Markus Jerger, the chairman of the Mittelstandsverband BVMW calls for more flexibility in the company forms.
Berlin Business associations are campaigning for a new legal form for companies in Germany. The legal form of the company with tied assets planned in the coalition agreement is a great opportunity for the location and alleviates the major successor problem in medium-sized companies, according to a paper that is to be presented in Berlin on Monday and is available to the dpa.
According to the Responsible Ownership Foundation, more than 20 associations have joined forces to form an initiative, including the Federal Association of Small and Medium-Sized Businesses, the Startup Association, the BVDW digital association and the Association of German Women Entrepreneurs.
The company with tied assets (GmgV) offers companies the opportunity to greatly expand the circle of potential successors. Many medium-sized companies are threatened with dissolution – “often also because a sale fails due to the private financial situation of capable successors”. With the new legal form, there would be an easy-to-implement option to pass on companies in trust.
“The company with tied assets guarantees that profits cannot be withdrawn, but reinvested or donated,” says the association paper. Instead of an expensive sale of the company or an inheritance, successors would join the company for a fixed amount, the nominal amount of the shares, as in an association, which they would receive back if the company was terminated. Hidden reserves or company value are not taken into account. The legal form also offers more freedom of design for social enterprises and start-ups that are not aiming for an exit, for example by sale.
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The Ampel coalition agreement states that a modern corporate culture includes “new forms such as social enterprises or companies with tied assets”. “For companies with tied assets, we want to create a new, suitable legal basis that excludes tax-saving constructions.”
According to the associations, this can only be achieved by introducing a company with tied assets. Germany must remain attractive for small and medium-sized businesses, said Markus Jerger, CEO of the BVMW small and medium-sized business association. The new legal form makes it easier to regulate the question of succession outside the family. The Association of German Women Entrepreneurs explained that the legal form is “a huge opportunity for entrepreneurial women who are still finding it difficult to obtain financing capital.”
“The society with tied assets fits into the zeitgeist around sustainable management,” says Lara Piechulla, partner at the consulting firm EY. “It can alleviate the successor problem, but a suitable candidate must still be found.” However, the question remains as to whether the new legal form is really necessary, said Piechulla. “Whether a company operates sustainably or not is not guaranteed just because the assets are tied up.” Many family businesses attach great importance to sustainability anyway.