Start-Up Companies in Germany

One of the most fundamental decisions in the founding phase of a start-up company is based on company law and faces the question of how the founding team will cooperate, the level of liability they will face and their plans for the future.

It is specifically about choosing the appropriate corporate form for your business idea. For this purpose, the parties involved must clearly define the economic and entrepreneurial goals of the start-up company in advance. This is because the different legal forms that come into consideration differ concerning central factors, e.g., the company’s assets, the liability of the company or the managing directors and partners, the ability to act, and tax obligations.

There is a choice between the more affordable partnerships – such as the GbR or OHG – and the corporations – such as the GmbH or UG – which, in return, grant the possibility of personal exemption from liability for the partners. Furthermore, hybrid forms such as the GmbH & Co.KG or UG & Co. KG are conceivable.

Our attorneys will work with you to find the most suitable corporate form and assist you in all company and partnership formation steps. This begins with the first consultation on the company’s establishment to determine the goals and legal structure of the start-up company and work through the business plan. Then the articles of association are drawn up and adopted, and the company name is entered into the commercial register. This is followed by the notarisation of the articles of association and the payment of the share capital. Finally, we arrange the company’s registration in the commercial and tax and business registers.

Another critical area of corporate law covered by our lawyers is related to M&A corporate transactions and due diligence audits. We support you and your start-up company in mergers, takeovers and the exit, i.e. the sale of a company as the final start-up phase. We also pave the legal way for companies’ mergers, restructuring and transformation. We subject all these intended corporate transactions to a careful due diligence examination to provide a detailed overview of the advantages and disadvantages. We also offer comprehensive support in the due diligence examination of your start-up.

In addition, we offer legal support for national and international joint ventures for your start-up company. We facilitate the preparation, organisation and actual realisation of a joint venture, whereby creating a collective consensus often presents a particular challenge. We can ensure that the essential discussion points in joint venture negotiations are worked through and that mutual interests are brought to a compromise.

Furthermore, we will advise and represent you in the liability of directors and shareholders and many other areas of German corporate law.

In the initial phases of a start-up company, such as the founding and development phase, many contracts must be concluded to enable entry into the economic market. These include financing agreements, loan agreements, rental agreements for business premises, purchase, work or service agreements with manufacturers or suppliers, successive supply agreements, framework agreements, partnership agreements, managing director agreements and employment contracts.

We draft your contracts according to your interests as the company founder and individually tailored to your start-up company. We pay particular attention to clear, precise and court-proof wording to avoid later complications already during the preparation of the contract. You can also turn to our experienced lawyers for the subsequent revision or redrafting of contracts, thus ensuring that the formal requirements of the contracts are adhered to and correctly implemented.

In addition to drafting contracts, examining contracts and contract clauses for possible invalidity, nullity, contestability, or incompleteness is of utmost importance. This applies both in contract negotiations and at the time of contract conclusion and undoubtedly after contract conclusion to ward off unjustified, ineffective, void or contestable claims and demands.

Only a careful examination of the contractual offers submitted can ensure that unpleasant contractual and business relationships are prevented and the interests of your start-up company are protected.

Our services in contract law for start-up companies and entrepreneurs also include drafting, negotiating, and reviewing general terms and conditions. It is essential to ensure that the correct wording is used in both B2C and B2B business so that no ineffectiveness of the general terms and conditions clauses is risked. Many court decisions and legal changes characterize the law on general terms and conditions, so the consultation of an experienced lawyer is highly recommended when drafting general terms and conditions.

Employment law presents challenges for start-ups and entrepreneurs, beginning before hiring the first employees.

After the successful establishment of a company, e.g. a GmbH or UG, the question arises as to how the founders’ salary as managing directors must be regulated, particularly whether social security contributions must be paid. This depends on the position of the respective shareholder-managing director in the company and the initial relationship between the founders.

Indeed, the more influence a managing director has in the company, and the fewer instructions bind them, the more likely a social insurance obligation will have to be rejected. This will be determined based on the articles of association and managing director contracts and the case facts.

Further regulations regarding the social security obligation and minimum wage, working hours, personnel qualification, and working premises must be considered when the first full-time and part-time employees, interns, working students, and other employees are hired. To cover the initial personnel requirements of a start-up company, it is recommended that you hire a specialist in labour law who can tailor and design the employment contracts to your company’s needs.

A further area of employment law for start-up companies is the legal design and implementation of an Employee Participation Scheme (ESOP). Whether it is a loan, dormant partner’s interest, virtual participation, variable remuneration agreement or granting of a partnership position, employee participation can bring many advantages to start-up companies.

The financing of employee remuneration can be made more accessible, performance incentives can be created, and the founding team can be supported more sustainably. Our experienced lawyers will assist you in selecting the appropriate form of employee participation and its implementation.

Trademark registration and protection are of essential importance for start-up companies and entrepreneurs. With the trademark as the figurehead of the business idea, the own products are innovatively marked. It conveys product quality, image, and trust and ensures a recognition value whose importance cannot be overestimated, especially for start-up companies.

The business launch can be heralded with the appropriate and protected brand, and the company’s establishment in the economic market can begin. For this purpose, the company brand must first be entered into the trademark register.

From a legal point of view, it must be established in advance that a similar trademark registration does not already exist, as the priority principle applies. The earlier registered trademark thus has priority over the later registered trademark. Furthermore, it must be clarified with the founders to what extent the trademark is to be protected, i.e. to what extent and in what way.

A distinction must be made between word marks, figurative marks, and “word/figurative marks”, tracer marks, and sound marks. We will support you in making the right choice and the corresponding application. Those interested in discovering more can obtain more information on trademark registration on our homepage.

Our attorneys also prosecute any trademark infringements for our start-up company clients and the associated trademark and assert resulting claims for damages, warnings, and claims for injunctive relief and removal. In addition, we can effectively protect your trademark through opposition against trademark registrations of competitors.

For the lawful use of your business idea and trademark by third parties, we design and review possible licensing, negotiate with partners, and draft appropriate licensing agreements. In this way, the economic potential of your start-up companies can be further exploited.

Before starting your start-up company’s business activities, questions regarding financing must be clarified so that appropriate state subsidies such as support programmes and promotional loans can be taken advantage of in good time. For example, KfW assumes 80% of the credit risk with the KfW – Start-up Loan to make it easier for entrepreneurs to access loans. Promotion by the respective federal state can also be considered in regional areas.

The financing options can be very diverse and, depending on their form, have different advantages and disadvantages. Whether bank loans, promotional loans, venture capital, crowdfunding or ICOs, we support you in the preparatory work and subsequent selection of the most suitable financing method with the right conditions for your start-up.

In financing, negotiations with investors and business partners play an essential role. Our legal assistance can ensure that the cooperation with investors and their participation in the company is not entered into in a hurry.

We work out compromises to bring mutual ideas and interests to a standard, business-friendly solution. We conduct the negotiations with experienced investors for you to avoid conflicts and disagreements in advance. Particularly when obtaining venture capital, the financing provider’s necessary experience and qualifications must be considered.

The investor often balances their profit-risk by acting as a long-term strategic partner in the start-up and influencing decisions.

The financing of the start-up is one of the most decisive factors for successfully establishing a business idea in the business world. Therefore, deciding on a particular form of financing and its implementation requires a lot of sensitivity and careful legal work. In addition to legal difficulties, economic and fiscal challenges also arise, which must be considered in company financing.

Our lawyers will accompany you from the preparation, negotiation, selection and implementation of the financing of your start-up company.