Best way to protect company owned assets

[mud]

It interesting the differences in these laws between otherwise similar countries.

In the English based systems, as a general rule:
- The company that trades is the one that would be liable if something goes wrong
- If the company had no assets then there's little for a person suing to chase
- There are limited instances where a Director of a company can be personally sued. Most often I've seen it occur when 'trading insolvently'- or trading knowing the company can't pay its bills.

To help avoid a lot of risk we always setup our trading companies to have no assets. As a general rule the assets are owned by holding companies and trusts, who are separate legal entities. The Holding companies don't trade with outside people and don't hire outside staff for instance.

Maybe there's a similar structure possible in Germany.

 

[CyprusLawyer101]

mud said:
It interesting the differences in these laws between otherwise similar countries.

In the English based systems, as a general rule:
- The company that trades is the one that would be liable if something goes wrong
- If the company had no assets then there's little for a person suing to chase
- There are limited instances where a Director of a company can be personally sued. Most often I've seen it occur when 'trading insolvently'- or trading knowing the company can't pay its bills.

To help avoid a lot of risk we always setup our trading companies to have no assets. As a general rule the assets are owned by holding companies and trusts, who are separate legal entities. The Holding companies don't trade with outside people and don't hire outside staff for instance.

Maybe there's a similar structure possible in Germany.
Click to expand...

This is solid advice

 

[Reawake]

mud said:
It interesting the differences in these laws between otherwise similar countries.

In the English based systems, as a general rule:
- The company that trades is the one that would be liable if something goes wrong
- If the company had no assets then there's little for a person suing to chase
- There are limited instances where a Director of a company can be personally sued. Most often I've seen it occur when 'trading insolvently'- or trading knowing the company can't pay its bills.

To help avoid a lot of risk we always setup our trading companies to have no assets. As a general rule the assets are owned by holding companies and trusts, who are separate legal entities. The Holding companies don't trade with outside people and don't hire outside staff for instance.

Maybe there's a similar structure possible in Germany.
Click to expand...

In general, this is not a bad idea. A holding structure is also quite common in Germany, but mainly for tax reasons. Unfortunately, such a good protection as in the English-based system is not possible here.

However, since I was forced to give a personal guarantee when I sold the assets of my company, I am also personally liable in case of doubt. This means that my shares of other companies (e.g. the holding company) could also be seized.

Therefore, I need a solution where the seizure by the judiciary would not be possible. This would bring up the possibility of an offshore company, where the German authorities would not be able to seize shares or funds due to the lack of enforceability. I still have to find out which jurisdiction would be suitable and especially how I can transfer the funds from my German cash rich company to the offshore company, if possible, without making myself liable to criminal prosecution.

 

[CyprusLawyer101]

Reawake said:
In general, this is not a bad idea. A holding structure is also quite common in Germany, but mainly for tax reasons. Unfortunately, such a good protection as in the English-based system is not possible here.

However, since I was forced to give a personal guarantee when I sold the assets of my company, I am also personally liable in case of doubt. This means that my shares of other companies (e.g. the holding company) could also be seized.

Therefore, I need a solution where the seizure by the judiciary would not be possible. This would bring up the possibility of an offshore company, where the German authorities would not be able to seize shares or funds due to the lack of enforceability. I still have to find out which jurisdiction would be suitable and especially how I can transfer the funds from my German cash rich company to the offshore company, if possible, without making myself liable to criminal prosecution.
Click to expand...

Redomiciliation

 

[mud]

Reawake said:
In general, this is not a bad idea. A holding structure is also quite common in Germany, but mainly for tax reasons. Unfortunately, such a good protection as in the English-based system is not possible here.

However, since I was forced to give a personal guarantee when I sold the assets of my company, I am also personally liable in case of doubt. This means that my shares of other companies (e.g. the holding company) could also be seized.

Therefore, I need a solution where the seizure by the judiciary would not be possible. This would bring up the possibility of an offshore company, where the German authorities would not be able to seize shares or funds due to the lack of enforceability. I still have to find out which jurisdiction would be suitable and especially how I can transfer the funds from my German cash rich company to the offshore company, if possible, without making myself liable to criminal prosecution.
Click to expand...

I wonder if you could setup a trust in a nice, tax friendly English-based country (Gibraltar, Carribean, Malta etc.) to buy the holding company and other assets.

Then any German court would need the permission of the non-german country to enforce a claim. And 'piercing the corporate veil' may not be all that successful in the non-german country.

 

[Reawake]

CyprusLawyer101 said:
Redomiciliation
Click to expand...

As far as I am correctly informed, for a redomiciliation it is necessary to liquidate the company first in the giver country. This would lead to the fact that I would have to pay taxes on the entire company assets immediately.

The liquidation of a corporation in Germany also takes at least 13 months (due to the legal lock-up period), realistically probably rather 24 months.

mud said:
I wonder if you could setup a trust in a nice, tax friendly English-based country (Gibraltar, Carribean, Malta etc.) to buy the holding company and other assets.

Then any German court would need the permission of the non-german country to enforce a claim. And 'piercing the corporate veil' may not be all that successful in the non-german country.
Click to expand...

In theory this might work, but in practice the German tax office will definitely take notice if I sell a company with 1M in the bank account for 10k to a foreign company.

Last edited: Jul 25, 2023

 

[CyprusLawyer101]

Reawake said:
As far as I am correctly informed, for a redomiciliation it is necessary to liquidate the company first in the giver country. This would lead to the fact that I would have to pay taxes on the entire company assets immediately.

The liquidation of a corporation in Germany also takes at least 13 months (due to the legal lock-up period), realistically probably rather 24 months.


In theory this might work, but in practice the German tax office will definitely take notice if I sell a company with 1M in the bank account for 10k to a foreign company.
Click to expand...

A redomiciliation does not require the liquidation of a company at least in a good chunk of jurisdictions. It is true though that certain requirements such as bringing accounts and compliance up to date are necessary in the exiting jurisdiction before redomiciliation takes place and these same requirements also appear in a liquidation process.
What is important to assess is whether any exit or other taxation would apply to the assets of the company at such an event of redomiciliation.

 

[myhand]

Reawake said:
When I sold the assets, I had to give a catalog of guarantees for which, in the event of a breach, both my company and I are personally liable without restriction.
Click to expand...

That's a stupid mistake or something simply unavoidable. You closed all doors to be able to get away from this agreement.

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