allocating all of the opportunities, benefits or profits to another group company,

(3) cash-management within a group of companies depriving the subsidiary of the liquidity necessary to meet its obligations, and (4) measures in connection with the integration into a group of companies (e.g. transfer of material business operations to other group companies; upstream guarantees).

However, since this form of piercing the corporate veil has been designed as a narrow exception, its application is restricted to interferences involving risks and disadvantages for the GmbH which, from an ex ante point of view, are clearly disproportionate to the potential opportunities, profits or benefits to be gained, and are therefore highly likely to result in the destruction (i.e. insolvency) of the GmbH. Consequently, cases of mere mismanagement do not fulfil the requirement of a wilful and harmful destructive interference.

Summary: Cases of ‘Piercing the Corporate Veil’

•Substantial undercapitalization (qualifizierte Unterkapitalisierung): In the case of substantial undercapitalization, companies have been utterly under-resourced by the shareholders.

•‘Commingling’of assets (Vermögensvermischung): Personal liability may be assumed if the corporate and personal spheres of property cannot be separated from each other.

•Abuse of the corporate form (Rechtsformmissbrauch): Evident abuse of corporate form to the detriment of the company’s creditors.

•Destructive interference (existenzvernichtender Eingriff): Willful conduct contra bonos mores which foreseeably results in the destruction (i.e. insolvency) of the company to the detriment of its creditors.

3.6  Protection of Minority Shareholders

In this section we will look at some key issues of protecting minority shareholders (Minderheitenschutz), with special focus on the GmbH.

3.6.1  Articles of Association—General Issues

As indicated above, the legal framework of a GmbH offers much more flexibility than that of an AG. The articles of association (Gesellschaftsvertrag) of the GmbH may, in particular, be tailored to the specific needs of the shareholders, provided that the minimum statutory requirements regarding the content of the articles of association (set out in Sec. 3 GmbHG) are met. Pursuant to this provision, the articles of association must contain the name and registered office of the company, the objects of the company, the amount of the registered share capital and the amount of shares, as