1 Gesetz zur Modernisierung des GmbH-Rechts und zur Bekämpfung von Missbräuchen (MoMiG – Law for the modernization of Private Limited Companies Act and for combating abuses), (BGBl. reference not yet available at time of editorial deadline); draft law reference: BR-Drucks. 354/07; See also the Bericht des Rechtsausschusses (report of the Committee on Legal Affairs), BT-Drucks 16/9737. For an overview in English see Noack, Ulrich & Beurskens, Michael, Modernising the German GmbH! Mere Window Dressing or Fundamental Redesign?, European Business Organization Law Review (EBOR) 97–124 (2008); Schmidt, Jessica, German Company Law Reform: Makeover for the GmbH, a new “Mini-GmbH” and some important news for the AG, 18 International Company and Commercial Law Review (ICCLR) 306–311 (2007); Wooldridge, Frank, Proposed Reforms of the German GmbH, 28 Company Lawyer (Co Law) 381–383 (2007).Google Scholar

2 See Die deutsche Antwort (The German Answer), Frankfurter Allgemeine Zeitung (FAZ), 24 May 2007, 13; Robert Freitag & Markus Riemenschneider, Die Unternehmergesellschaft – “GmbH light” als Konkurrenz für die Limited?, Zeitschrift für Wirtschaftsrecht (ZIP) 1485 (2007).Google Scholar

3 In 2006, nearly one in four private limited companies set up by Germans was not a GmbH but a UK Limited. See in detail and with more data Horst Eidenmüller, Die GmbH im Wettbewerb der Rechtsformen, Zeitschrift für Unternehmens- und Gesellschaftsrecht (ZGR) 168, 173 (2007).Google Scholar

4 Companies Act 2006 (CA), ch. 46.Google Scholar

5 Some of the provisions are already in force. However, a large part of the Act will only enter into force on 1 October 2009; the final implementation timetable is available at http://www.berr.gov.uk/files/file46674.doc.Google Scholar

6 See Companies Act 2006, Regulatory Impact Assessment, January 2007, 1, available at http://www.berr.gov.uk/files/file29937.pdf.Google Scholar

7 For a comprehensive outline of the reforms brought about by the CA 2006 see Alan Steinfeld et al., Blackstone's Guide to The Companies Act 2006 (2007).Google Scholar

8 See the draft for The Companies (Model Articles) Regulations 2008, available at http://www.berr.gov.uk/files/file45533.doc.Google Scholar

9 The idea of establishing a completely new form of company, which was promulgated in particular by Jürgen Gehb, a member of the Bundestag (German parliament), did not prevail. The Gehb draft law is available at www.gebh.de.Google Scholar

10 Gesetz betreffend die Gesellschaften mit beschränkter Haftung (GmbHG – Private Limited Companies Act).Google Scholar

11 See Begründung zum Regierungsentwurf (Begr Reg) (legislator's explanatory notes), BR-Drucks 354/07, 71.Google Scholar

12 Id. at 71–72.Google Scholar

13 See Joost, Detlev, Unternehmergesellschaft, Unterbilanz und Verlustanzeige, ZIP 2242, 2245 (2007).Google Scholar

14 See Begr Reg, supra note 11, at 72.Google Scholar

15 See infra C. VIII. 1.Google Scholar

16 Begr Reg, supra note 11, 71. See further Seibert, Ulrich, Der Regierungsentwurf des MoMiG und die haftungsbeschränkte Unternehmergesellschaft, GmbHR 673, 675 (2007).Google Scholar

17 See Römermann, Volker, MoMiG: Regierungsentwurf mit “Überraschungs-Coups”, GmbHR R193 (2007).Google Scholar

18 See Noack, Ulrich, Der Regierungsentwurf des MoMiG – Die Reform des GmbH-Rechts geht in die Endrunde, Der Betrieb (DB) 1395, 1396 (2007).Google Scholar

19 See Thomas Wachter, Die neue Drei-Klassengesellschaft im deutschen GmbH-Recht, GmbHR R209, R 210 (2007); and the expert opinion of Michael Hoffmann-Becking for the Committee on Legal Affairs of the Bundestag (BT – Federal Diet), available at http://www.bundestag.de/ausschuesse/a06/anhoerungen/28_MoMiG/04_Stellungnahmen/Stellungnahme_Prof__Hoffmann-Becking.pdf, p. 2.Google Scholar

20 See Hoffmann-Becking, supra note 19, at 2; Handelsrechtsausschuss des DAV, Stellungnahme zum Regierungsentwurf eines Gesetzes zur Modernisierung des GmbH-Rechts und zur Bekämpfung von Missbräuchen (MoMiG), Neue Zeitschrift für Gesellschaftsrecht (NZG) 735, 736–737 (2007); Veil, Rüdiger, Die Unternehmergesellschaft nach dem Regierungsentwurf des MoMiG. Regelungsmodell und Praxistauglichkeit, GmbHR 1080, 1082 (2007); Jan Wilhelm, “Unternehmergesellschaft (haftungsbeschränkt)” – Der neue § 5a GmbHG in dem RegE zum MoMiG, DB 1510, 1511 (2007).Google Scholar

