Limitation of liability for AG bodies

In principle, it is possible to arrange for a limitation of the liability of an AG in the internal relationship. Such a limitation is, for example, the requirement of approval by shareholders, according to which particularly risky projects are to be supported and approved by the shareholders. This spreads the liability risk and relieves members of the management board plus members of the supervisory board.

Alternatively, agreements can be made regarding the limitation of claims. However, the protection of creditors must not be violated by law, which is why this form of limitation of liability does not offer comprehensive legal certainty. In all simplicity, however, it is also possible for shareholders to express a waiver of the liability of the supervisory board and management board in a shareholders’ resolution. However, such a resolution may not be adopted before the end of the third year after the liability claim has arisen.

Limitation of liability in the internal relationship of the AG:

• Shareholder approval
• Covenant
• Waiver of liability by resolution

Liability of the Management Board – breaches of the duty of care

As the management body, the management board takes over the operational business and enjoys a great deal of freedom with regard to the management of the company. This requires a high degree of trust on the part of the other executive bodies, which is why the management board is subject to a duty of care as a basis for liability: After all, it works with the shareholders’ deposits and not with its own finances! Accordingly, the management board is liable for breaches of the duty of care imposed on it and for criminal offences. In the event of liability claims, the management board is held liable by the supervisory board.

Liability of the Supervisory Board – Breaches of Principle & Principle of Confidence

The supervisory board is also subject to a duty of care – more precisely: the principle of careful and orderly management – and must act in accordance with the principle of trust vis-à-vis the management board. It is liable to the stock corporation and its shareholders for damages caused by financial losses, but also to third parties insofar as they are affected by a culpable act on the part of the supervisory board.

Liability of shareholders – individual liability & pass-through liability

Each shareholder is individually liable to the extent of the shares he holds. Creditors can therefore in principle not encumber his private assets should the value of his contributions be insufficient. The only exception to this rule is the so-called “pass-through liability”, in which the strict separation between business and private assets can be waived under certain circumstances. An assessment in this regard must be determined by the respective competent court.

Establish a GmbH: Legal form and alternatives

1. Limited liability company (GmbH)
2. Special case: Real estate GmbH
3. Legal forms: List

Limited liability company (GmbH)

Limited Liability Company (Gesellschaft mit beschränkter Haftung, GmbH) – The limited liability company is a German legal form that is founded by at least one person and managed by at least one shareholder. As the name already indicates, this corporate legal form is characterized by a limitation of liability for its shareholder(s).

• Limited liability company (GmbH)

Special case: Real estate GmbH

Immobilien GmbH / Vermögensverwaltende GmbH / Immobiliengesellschaft – In this article you will learn the basics about real estate companies. Who would think of founding a limited liability company when buying a house or a condominium? Admittedly, this makes no sense for owner-occupation, but it does for renting.

• Real estate company

Here you will find all the legal forms that can be chosen as a founder in Germany and a guide with a checklist:

Legal forms: List

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

Private Sold Failed – Sold

Sylvia and Hans A. from Mainz: “We were initially sceptical whether a broker could sell our house better than we could ourselves with our experience. The estate agent had a really select customer file and in addition a functioning network. As a result, the sale went through more quickly and smoothly than ever before.”

Property after relocation – sold

John K. from Ingelheim: “I had to move away from here for professional reasons. At first I considered selling my property. But then the advice I received led me to the decision to rent out the property. They also introduced me to excellent prospective tenants. I really didn’t have to worry about anything.”

Property after divorce – sold

Yvonne N. from Bad Kreuznach: ” After separating from my husband, I no longer wanted the big house with the garden. More: garden guide. It should be an apartment, but I had never before dealt with the sale and purchase of real estate. I was most afraid of someone making the most of my situation and inexperience for themselves. With them I immediately noticed that I would be given very personal advice and that everything could be done without any time pressure. So I had then calmly sold my house at a great price and got several suitable apartment offers. All from one source, it was a great experience.”

