that if one party fails to adhere to the arrangement, this entitles the other side to rescind the agreement. However, rescission would only have ex nunc effect, i.e. its effects would be limited to the period starting from when rescission takes effect onwards. This was clarified by the Bundesarbeitsgericht (BAG), Germany’s Federal Labour Court, in a judgment from January 31, 2018 (Az.: 10 AZR 392/17).

The decision to rescind a post-contractual prohibition on competition ought to be carefully considered and not made in haste, as demonstrated by the case that came before the BAG. Here, the employee terminated the employment relationship with effect from January 31. The employment contract included a three-month post-contractual prohibition on competition. In return, the employee was supposed to receive compensation for the interim period. Yet even after several weeks had passed following termination of the employment relationship and despite being requested to pay the compensation, the employer failed to do so. The ex-employee subsequently informed his former employer by email of March 8 that he no longer considered himself bound by the prohibition on competition. In addition, he sued for payment of the compensation for the agreed interim period of three months, stating that he had only rescinded the prohibition on competition out of spite.

The BAG nonetheless held that this did not render the rescission invalid. It went on to say that the plaintiff had been entitled to withdraw from the agreement because of the other party’s failure to pay the compensation agreed for the interim period and that the rescission had ex nunc effect. This meant that the plaintiff was entitled to pro rata compensation for the period from February 1 to March 8, but not for the remaining weeks.

Lawyers who are experienced in the field of employment law can offer advice when drafting agreements and post-contractual prohibitions on competition.

For more informations: https://www.grprainer.com/en/legal-advice/employment-law.html

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PressemitteilungenArbeitsrecht
news-3323 Mon, 24 Sep 2018 20:40:00 +0200 CJEU – Selective prohibition on sale of luxury items https://www.grprainer.com/en/news-and-press/detail/news/cjeu-selective-prohibition-on-sale-of-luxury-items.html In a ruling from December 6, 2017, the Court of Justice of European Union (CJEU) held that a selective distribution system for luxury items does not constitute a violation of the prohibition on restrictive practices under EU law if certain conditions are fulfilled.

Suppliers of luxury items can prohibit their authorized dealers from selling items online via third-party platforms such as Amazon or eBay. In a judgment from December 6 of 2017, the Court of Justice of the European Union established that this does not constitute a violation of competition law or the prohibition on restrictive practices under EU law (Az.: C-230/16). The CJEU ruled that a selective distribution system for luxury items that is designed primarily to maintain a luxury image is acceptable as long as certain conditions are fulfilled.

According to the ruling, the prohibition on restrictive practices under EU law is considered not to have been violated if the resellers are selected on the basis of objective criteria of a qualitative nature, and these are applied consistently to all resellers under consideration without discrimination. At the same time, the CJEU ruled that the established criteria cannot extend beyond what is necessary.

The case before the CJEU concerned the sale of luxury items via third-party platforms online. The business sold luxury cosmetics in Germany. To maintain the luxury image of some of its brands, these cosmetics are sold through a selective distribution network. To this end, the authorized dealers must meet certain requirements regarding the environment, facilities and equipment. While they are allowed to sell the luxury items online on their own homepage, they are prohibited, on the other hand, from selling the items online via third-party platforms that are recognizable to consumers. One authorized dealer nevertheless decided to sell the items on Amazon. The company brought a legal action against this citing the contractual prohibition. However, the Oberlandesgericht (OLG) Frankfurt, Frankfurt’s Higher Regional Court, had doubts concerning whether the prohibition clause is valid or whether it violates the prohibition on competition. It therefore referred the matter to the CJEU.

The Court of Justice found the clause to be valid provided the conditions mentioned above are fulfilled. We at the commercial law firm GRP Rainer Rechtsanwälte note that the Court held that the prohibition on restrictive practices under EU law does not preclude the use of a contractual clause if it serves to maintain the luxury image of the goods in question. Notwithstanding this, the ruling likely raises questions. It will need to be clarified on a case-by-case basis where high quality ends and luxury begins. Lawyers who are versed in the fields of competition and antitrust law can offer advice in the event disputes between distributors and companies.

For more informations:

https://www.grprainer.com/en/legal-advice/antitrust-law.html

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KartellrechtPressemitteilungen
news-3310 Fri, 21 Sep 2018 08:48:51 +0200 BGH – Managing directors acting as front men can also be held liable https://www.grprainer.com/en/news-and-press/detail/news/bgh-managing-directors-acting-as-front-men-can-also-be-held-liable.html Formal managing directors who are only appointed to act as front men are subject to criminal liability as well. This was reaffirmed by the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, in a ruling from October 13, 2016 (Az.: 3 StR 352/16).

A managing director who fails to fulfill his or her obligations may be held liable. There are many examples in practice of companies with a de facto managing director who is not registered in the commercial register but is effectively responsible for managing the business, and a formal managing director who barely has any internal responsibilities and serves merely as a front man. The managing director acting as a front man can nonetheless be held accountable under criminal law as well. We at the commercial law firm GRP Rainer Rechtsanwälte report that this principle has been reaffirmed by the Bundesgerichtshof.

In the case in question, the accused was the formal managing director of a Gesellschaft mit beschränkter Haftung, a type of German private limited liability company commonly known and referred to as a “GmbH”. In practice, business was conducted by another person. Charges were brought against the formal managing director because of the company’s failure to ensure proper payment of social security contributions.

