Sat, Mar. 17, 2007

New Heirs, New Shares

CK - Washington.   German law on wills and estates, Erbrecht, may change significantly, Attorney General Brigitte Zypries announced on March 16, 2007. There will be new classes of heirs and new rules on statutory shares for the distribution of estates. Deferred distribution rules will protect major assets such as houses or businesses.

In addition to offspring, parents and siblings, statutorily protected heirs will include those of similar status. The amendments recognize changes in living arrangements such as non-marital partnerships. The basic principle of balancing a testator's right to distribute an estate freely against the mandatory provision of law allocating one-half of the statutory distribution to certain heirs will remain unchanged, but there will be potentially more parties entitled to mandatory shares under the new rules of inheritance.

A slight relaxation of rules that enable a testator to disinherit statutory heirs means that some criminals may no longer claim a mandatory share, Pflichtteil, of an estate. Also, care-giving heirs will receive compensation from the estate for services provided a decedent. Gifts distributed by a decedent within ten years before death will be apportioned over time when their return to the estate is required, Pflichtteilsergänzungsanspruch.

The website of the Berlin Department of Justice does not publish the bill, Referentenentwurf. Instead, it announces that the bill has been sent to affected divisions. The site does not state who sent it or who received it and why it does not publish it. This insulting lack of transparency is typical of the legislative process in Berlin.

EU Company for US Business

CK - Washington.   Haver & Mailänder attorneys Dr. Ulrich Schnelle and Kai Graf von der Recke introduced recent trends in E.U. company law and their effects both on German law and corporate forms suitable for U.S. business investment in Germany, at a March 16, 2007 presentation for the German American Law Association--Capital Area Chapter held at the Representative of German Industry and Trade in Washington, DC.

The two Stuttgart lawyers explained how the European Court of Justice vaporized a core doctrine of German corporate law, the seat doctrine, Sitztheorie. As a result, corporate forms of other national legal systems from the E.U. as well the as the E.U. proper corporate forms such as the Societas Europaea rushed into the market. Now, there is some experience with advantages and disadvantages of such forms.

Complex, tax-driven structures involving third country corporations and tax-treaty networks may occasionally offer U.S. business insulation against some perceived disadvantages, but often, straight U.S.-German corporate links provide greater benefits when taking advantage of the bilateral FNC treaty. The treaty enables U.S. corporations to do business in Germany just like E.U.-based corporations.

The presentation resulted in an exciting discussion ranging from antitrust and tax perspectives to criminal exposure of officers in insolvencies. In addition, the speakers addressed concerns such as employee seats on corporate boards, which is no deterrent to American business, even global firms where co-determination is at its most potentially intrusive.

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