Germany needs a new legal form – a “society with tied assets” (GmgV) – I made this public demand a year ago together with hundreds of entrepreneurs from Michael Otto to Verena Pausder and with the support of experts such as Lars Feld and Michael Hüther.
The GmgV has normal owners like any company, they can shape the company, but they cannot personally withdraw the assets indefinitely. Increases in value and profits remain in the company, but performance can still be well rewarded. Shares can be passed on at their nominal value and thus much more easily to “people with similar values and skills”.
It is a legal form that enables family businesses and start-ups to focus on the company’s independence in the long term, even if there are no successors in the family. Much support was given to our request. While in a representative study by the Allensbach Institute, 72 percent of the family businesses surveyed welcome the new legal form option, some business associations have also opposed the idea. The argument: the idea of ownership would be eroded and entrepreneurial motivation undermined.
I understand our proposal differently: It enables an understanding of the company, as it is already practiced by numerous family businesses through family traditions, to be meaningfully anchored in law – also, but not necessarily, independently of the family. Of course, tradition in a family business is something special and growing into a company is something very valuable.
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I myself saw from childhood how my father performed his duties and what it means to be an entrepreneur. With three sons, I was faced with the question of how the shares in the company could be divided up in a sustainable manner, and at the same time I was aware that my children did not necessarily see their professional future in the family business.
Foundation solutions are very complex
If I bequeathed equal shares in the company to my children, what would happen then? Can we assume that everyone will pull together in the long term? Does it make sense to keep dividing the shares in the company with each generation? It was about creating clarity as to what the entrepreneurship is actually based on and what we can do to bring it to bear in our company in a special way.
Because ultimately it boils down to the question of what is actually the decisive factor in being an entrepreneur: the legal power of disposal over the assets? Or the wide range of design options that you have in a real management position? In doing so, I came to the opinion that a foundation structure is a very good fit for our company.
By transferring the shares to various foundations, we have found a way that gives future generations the opportunity to actively participate in the company. Entrepreneurship and ownership are permanently linked via the structure of a double foundation. The voting rights in the company are not inherited, but remain with the people who are entrepreneurs themselves and who have the necessary skills and values.
There is no space left for so-called investors. The advisory board of our foundation decides who is responsible for the key design tasks. This means that our company, as I understand it, largely belongs to itself.
Fiduciary ownership or ownership in responsibility is certainly not a suitable form for every company. Here, too, the following applies: Different entrepreneurial attitudes require different legal and political framework conditions. Fiduciary property in the sense of responsible ownership can only be realized today – and only to a limited extent – with complex foundation structures. So, with Globus, we followed the path of the dual foundation structure.
For us, the solution of the double foundation has fulfilled its purpose. Originally, however, this legal form was designed for something completely different than holding a company and implementing fiduciary property. A foundation actually serves to bind future generations to the will of the founder forever.
A new legal form must take the change into account
From my ancestors, I took on the task of ensuring that the company continues to develop and keep up with the times. In my opinion it would not have continued to carry on everything as my forefathers did. The company is different today than it was 40 years ago. This is clearly different from what is actually implied by the legal form of the foundation.
Therefore, I support a new form of society in which entrepreneurs can focus fully on the present and future, act entrepreneurially and are the real owners of the design, the responsibility. Entrepreneurs who want to manage more than just a donor’s will. You can change the company’s purpose, build and reduce assets, reinvest or donate profits and, if necessary, even close the company.
In the Allensbach study from this year mentioned at the beginning, it becomes clear: 76 percent of family entrepreneurs reject a foundation solution, 82 percent emphasize that holding shares directly is an important motivating factor. This would allow the proposed legal form.
The introduction of the foundation structure was possible at Globus because, as a large family company, we were also able to financially support the path to this type of company. Establishing and operating a foundation is very costly in terms of time and money. For small companies and start-ups that depend on fast, unbureaucratic and inexpensive solutions, this is hardly acceptable.
The meaning of a company comes to the fore
One also expects start-ups or medium-sized companies with a foundation solution to have a superstructure that cannot be shouldered. Foundation structures may be an option for some, depending on their size, but smaller companies need other approaches.
The new legal form therefore creates an additional option. Entrepreneurs would have more freedom of choice; competition would be strengthened. Making values that are important to us as entrepreneurs who “think in terms of generations” easier to implement – this is where the opportunity lies.
Thousands of founders, medium-sized and small businesses would be helped if the new federal government takes the need for a new legal form seriously and tackles the project without delay. Because in order for the planet to heal, it is important to strengthen a sustainable economy.
Fiduciary property and the “society with tied assets” are pieces of the puzzle to accomplish this task. It does not focus on short-term profit, but on the meaning of a company and contributes to an economy that serves and respects people, nature and companies.
More: The fiduciary principle can preserve the independence of companies