Articles of association that fit your company perfectly

A Musterprotokoll formation is inexpensive, simple and fast, but it is not suitable for every company structure.

There are certain limitations to the formation of a Musterprotokoll. A maximum of three persons may act as partners and a maximum of one managing director may be appointed. In addition, the wording of the Musterprotokoll is laid down by law and cannot be changed. For example, in the absence of a corresponding express provision, the shareholders are permitted to sell their shares to third parties at any time without the consent of the other parties involved.

If a company has only one shareholder and one managing director and the admission of further shareholders is not planned in the future, the formation with a Musterprotokoll may suffice. However, individual regulations can also be useful for one-person companies, eg the establishment of inheritance regulations.

If, however, a formation with more than three partners is planned, more than one person takes over the management, or tailor-made regulations are desired, then a statute must be established. Regulations such as succession, sales rights, information rights, non-compete obligations etc can be added or adapted. At the same time, it is possible to influence the rights and duties of the managing directors. The individual articles of association can also define a fiscal year for the entrepreneurial company that differs from the calendar year, so that the obligation to prepare the annual financial accounts (Jahresabschluss) can be postponed.

The basic statutory components are generally not sufficient. This becomes painfully obvious in the event of a dispute between the shareholders where it becomes clear that a legal framework is important for the settlement of disputes. Therfore the following regulations are particularly recommendable:

• Rules of the shareholders' meeting (incl. in Basic package)
• Management rights (incl. in Basic package)
• Distribution of profit and its distribution to shareholders (incl. in Basic package)
• Termination of the shareholder (incl. in Basic package)
• Settlement of founding costs (incl. in Basic package)
• Redemption of business shares (incl. in Basic package)
• Inheritance regulations (incl. in Basic package)
• Announcements in the electronic Federal Gazette (incl. in Basic package)
• Final provisions/severability clause (incl. in Basic package)
• Family law regulation (incl. Startup package)
• Shareholders' disposal rights (incl. Startup package)
• Non-competition clauses (incl. Pro package)
• Termination of the articles of association/liquidation (incl. Pro package)
• Severance payments upon withdrawal of a shareholder (incl. Pro package)
• Amount and requirements for severance payments (incl. Pro package)

In particular, if an investor has invested in a startup, it is advisable to make further provisions. These are usually recorded in your separate agreement (shareholders' agreement or participation agreement) so that they are not publicly visible in the Handelsregister (commercial register).

The internet is full of model statutes, but they often contain only superficial regulations which may not work for your individual company. Outdated or overly rigid regulations can lead to the need for subsequent changes which in practice means additional notary and court visits - costing you time and money. Moreover, if your company's articles of association are not up to scratch, the registration of the company can also be rejected by the district judge.

It is therefore advisable to seek professional help upfront in order to avoid future troubles and to ensure that your articles of association are not only legally sound but also suitable for your company's individual circumstances.