Commercial Law, what does it concern?
Commercial law regulates the legal relations of traders. In this way, commercial law contains the provisions regarding legal relations of businessmen and third parties. In addition, the regulations regarding the German HGB (German Commercial Code) contain the entire legal and recording obligations for traders.
German Commercial Law has emerged from the German Municipal Law and has been strongly influenced by Italian and French commercial law.
Commercial Law primarily comprises the German Commercial Law and its subsidiary laws. Special attention is given to maritime law and inland navigation law. Company law, industrial Property Rights, Securities Law, Bank and Stock market law should also be considered as a part of Commercial Law.
Which principles characterize Commercial Law?
Special regulations are applied to the business organisation area and to the legal trading activities. Those trading activities should be executed faster and more efficiently than in general civil law, which is only complementary. This principle is justified by the expectation that participants in commercial law have generally a greater experience and professionalism. Tarde Law can lead to extended rights, but also, to increasing obligations.
A number of explicit laws are not applicable (or only party applicable) to commercial law: such as doorstep selling regulation, distance sales law, consumers laws, terms and conditions forbidden clauses’ etc.
When is Commercial Law applicable?
The German Commercial Code (HGB) is applicable to traders. According to Section 1 (1) HGB, anyone managing a commercial enterprise can be considered a trader. A business enterprise is an independent, externally recognizable activity that has been created for durability and long-term profits and not as a“free occupation”.
According to the definition of § 84 I 2 HGB (German Commercial Code), someone substantially free to shape his/her own business and his working hours, can be consider a self-employed. Exceptions are only those companies whose operations, do not require a commercial business set up according to the type and scope of their trade (see §1 para.2).
However, all those liberal profession, concerning scientific and artistic activities, agriculture and forestry, are considered exempted.
The concept of trader in the German Commercial Code is in force since the 1st, January 1900; nowadays, the “concept of enterprise” is contained in the German Civil Code.
Post-contractual non-competition agreement
It is really common to find prohibition of competition in many contracts or treaties, and this restriction can also be carried out after the termination of the contract under the conditions of §§ 74 ff. German Commercial Code. These regulations are not only applicable to commercial employees, but also to all other employees, in accordance with §110 Industrial /Commercial Code (GewO in Germany). They are not directly applicable to the authorized representative of the executive bodies.
Apart from formal prerequisites, to the prohibition of competition agreement belongs an obligation of compensation and a max. duration of 2 years since the end of the employment relationship (section 74a (1) sentence 3 HGB-German Commercial Code).
In case the conditions have not being respected, the nullity of the provisions can be requested.
Definition of a “company”
The company is the name of a trader as it is registered in the commercial register. Pursuant to Section §18 (1) HGB (German Commercial Code), the company must be suitable for an identification of the business and should have distinctive characters. A “distinctive identification” depends on Commercial Law, and this means that the company must be able to provide provenance identification. In addition to a real name, it is also possible to enter pure fantasy terms, information, as well as a mixture of personal and concrete data. In particular, the principle of corporate unity, company´s truthfulness, publicity, exclusivity and reliability are applicable.
Business letters, required information
Depending on the legal form of the company, different laws are applicable. For instance, in case of companies with limited liability (§35a GmbHG), all the business letters that should be directed to a specific recipient require a legal form, the registered office of the company, and the registration number of the company. Nonetheless, the details regarding the CEO(s) and, if applicable, the chairman of the Supervisory Board, are required. Similar regulations include §80 AktG (Stock Corporation Act) for corporations, § 125a HGB (German Commercial Law) for open trading companies (and limited partnerships) and § 37a HGB (German Commercial Law) for other traders. In case of invoices, the taxpayer´s number must be indicated in accordance with §14 para.1a USTg. This is the national taxation number and not the common and so-called VAT identification number (USt.-ID). The latter, can be easily requested at the Federal Office of Finance in Saarlouis and it is used for VAT-free business transactions within the EU.
Foundation of a company, what should be taken into consideration
It is recommendable to consult an accountant and an attorney in order to succeed within the entrepreneurial form. If you want to run a business, you shall need a trading license; this can be obtained after completing a so-called “commercial opening form” (Gewerbeeröffnungsbogens in German) at the municipal office or city in which the company is located. The local IHK shall report the enforcement of the (compulsory) membership and the payment of the contributions. This usually turns to the concerned person itself. The IHK, municipalities, other authorities and many other institutions can also provide funding opportunities for a concrete enterprise.
What can we do for you? Our services
We will advise and represent you in the following topics:
- Commercial and corporate law;
- Choice of the Company form with regard to liability, taxation, capital procurement, labor law, organization and profitability;
- Commercial balance, profit and loss accounting, notes, management report;
- Shareholder´s rights against the respective company, against other shareholders or group of companies;
- Company Law, duties and liability of the GmbH Managing Director;
- Stock Corporation Law, Board of Management, Supervisory Board, Shareholder´s Meeting.
What do we need to process your legal questions?
Commercial Law covers a very broad spectrum. In general, we need all those contractual documents, company´s data and obviously, all your questions!
For more information, please do not hesitate to check this website out: http://handelsrechthannover.de .
Additional topics and services
- Commercial Code (HGB)
- Lawyers, Commercial Law Hanover
- Trading business
- Commercial representation
- Trade representative compensation
- Commercial agent agreement
- Transport law
- Company law & company name´s law
- Trade names
- Comprehensive legal protection and legal advice in commercial law
- Contract review and contract drafting
More information on German commercial law.