Shareholder as testator
If a deceased person was active as an entrepreneur in some way during his lifetime, company law will also apply to the settlement of his estate after his death in addition to inheritance law.
What happens to my sole proprietorship after my death?
1. continuation of the company
If the testator has not made a last will and testament, the sole proprietorship is included in the estate as a tangible entity in accordance with Section 1922 BGB. If several persons inherit the estate, the resulting community of heirs becomes the owner of the company.
As a result, the undivided community of heirs can continue the sole proprietorship. It should be noted here that the mere continuation does not constitute an implied conclusion of a partnership agreement and therefore the sole proprietorship is not automatically converted into a general partnership or a civil law partnership.
2. break-up of the company
If the co-heirs cannot agree on who should continue the sole proprietorship, for example a single co-heir or several co-heirs in the form of a company, the aim of a community of heirs is to dissolve it. and the sale of the company may be necessary, in order to be able to divide the estate according to the quotas.
The principle of unanimity of all heirs often leads to problems in the management of a company by an undivided community of heirs. According to Section 2040 of the German Civil Code, heirs can only jointly dispose of one item of the estate. In practice, this often leads to conflicts of interest within the community of heirs when it comes to important decisions regarding the company.
In order to prevent potential differences of opinion, it is advisable to grant a third party who is not a co-heir a power of attorney to be entered in the commercial register during his or her lifetime.
It should also be noted that the Assertion of compulsory portion rights leads to considerable liquidity problems for the company can lead to a compulsory portion. This is because compulsory portion claims against the community of heirs are due immediately. In order to be able to settle these claims, it may also be necessary to liquidate and sell the company. A waiver of inheritance or an isolated waiver of compulsory portion is often recommended in order to prevent the break-up by asserting compulsory portion claims.
In addition, the Lack of qualification make it considerably more difficult or even impossible for the heirs to continue the business. The special provisions of the Crafts Code must be observed, particularly in the case of craft businesses. According to the Crafts Code, a craft business can only be continued after the death of the master craftsman by his spouse, the child entitled to inherit up to the age of 25, the executor of the will, a curator of the estate, estate administrator or estate insolvency administrator. If one year has already passed since the deceased's death, the continuation of a skilled crafts business is only possible if the business is managed by a skilled craftsman who fulfils the registration requirements of the skilled crafts register.
How can I protect my sole proprietorship?
By making a will, the testator can avoid the break-up of his business by arranging for a successor to his company or the formation of a partnership or corporation at an early stage.
What happens to my share in a partnership?
Shares in partnerships are also subject to forfeiture. However, the death of a partner in a partnership Company under civil law within the meaning of Section 705 of the German Civil Code (BGB) generally leads to the dissolution of the company if the articles of association do not expressly provide for the continuation of the company after the death of a shareholder (Section 727 (1) BGB). A deviating regulation can be made by way of a so-called Continuation clause be agreed in the partnership agreement. If such a clause has been agreed, the GbR can be continued after the death of a partner. The shares of the deceased partner revert to the other partners (Section 738 (1) BGB).
Depending on the structure of the continuation clause, the heirs of the deceased shareholder can assert compensation claims in accordance with Sections 738-740 BGB.
The situation is different if the testator is part of a Partnership (OHG, KG) was. In this case, the death of a partner does not generally lead to the dissolution of the company. The shareholder leaves the commercial partnership upon his death. His or her share in the company accrues to the remaining partners. A corresponding continuation clause is superfluous in this type of company. The heirs of the deceased do not automatically assume the shareholder status of the deceased.
However, it is possible to enable the heirs to become shareholders by means of an entry or succession clause or, if applicable, a so-called qualified succession clause.
Under a Entry clause is the agreement in the articles of association that after the death of a shareholder, his heir or a third party designated by the testator has the right to enter the company in place of the deceased.
Through a Succession clause the company share is inherited and the heir receives a direct share in the company. If there are several heirs, the principle of universal succession applies, which means that the heirs acquire the company share as a community of heirs. However, it should be noted that the community of heirs as a whole does not receive the company share by way of special legal succession; instead, each heir acquires a company share as an individual in proportion to their share in the estate.
In addition, it is also possible to Qualified succession clause to designate only one or certain heirs as successors.