Investment – brokered

Ludwig M. from Wiesbaden: “I invest my capital almost exclusively in real estate. Up to now I have always done the business myself, because in such matters it is difficult for me to trust other people. I simply gave people the chance to convince me in a small transaction. Didn’t think how quickly and with maximum profit for me it settled the issue.”

Inherited apartment house – sold

Katja H. from Mainz: “An inherited apartment building in the new town was a few numbers too big for me to take care of. I contacted several estate agents for the sale. With them, I was particularly impressed by the fair advice and valuation. Besides, the whole team was so straightforward and I didn’t have to worry about anything.”

Example photo of multi-family house:

Comparative value method: Simply explained

Only properties in similar locations and with a comparable layout are considered in the comparison. The properties included in the valuation should come from the immediate vicinity of the residential property.

To determine the comparative value, the purchase price achieved by the comparative property is divided by its area. The determined price per square metre of the sold property is apportioned to your property to be valued.

Calculation example: Comparative value

For the calculation of the comparative property value, we put two properties in relation to each other, for example. Using the information on purchase price and total living space, we can then calculate the proportional purchase price for your property.

Details of the property being valued:

• Area of the property to be valued: 200 square meters
• Purchase price of the property to be valued: ?

Details of the comparative property:

• Area of the comparative property: 100 square meters
• Purchase price of comparative property: 300,000 euros

Price per square meter

Calculating the ratio of price per square metre of the comparative property provides the perfect basis for concluding the appropriate purchase price for the property being valued under the same conditions. The two purchase prices provide information about the value of your property and thus form a good comparison value.

• Price per square metre of the comparable property = 300,000 Euro / 100 sqm = 3,000 Euro per sqm

Purchase price based on the price per square metre

• Purchase price of the property to be valued = 3,000 Euro * 200 sqm = 600,000 Euro

The comparative value method is considered to be particularly realistic. It is frequently used to determine the value of properties, as the locations are relatively comparable from region to region.

For residential properties, it is also the preferred method for determining a realistic property price. However, if the comparative value is determined for a developed property, further corrections may need to be made. Additional features can increase the probable purchase price, structural damage or a renovation backlog can reduce the determined sales price.

The comparative value method is an extremely accurate reflection of the price that can be achieved on the market.

Valuation for the sale of real estate

All important information about the valuation of real estate sales summarized for you: Valuing a property.

Income approach: Breakdown of market value & building income value

The capitalised earnings value method divides the property into the market value of the land and the building income value.

Land value interest = 7 percent * 100,000 euros = 7,000 euros

Building income value = 5,600 Euro * 12.50 (multiplier) = 70,000 Euro

This includes rental income, maintenance costs and costs for managing the land and building. Accordingly, the rental income less the management costs and the land value including its interest are compared.

• Capitalised earnings method

Material value method: Value for the new construction of a property

The calculation first uses the standard land value to determine the market value of the land, then the real value of the building is added.

The real value of the building is calculated on the basis of the building’s production costs less any reductions for age. The real value of the land (market value of the land) and the real value of the building are added together and multiplied by a real value factor.

Value in kind = (100,000 Euro + 150,000 Euro) * 0.5 = 125,000 Euro

The calculation of the asset value factor is based on the building type, the preliminary asset value and the standard land value. The total tangible asset value determined in this way indicates the financial resources that would be required to rebuild the property.

• Real value method

Value appraisal (costs)

Who prepares appraisals for real estate? What does a house appraiser cost? What does an appraiser for old buildings cost? Unless legal regulations require the appointment of an expert, a real estate appraisal will provide you with a realistic valuation of your property in the regional and national market. We provide timely and accurate valuations of land, residential and commercial properties.

However, if the valuation is to be presented in court, for example in the case of a divorce, experts must be consulted for a fee. The residential or rental property is inspected on site. As a rule, both a written and a digital copy of the appraisal are issued.

• Valuation report