21 Statement of the Bundesrat, BR-Drucks 354/07, 4–5.Google Scholar

22 Handelsrechtsausschuss des DAV, supra note 20, at 736.Google Scholar

23 See Seibert, , supra note 16, at 675; Wilhelm, , supra note 20, at 1510.Google Scholar

24 See CA 2006, Explanatory Notes, n. 835.Google Scholar

25 S. 586 CA 2006 (shares to be at least one-quarter paid up) is only applicable to public companies.Google Scholar

26 Id. s. 585, Argumentum e contrario e (which specifically prohibits these forms of contributions for public companies).Google Scholar

27 § 27 (2) of the Aktiengesetz (AktG) (German Stock Corporation Act) by way of analogy; See Marcus Lutter & Walter Bayer, § 5, in GmbH-Gesetz. Kommentar, margin number 17 (Marcus Lutter & Peter Hommelhoff eds., 16th ed. 2004).Google Scholar

28 See Begr Reg, supra note 11, at 71; See also Joost, , supra note 13, at 2244; Seibert, , supra note 16, at 676; Veil, , supra note 20, at 1081.Google Scholar

29 With respect to this problem see in detail the expert opinion of Tilman Götte for the Committee on Legal Affairs of the Bundestag, available at http://www.bundestag.de/ausschuesse/a06/anhoerungen/28_MoMiG/04_Stellungnahmen/Stellungnahme_Prof__Goette.pdf, 5; Michael Bormann, Die Kapitalaufbringung nach dem Regierungsentwurf zum MoMiG, GmbHR 897, 901 (2007); Joost, supra note 13, at 2244–2245; Eckhard Wälzholz, Das MoMiG kommt: Ein Überblick über die neuen Regelungen, GmbHR 841, 843 et seq. (2008).Google Scholar

30 See Paul L. DAvies, Gower and Davies’ Principles of Modern Company Law 57 (2003).Google Scholar

31 See CA 2006, Explanatory Notes, n. 32; Blackstone's Guide, supra note 7, at 3.10 and 4.05; Derek French, Stephen W. Mayson & Christopher L. Ryan, Mayson, French & RYan on Company Law 2.2.1.3 and 3.3.2 (2007–2008).Google Scholar

32 Very critical e.g. Freitag, & Riemenschneider, , supra note 2, at 1486–1487; Heckschen, Heribert, Die GmbH-Reform! Wege und Irrwege, Deutsches Steuerrecht (DStR) 1442–1444 (2007); Ulmer, Peter, Der “Federstrich des Gesetzgebers” und die Anforderungen der Rechtsdogmatik, ZIP 45, 46 et seq. (2008). For a restriction to one-member-companies: Walter Bayer, Thomas Hoffmann & Schmidt, Jessica, Satzungskomplexität und Mustersatzung, GmbHR 953, 958 (2007); Karsten, Fredrik, Kann man eine GmbH auf einem Bierdeckel gründen?, GmbHR 958, 966–967 (2007); Marcus Lutter in his expert opinion for the Committee of Legal Affairs of the Bundestag, available at http://www.bundestag.de/ausschuesse/a06/anhoerungen/28_MoMiG/04_Stellungnahmen/Stellungnahme_Prof__Lutter.pdf, 4. But see for a generally positive view the expert opinions of Eckart Sünner of the BDI and Barbara Grunewald for the Committee on Legal Affairs of the Bundestag, available at http://www.bundestag.de/ausschuesse/a06/anhoerungen/28_MoMiG/04_Stellungnahmen/Stellungnahme_Dr__S__nner.pdf, 3–5.Google Scholar

33 They date back to the Joint Stock Companies Act 1856, see Mayson, French & RYan, supra note 31, at 3.3.1.Google Scholar

34 Table A CA 1985 consists of 118 clauses, the draft for the new separate model articles for private limited companies under CA 2006 consists of 54 very detailed clauses (The Companies (Model Articles) Regulations 2008, supra note 8).Google Scholar

35 Seibert, , supra note 16, at 674.Google Scholar

36 See Begr Reg, supra note 11, at 61; Bericht des Rechtsauschusses (report of the Committee on Legal Affairs), BT-Drucks 16/9737, 93. See also Schmidt, J., supra note 1, at 307; Bayer, Hoffmann & Schmidt, , supra note 32, at 953.Google Scholar

37 See Schröder, Oliver & Cannivé, Klaus, Der Unternehmensgegenstand der GmbH vor und nach dem MoMiG, NZG 1, 3 et seq. (2007).Google Scholar

38 Almost 75% of the statutes of GmbHs currently contain clauses restricting the transfer of shares, see Bayer, Hoffmann & Schmidt, supra note 32, at 955.Google Scholar

39 See Schmidt, J., supra note 1, at 307; Bayer, Hoffmann & Schmidt, , supra note 32, at 593.Google Scholar

40 As of 1 January 2007, The Companies Act (Commencement No. 1, Transitional Provisions and Savings) Order 2006, SI 2006/3428, brought in force ss. 1068(5), 1078 CA 2006, requiring the Registrar of Companies to provide for the possibility of electronic delivery of the constitutional documents.Google Scholar

