An attempt to exclude "individualization of economic success" through distributions of profits or profitable sale of shares

 "The start-up scene suffers from the reputation of looking for a quick exit from a company. The draft of a new legal form is intended to prevent this. It should now enable start-ups to operate responsibly and in a future-oriented manner. Young entrepreneurs would like to found a company whose profits cannot be squandered unrestrained. That may be a simple goal, at best a bit surprising, but it is difficult to achieve with the help of German company law. At least that is how the Foundation Responsible Property and its founder Armin Steuerungagel see it. Therefore, they demand a new form of company, a "limited liability company with tied assets", in short GmbH-gebV. A group of renowned corporate and tax lawyers has now completed a draft law that the F.A.Z. presents. 

 It is already certain that this proposal will attract attention. Last year, the idea of ​​a new "ownership of responsibility" caused a sensation and at the same time attracted prominent advocates and vehement critics. The camp of supporters ranged from politicians from almost all parliamentary groups to the economist Lars Feld to the experienced supervisory board member Ann-Kristin Achleitner. On the other hand, many companies and lawyers reacted with skepticism. The new draft law has now taken up the criticism, tax minimisation assures, and offers significant improvements. 

This becomes particularly clear in the title that they propose for the new form of company and which now comes across as emphatically sober with the addition "with tied assets". The earlier version of “responsible ownership” had mainly upset the family entrepreneurs. They saw it as an attempt to claim exclusivity for a management attitude to which they also feel obliged. On the other hand, it never crossed their minds to deny other forms of business the feeling of responsibility, asserts Steueragel, who always praises family businesses as role models for the concept. 

 Doing business sustainably is in the foreground 

Because the central idea behind it is characterized by continuity: the shareholders cannot personally collect the assets tied up in the company, not even through dividend distributions or the sale of a share at prices that exceed the nominal value. Rather, they hold their shares as trustees for the next generation of entrepreneurs - without limiting their innovative strength, emphasize the initiators. The company and its purpose could evolve and change over time. The main limitation therefore lies in the use of the profit: It can only be invested in the company itself, in the development of new ideas or growth. With this type of company, start-ups could already show that they rely on reliability and sustainability. 

In the past few years, the scene has suffered a lot from the fact that it tends to surround the aura of a “quick exit”, so Steuernagel and his colleagues explain the motivation behind the idea, which more than 6,000 companies were enthusiastic about last year. That is a problem both when looking for investors and for young employees. But the model could also be of interest to family businesses if the company can no longer find a successor in the family. 

The existing foundation solutions, on the other hand, are no alternative for small and medium-sized companies, emphasizes Steueragel. The implementation is simply too expensive and too complicated. 

 Trust is good, control is better 

The six legal scholars, including the Cologne corporate law professor Barbara Dauner-Lieb and the Bielefeld tax law professor Simon Kempny, made the draft law as an independent research project so that the promise of tying up assets does not degenerate into a marketing gag or is even misused, it must be better protected. The company must pursue a commercial or non-profit purpose, so that not only capital is parked in it, it says in the draft law. In addition, an annual report is planned in which the company must prove that the assets are tied up. This is checked by an external auditor. Serious violations of the tie-up of assets can even result in the dissolution of the company. The legal scholars have also provided similar clarifications in tax law after the critics suspected the idea of ​​“responsible ownership” as a clever form of tax avoidance.

The skepticism still remains as to who should actually get enthusiastic about such a company if nothing can be earned with it. The supporters of the new legal form are not quite as strict about such abstinence. For their work in the company, the workers could certainly receive “performance-oriented, appropriate remuneration that comfortably secures their livelihood and enables provision for old age”, writes Anne Sanders, professor of corporate law at Bielefeld University. "Voluntary work is by no means required." Only an "individualization of economic success" through distributions of profits or profitable sale of shares is excluded. But that is not necessary either, argues Sanders. After all, many studies have shown that money is by no means the only motive for entrepreneurs to get involved. "

This new ownership form also could protect European startups from being purchased by deep pocketed non-EU companies, what happened with German robotic company Kuka bought by Chinese investors.