Services

1. Cross-border and domestic corporate groups

Giving advice on all on all corporate law related aspects in connection with domestic and in particular multinational and cross-border corporate groups constitutes the core area of our practice and expertise.

1.1 Multinational and cross-border corporations and corporate groups

Due to the constantly increasing globalisation of world economy, advising and supporting multinational and cross-border corporations and corporate groups has become more and more important. The traditional way of establishing multinational corporate groups consisted in setting up subsidiaries pursuant to local law in each State of the group´s activity. Because of the differences between the laws applicable to each of the group´s subsidiaries, such corporate group structures bear a high risk. In addition, they impede a common and uniform management and control of the cross-border corporate group. 

LEXPORTATEU provides solutions for this legal problem by offering inter alia the following innovative legal products:

1.1.1 Advising from the top-down perspective of the parent company

Corporate groups are characterised by the coordination and centralised management of at least some core areas (Finance, HR, Sales and Purchasing etc.). The legal structure of a group must also be adjusted to this economic fact. In contrast to many traditional multinational corporate groups, whose subsidiaries are often set up and supported by local legal advisors lacking the specific knowledge of the law applicable to the parent company and its resulting economic and organisational needs, to the extent legally possible LEXPORTATEU is designing all subsidiaries and affiliated companies pursuant to the requirements and needs of the group management. Since the actual structure of corporate groups is varying significantly (from groups showing a decentralised management, and often belonging to different sectors or industries, up to strictly hierarchical vertical group structures), it is important to structure subsidiaries in such a way that they integrate harmoniously in the overall structure of a cross-border corporate group, avoiding legal frictions.

1.1.2 Design of new or revision of pre-existing cross-border corporate group structures

Whether your business is daring for the first time the step to set up a subsidiary abroad, or if you have long been owning and managing foreign shareholdings, LEXPORTATEU is able to develop a corporate group structure adapted to your individual needs. We check, if pre-existing structures comply with legal and regulatory requirements, but also, if the legal options available nowadays are already fully used. If not, we will take care of it. In addition, we compare the variant of a corporate group structure with alternative options, such as for example the cross-border unitary enterprise.

1.1.3 Results-driven choice of the most appropriate legal form for the client´s group companies

In modern days, within the EU and the EEA there exist far reaching choice of law options, enabling the choice of the preferred law applicable. In this way, even cross-border corporate groups of companies are able to unify the legal form of their subsidiaries in such a way, that the differences and the lack of compatibility between the divergent laws applicable to its subsidiaries can be avoided to a large extent. Thus, at least from a corporate law perspective, the complexity of a multinational corporate group can be reduced to the uniformity of a “mere” domestic one.

As a result of our long-standing experience in advising multinational groups, LEXPORTATEU has deep knowledge and benefits from its experience regarding the legal orders at choice. If required, external experts from other jurisdictions are consulted in a flexible way pursuant to our Legal Croudworking-concept.

Of course we take for granted that this comparison is realised exclusively following the objective criteria deriving from the Pros and Cons of the respective law at choice, and based on your entrepreneurial and economic interests. If latter reveals that the jurisdictions of the German, Spanish and Austrian corporations principally supported by us do not constitute an appropriate legal form, we will advise to choose a more appropriate one under another jurisdiction and would be pleased to consult external experts advising in latter. By acting so, we prevent prophylactically that inefficient and legally risky group structures may come into being because due to the blinkered attitude and out of self-interest, local advisors exclusively fall back on the legal forms which are well-known by them and which they use to distribute.

1.1.4 Implementation of an appropriate corporate group structure along with the corresponding Corporate Governance

If required, we provide for the implementation of new respectively the complete or merely partial adjustment of pre-existing corporate group structures. Although it saves a lot of time and money if a multinational group is established right from the beginning with an efficient and competitive group structure, nowadays there exist ways to adjust and amend pre-existing, outdated group structures to the modern legal and economic environment. 

In addition to the instruments of a cross-border merger and a cross-border conversion, we have also a long standing experience in the drafting and implementation of cross-border affiliation and other kinds of inter-company agreements, in the event and to the extent this is possible pursuant to the respective law applicable and makes sense from an economic (in particular tax) point of view.

Furthermore, internal organisational structures and decision-making processes must be established and implemented in order to enable a fluid and efficient management and control of the corporate group (Group Corporate Governance).

1.1.5 Conceptualisation and implementation of group-wide Cash Pooling schemes

The groupwide coordination and control of the intragroup financing and cash management forms the core element of each corporate group. Already in a domestic corporate group, besides tax and various company law requirements, in a crisis of a company also insolvency law aspects must be observed.

In a cross-border corporate group, due to the incompatibility of the laws respectively applying to the different group companies, these risks can only be controlled if they are already taken into account at the moment a groupwide cash pooling is conceptualised. This not only involves configuring the Cash Pooling in a way that the diverse company law requirements resulting from the respective jurisdictions being applicable to the group companies and often in principle incompatible among each other are observed in full.