41 Price List available at http://www.companieshouse.gov.uk/toolsToHelp/productPriceListCompare.shtml.Google Scholar

42 Gesetz über elektronische Handelsregister und Genossenschaftsregister sowie das Unternehmensregister (EHUG) of 10 November 2006, BGBl. I, 2553.Google Scholar

43 See in more detail J. Schmidt, supra note 1, at 307.Google Scholar

44 Eidenmüller, supra note 3, at 199; Noack, supra note 18, at 1398.Google Scholar

45 See Eidenmüller, supra note 3, at 198–199; Noack, & Beurskens, , supra note 1, at 108. The BDI even complains that at many register courts incorporations take even longer (!) than before. See Sünner, supra note 32, at 5.Google Scholar

46 See Heckschen, , supra note 32, at 1447.Google Scholar

47 The equivalent provision in CA 1985 was s. 1(3A).Google Scholar

48 See supra C. III.Google Scholar

49 In respect of the character of the UG as merely a subtype of the GmbH. See supra B.Google Scholar

50 See Lutter, & Bayer, , supra note 27, at margin notes 26 et seq. Google Scholar

51 Re Bulawayo Market and Offices Co Ltd (1907) 2 Ch 458.Google Scholar

52 See the rr. 3, 5 and 7 of the draft model articles supra note 8; Mayson, French & RYan, supra note 31, at 15.8.1. See Table A CA 1985, supra 34, rr. 70 and 72.Google Scholar

53 See Lutter, & Hommelhoff, , § 48, in GmbH-Gesetz. Kommentar, margin number 12a (Marcus Lutter & Peter Hommelhoff eds., 16th ed. 2004).Google Scholar

54 For a detailed account of the new rules see Blackstone's Guide, supra note 7, at 12.03, 12.07 et seq.; Mayson, French & RYan, supra note 31, at 14.5, 14.7.1.Google Scholar

55 See Begr RegE, supra note 11, at 72. See also Handelsrechtsausschuss des DAV, supra note 20, at 737; Joost, supra note 13, at 2247–2248; Seibert, supra note 16, at 676; for a rather critical assessment see Veil, supra note 20, at 1083.Google Scholar

56 Second Council Directive of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, (1977) O.J. L 26/1.Google Scholar

57 However, this seems to be the interpretation of Joost, supra note 13, at 2248.Google Scholar

58 See generally Happ, Wilhelm & Holler, Lorenz, “Limited” statt GmbH – Risiken und Kosten werden gern verschwiegen, DStR 730, 733 (2004); Kessler, Wolfgang & Eicke, Rolf, Die Limited – Fluch oder Segen für die Steuerberatung?, DStR 2101, 2102 (2005); Joost, , supra note 13, at 2246.Google Scholar

59 See Begr RegE, supra note 11, at 71–72. See further Schärtl, Christoph, Unternehmergesellschaft (haftungsbeschränkt) – innovatives Konzept oder “typischer Kompromiss”?, GmbHR R305 (2007).Google Scholar

60 See Joost, , supra note 13, at 2245.Google Scholar

61 See supra B.Google Scholar

62 See Bormann, , supra note 29, at 899; Handelsrechtsausschuss des DAV, supra note 20, at 737.Google Scholar

63 See Kleindiek, Detlef, Die Unternehmergesellschaft (haftungsbeschränkt) des MoMiG – Fortschritt oder Wagnis?, BetriebsBerater (BB), Die erste Seite, issue 27 (2007); Veil, , supra note 20, at 1083.Google Scholar

64 English law only knows two instances where a subordination of debts owed to shareholders may occur: ss. 74(2)(f), 215 Insolvency Act 1986. See also Jessica Schmidt, “Deutsche” vs. “Britische” Societas Europaea (Se) – GRündung, Verfassung, Kapitalstruktur 464 (2006); Jan-Philipp Hoos, Gesellschafterfremdfinanzierung in Deutschland und England: Risiken und Haftung, 145 et seq. (2005).Google Scholar

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66 See the decisions of the Oberlandesgericht (OLG) (Higher Regional Court) Jena of 22 August 2007, 6 W 244/07, ZIP 1709 (2007) and of the OLG Nürnberg of 10 August 2007, 13 U 1097/07, GmbHR 41 (2008). For a detailed discussion of these cases and the legal concept of the “Restgesellschaft“ (“relic company”) see Stefan Leible & Matthias Lehmann, Auswirkungen der Löschung einer Private Limited Company auf ihr in Deutschland belegenes Vermögen, GmbHR 1095 (2007); Jessica Schmidt, case note on OLG Jena of 22 August 2007, ZIP 1712 (2007); Rüdiger Werner, case note on OLG Nürnberg of 10 August 2007, GmbHR 43 (2008).Google Scholar

67 See Koller, Torsten, The English Limited Company – ready to invade Germany, 15 ICCLR 334 (2004).Google Scholar