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Report on Authorised Dealer’s Entitlement to Compensation

Under certain circumstances, an authorised dealer may be entitled to claim compensation after termination of the contract with the company if the latter continues to be able to use its business contacts.

In our experience at the commercial law firm GRP Rainer Rechtsanwälte, it is common for an authorised dealer’s potential claims for compensation after termination of the contract with the company to lead to legal disputes. We note that because the German legislature has not explicitly regulated authorised dealers’ entitlement to compensation, it is possible for the provisions governing commercial agents’ right to compensation under sec. 89b of the Handelsgesetzbuch (HGB), Germany’s Commercial Code, to be applied analogously.

These state that the commercial agent is entitled to claim compensation after termination of the contractual relationship with the company if he or she has established new business contacts and the company continues to be able to benefit from these contacts after the contract has come to an end. This right to compensation cannot be contractually excluded.

The provisions can be applied analogously to an authorised dealer’s entitlement to compensation under certain circumstances. The conditions that need to be met for this to happen were set out by the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, in a ruling from 5 February 2015 (Az.: VII ZR 315/13). According to this ruling by Germany’s highest court of ordinary jurisdiction, the right to claim compensation only arises if the authorised dealer was integrated into the company’s sales force and committed to making his or her business contacts available to the company so that the latter can continue using them. The authorised dealer must have committed to transferring his or her client base to the company in such a way that the company is able to readily harness the benefits of this client information without any delay. Furthermore, the authorised dealer must by virtue of special contractual arrangements be integrated into the company’s sales force to such an extent that he or she from an economic per
spective has extensive duties to perform that would otherwise have to be met by a commercial agent.

In the case in question, the BGH denied the authorised dealer the right to claim compensation because the company had not been entitled to use the client information, having contractually committed to block the transferred data and delete it at the request of the authorised dealer.

The right to claim compensation is a controversial topic in the case of commercial agents and all the more so in relation to authorised dealers. Lawyers who are experienced in the field of commercial law can assist authorised dealers and businesses in drafting agreements as well as in the event of legal disputes.

If you would like to find out more, please visit https://www.grprainer.com/en/legal-advice/commercial-law.html

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Rechtsanwälte GRP Rainer

Criteria for Assessing Whether GmbH Managing Directors are Subject to Mandatory Social Security Contributions

According to a decision of the Bundessozialgericht, Germany’s federal court of appeals for social security matters, GmbH managing directors are ordinarily deemed to be employees of the company and hence subject to mandatory social security contributions.

It is not uncommon for disputes to arise over whether GmbH managing directors are subject to mandatory social security contributions. We at the commercial law firm GRP Rainer Rechtsanwälte note that it can prove to be a costly affair for the company if it is determined that the managing director is subject to mandatary social security contributions but no payments have been made to this end and therefore supplementary contributions become payable.

In rulings from 14 March 2018, the Bundessozialgericht set out clear criteria for assessing whether GmbH managing directors are subject to mandatory social security contributions (Az.: B 12 KR 13/17 R and B 12 R 5/16 R). According to these judgments, the managing director of a GmbH is ordinarily deemed to be an employee of the company. The Court held that they are only considered not to be employees if they own more than 50 per cent of the company’s share capital and are thus majority shareholders. The Court went on to state that if they have a 50 per cent stake in the share capital, a presumption in favour of self-employed status is then only possible if the articles of association clearly confer a full blocking minority on the managing director and this enables him or her to prevent instructions from being issued by the general meeting of the shareholders. The Court therefore concluded that the decisive factor for the managing director’s status as self-employed is whether he or she has the legal power to determine the fate of the company by influencing the general meeting of the shareholders.

In doing so, the Bundessozialgericht has set high standards for recognizing managing directors as self-employed. It also made clear that the crucial factor in assessing whether the managing director is an employee and thus subject to mandatory social security contributions is not how he or she acts in relation to third parties. Even if he or she is granted broad powers and freedoms, this alone does not indicate that they are self-employed. Instead, it is the extent to which the managing director has recourse to legally enforceable measures for the purposes of influencing resolutions of the general meeting of the shareholders that is the key factor.

Companies should keep in mind the issue of mandatory social security contributions for managing directors as early as when agreements are being drafted in order to avoid unpleasant surprises at a later date. Lawyers who are experienced in the field of company law can provide companies as well as shareholders with expert advice on matters that go beyond mandatory social security contributions.

If you would like to find out more, please visit https://www.grprainer.com/en/legal-advice/company-law.html