The accused was registered as the sole managing director and appointed by way of a shareholder resolution. The BGH held that this status as formal managing director alone justified her being held accountable as a corporate body vis-à-vis third parties, which is why it had been her duty to ensure proper payment of social security contributions. The fact that there was another person with such extensive decision-making powers and responsibilities that they were viewed as the de facto managing director did not preclude this conclusion.

The Court went on to say that even if the formal managing director has no significant internal responsibilities and serves merely as a front man, this does not absolve him or her of criminal liability. A person who is formally appointed as managing director was said to have the capacity, both in law and in practice, to carry out the full scope of actions associated with this position at all times, with accountability stemming from his or her status as a corporate body. The BGH further ruled that even a managing director who is appointed only as a matter of form is not incapable of ensuring proper payment of social security contributions despite lacking responsibilities; if necessary, the managing director acting as a front man would have to turn to the courts for help in exercising his or her rights. Otherwise, he or she would have to resign from their post.

Lawyers who are experienced in the field of company law can serve as qualified advisors in relation to matters concerning the liability of managing directors.

For more informations:

https://www.grprainer.com/en/legal-advice/company-law.html

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GesellschaftsrechtPressemitteilungen
news-3305 Mon, 17 Sep 2018 08:41:30 +0200 GRP Rainer Rechtsanwälte – Experience suggests planning for business succession early on https://www.grprainer.com/en/news-and-press/detail/news/grp-rainer-rechtsanwaelte-experience-suggests-planning-for-business-succession-early-on.html Business succession is an issue that preys on the minds of many small and medium-sized enterprises and family-run businesses. Yet finding a suitable successor can prove challenging.

In the coming years, business succession will be on the agenda of a lot of small and medium-sized companies and family-owned businesses. While searching for a suitable successor to manage the company at the highest level is of utmost importance for the survival of the business, our experience at the commercial law firm GRP Rainer Rechtsanwälte suggests there is a tendency to kick the matter into the long grass. There are several reasons for this: One the one hand, the uncertainty resulting from tax reforms is increasingly playing a role, and on the other hand, emotional reasons can make it difficult for those in charge of companies to entrust others with the fate of their business.

Demographic trends are also making it harder to find a suitable successor. More and more bosses are set to retire. At the same time, there are fewer and fewer young people available to take up the reigns. It is therefore all the more important to make plans for business succession and implement these in good time.

In the case of family-run businesses, the expectation is often for the baton to be passed on to the next generation. In doing so, it is important to consider the implications both from a tax perspective as well as with respect to succession law. One also needs to address the issue of whether, for instance, one’s own children are even interested in continuing the business, or whether they have the necessary qualifications.

Another option is to sell the business. Preparations ought to be made well in advance of the sale. In addition to searching for a potential buyer, priority should also be given to valuating the business in order to determine an appropriate selling price. It is equally important to account for existing employment contracts and inheritance claims. Depending on its corporate form, the business could also potentially be sold to a fellow partner or shareholder.

Business succession is a complex subject in relation to which a number of legal aspects need to be considered. Long-term and forward-looking planning is therefore essential. Lawyers who are experienced in the field of company law can offer advice when searching for a suitable successor and ensure a smooth transition.

For more informations:

https://www.grprainer.com/en/legal-advice/private-clients/law-of-succession/business-succession.html

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UnternehmensnachfolgePressemitteilungen
news-3303 Fri, 14 Sep 2018 08:35:37 +0200 GRP Rainer Rechtsanwälte – Experience in resolving shareholder disputes https://www.grprainer.com/en/news-and-press/detail/news/grp-rainer-rechtsanwaelte-experience-in-resolving-shareholder-disputes.html If a dispute among shareholders cannot be resolved, it is in the interests of all parties involved to come to a solution that does not jeopardize the company’s existence.

While shareholders are usually in agreement about the strategy and objectives of the business when the company is being established, this harmony can give way to differences of opinion between the shareholders as the years go by, e.g. regarding the company’s future direction or filling the position of managing director. If both sides remain stubborn and the dispute cannot be resolved, it becomes necessary to find suitable solutions for the benefit of the company.

Our experience at the commercial law firm GRP Rainer Rechtsanwälte shows that two options typically present themselves as a way of ending a shareholder dispute: redemption of a shareholder’s shares or removal of the managing director. A company’s central decision-making body is the general meeting of the shareholders, and it is here that shareholders’ voting rights play a pivotal role.

Removing a shareholder-managing director can prove problematic, since he or she is also entitled to vote and may thus be able to prevent his or her removal. To prevent him or her from exercising their right to vote, the removal needs to proceed on the basis of good cause or the shareholder-managing director must be clearly incapable of properly conducting business. One example of good cause justifying removal is a gross dereliction of duty by the managing director, for instance in the form of balance sheet manipulation, accepting bribes, tax evasion, unauthorized use or disposal of company assets, or persistent disregard of instructions from the shareholders. Mere mistrust of the shareholder-managing director does not justify loss of his or her voting rights.

Redemption of a shareholder’s shares requires objective justification based on grounds incorporated into the articles of association. Examples of relevant grounds include the shareholder becoming insolvent, compulsory execution being levied against his or her shares, or divesting shares to ineligible persons under the articles of association.

Complex legal regulations need to be observed in the context of a dispute among shareholders. It is equally important not to ignore tax implications. Lawyers who are experienced in the field of company law can serve as competent advisors in trying to find appropriate solutions.

For more informations:

https://www.grprainer.com/en/legal-advice/company-law.html

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GesellschaftsrechtPressemitteilungen