04 June 2007

EZA 793 Briefing Note:

Germany: Business Regulation

German company law under scrutiny – good for start ups and growth firms

·Almost three years after its introduction in Germany on 29Dec 2004, the European plc. (SE, Societas Europeae) is becoming increasingly popular among German plcs replacing the currently prevailing national plc statute (AG).

·This allows companies more flexibility in terms of “employee co-determination”, shape of boards, and – long term – choice of headquarters.

·Next year the German government plans a fresh change in company law from the “bottom-end” by allowing the statute mini GmbH (ltd.).

·This would allow companies to be set up at minimum cost in terms of equity and increase transparency for prospective stakeholders.

·In contrast to the SE statute this can be seen as a move to make domestic business regulation more attractive, and limit the number of companies assuming a non-German ltd company status.

Asset conclusions: proliferation of new company statutes enhances company flexibility, hence good for equity valuations and growth prospects.

© Graham Bishop