Company law, company formation and the company registration procedure

• company formation: choosing the company form, drafting the instrument of constitution, and the electronic application for registration
• preparing and submitting applications for the registration of changes: registered seat, change of managing director and of members, and the increase or reduction of the subscribed capital (initial capital or share capital)
• preparing resolutions of members’ meetings and founder’s resolutions, and agreements between members
• representation in legality supervision proceedings and in the course of voluntary dissolution and liquidation

Why a company cannot be formed without an attorney-at-law

Under Act V of 2006 on Public Company Information, Company Registration Proceedings and Voluntary Dissolution, legal representation is mandatory in company registration proceedings and in proceedings for the registration of changes, and the application must be submitted by the organisational representative of the company through a legal representative. The procedure itself is conducted by the court of registration; the attorney-at-law prepares and submits the application and then represents the company in the course of the procedure.

The company registration procedure has for years been entirely electronic: the application for registration and the application for the registration of changes may be filed by electronic means only, and communication between the court of registration and the applicant likewise takes place through that channel. This requires the legal representative’s qualified electronic signature and access to the company registration system.

The steps of company formation

The first decision is the choice of the company form. This is not a question of form: the extent of liability, the capital requirement, the order of decision-making and the possibilities for a later change of ownership all depend upon it.

This is followed by the selection of the company name. Upon an application filed by electronic means by the legal representative, and against payment of the court duty, the court of registration examines within one working day of the receipt of the application whether the chosen name is already taken. Where the name is capable of registration, the court of registration reserves it for a period of sixty days — during that time no other legal entity may have itself registered under the same name.

Next comes the preparation of the instrument of constitution. This may be done by applying the model contract set out in the annex to the Act, or by individual drafting. The use of the model makes a simplified company registration procedure available, whereas an individually drafted instrument is warranted where the owners wish to depart from the statutory default position — for example as regards the distribution of profits, restrictions on the transfer of business shares, or the powers of the management.

Following the signature and countersignature of the instruments, I submit the application for registration by electronic means and provide representation until registration.

Registration of changes

Changes occurring in the course of operation must be notified in the same manner: a change of the registered seat or of an establishment, a change of managing director or of members, the increase or reduction of the subscribed capital, and the amendment of the instrument of constitution. These as a rule also require a members’ meeting resolution or a founder’s resolution, the preparation of which forms part of the retainer.

One matter is an exception: a change in the scope of activities is to be notified not to the court of registration but to the state tax and customs authority, and it is entered in the company register on the basis of the data supplied by the tax authority.

Where operation runs into difficulty

My activities as an attorney-at-law extend to representation in legality supervision proceedings, to the conduct of voluntary dissolution, and equally to the representation of the creditor side and of the debtor side in liquidation proceedings.

Frequently asked questions

May I form a company without coming into the office?

Subject to certain conditions, the instrument may also be signed via an electronic communications network. I examine whether this is possible on a case-by-case basis — I have set out the details on the page on concluding contracts by remote identification.

Is the model contract sufficient?

Where the owners work with the statutory default position, typically yes. Where, however, there are several owners, with differing capital contributions or differing roles, an individually drafted instrument of constitution forestalls later disputes.

Is an attorney-at-law also required in order to amend company data?

Yes. Legal representation is mandatory in proceedings for the registration of changes just as it is in the registration procedure.