Rather, all insolvency law requirements applicable to the respective group companies in a worst case scenario must be also met. They too differ sometimes considerably from one jurisdiction to another and are neither compatible among each other, nor are they with the company law requirements eventually applicable in parallel. As a result thereof, directors of the companies respectively involved may incur into liabilities and in addition, intercompany loans threaten to be lost in insolvency. 

In this respect too, LEXPORTATEU´s advisory approach to organise cross-border corporate groups to the extent legally possible in a uniform legal form, has proven to be a valuable tool. Through a prophylactic design of the cash management and the fulfilment of certain requirements in the intragroup lending practise, the insolvency risks eventually existing pursuant to the law applicable to the respective group company can also be reduced to a  considerable extent.

1.1.6 Cost savings through standardisation and unification of legal processes

In addition, through the unification of the legal form and the law applicable to the group companies, we enable you to a large extent to carry out a standardised management and control of your corporate group. This reaches from the uniform drafting of articles of association, shareholder agreements, and bylaws as well as the consent requirements they provide for, up to draft shareholders’ and boards resolutions as well as templates for registration requirements with Commercial Registers.

This results in a substantial potential for savings because local advisors can be avoided to a large extent. Via the unification of the legal forms of the group companies, activities formerly outsourced can be completely insourced again and be handled at less cost and more efficiently by the group’s inhouse legal department.

1.1.7 Defence against respectively pursuit of liability claims

Each jurisdiction worldwide provides for some set of rules that protects minority shareholders and creditors. Even though these differ widely from one jurisdiction to the other, a vast majority of this protection is achieved through liability rules and the imposition of sometimes draconian sanctions to the detriment of the parent company, its directors as well as the directors of the respective subsidiary.

To rely on the assumption that the liability rules in other jurisdictions are mor or less comparable to those applicable in the parent company´s jurisdiction, can turn out to be a fatal error, particularly in the event of insolvency or economic crisis of a subsidiary or following its disposal. LEXPORTATEU supports you to minimize these risks by preventively designing a secure corporate group structure. But even though the damage has occurred, we are guiding you safely through the jungle of the international law of the groups of companies, both with respect to extrajudicial conflicts or judicial litigation aimed to assert such claims or to defend against them. In jurisdictions where we are lacking bar admittance, we are consulting renowned external experts pursuant to our Legal Croudworking-concept.

1.1.8 Current support of cross-border corporate group structures

Despite all these numerous advantages of a unified corporate group structure, it leads to some administrative burden to use subsidiaries incorporated under another law than the one applying to the local corporations in the State they are carrying out their business. For example, branches must be registered, and the financial statements as well as eventually the subsidiary’s articles of association must be deposited, depending on the local jurisdiction. Nowadays, these formalities can be easily complied with electronically, sometimes in collaboration with a notary public. If required we are pleased to to take care of the due fulfilment of these tasks. 

Furthermore, as the need arises we fulfil secretarial tasks or take care of the general corporate housekeeping, such as for example the drafting and passing of shareholders’ and board resolutions and instructions to subsidiaries on a groupwide basis, and support you in the drafting of reporting and disclosure requirements in the area of company and group law, such as for example the dependency report (Abhängigkeitsbericht).

1.1.9 Establishment and support of cross-border corporate groups composed by SMEs

Although SMEs represent the backbone of European economy, at present due to the complexity of traditional cross-border corporate group structures many small and medium sized companies refrain from establishing a corporate group beyond their national borders. A further reason for this lies in lack of internal legal know how, because many small corporate groups do not have an own legal department at their disposal which is sufficiently specialised in this area . 

Through our approach to organise also cross-border corporate groups to a large extent in a uniform legal form of their subsidiaries, we are reducing both the legal risks and the need for external legal advice. Thus, we are enabling small and medium sized enterprises to expand to other markets withing the EU and the EEA, without being prevented from doing so by prohibitive costs or exposure to liability.

1.2 Domestic corporate groups

Of course, we are providing all the services as explained above in the chapter on multinational corporate groups also to mere domestic group structures. As a result of our innovative legal concept, the borders between a multinational and a mere domestic corporate group are increasingly blurring.

Because by choosing a largely uniform legal form for all companies of the corporate group, at least from a corporate point of view, the cross-border corporate group is resembling to a huge extent to a mere domestic corporate group.

Nevertheless, today´s opportunities to choose the applicable law enable also corporate groups exclusively acting in one sole State to choose such legal forms for their subsidiaries, which best fit to their concrete economic needs. Consequently, for instance a group exclusively acting into the German market is not forced to use group companies incorporated under German law. Hence, the German rules on corporate co-determination may be avoided without any need to opt for the expensive solution of a Societas Europaea, which is only partially suitable for this purpose.

On the other hand, a corporate group exclusively active in the Spanish market may opt to run its subsidiaries exclusively in the legal form of a German limited liability company with a sole shareholder, for instance in order to avoid the strict rules on the piercing of the corporate veil, the liability of the shadow director, or on companies with a sole shareholder under Spanish company law. A corporate group exclusively acting in the Austrian market may avoid the severe rules on capital maintenance and on loans replacing share capital  under Austrian law.