12th ICCML Forum

Current issues in Venture Capital law

 

On October 25, 2019, the Institute for Corporate and Capital Markets Law (IUKR) hosted the twelfth Hamburg Forum on Corporate Law. Speakers presented on current issues in venture capital financing. The focus was on the “Delaware Flip” from a German company into a structure with a Delaware company as well as problems of employee participation.

The managing director of IUKR, Prof. Dr. Thilo Kuntz, LL.M., opened the forum and the conference part on the Delaware Flip with a contribution on the structuring of venture capital financings under Delaware corporate law. The importance of the U.S. and different regions within the U.S. for the global venture capital industry as well as typical legal methods and structuring within the industry were discussed. Prof. Dr. Christine Osterloh-Konrad from the University of Tübingen then introduced the tax law consequences of the Delaware Flip. In particular, she explained the tax consequences of the contribution of German GmbH shares to a Delaware corporation and the possibility of using tax losses of the GmbH. Robin Eyben, attorney and partner at Osborne Clark, continued with an insight into the advisory practice on the Delaware Flip. Above all, he recommended a thorough analysis of the motives for such a step and then shed light on its implementation as well as various structuring options, not least for dealing with intellectual property.

In the afternoon, Dr. Jens Wolf, attorney and partner at Taylor Wessing, started the second block of topics of the forum with his presentation on the design of employee shareholdings. He presented three typical models of employee participation and discussed current developments such as the admissibility of a negative liquidation preference and vesting after exit. Lawyer and tax advisor Jesko Nobiling, partner at CMS Hasche Sigle, supplemented this with the taxation of employee shareholdings. Starting from the basic tax issues of the employees and the company, the timing of taxation in particular became clear as a decisive factor. Finally, this led to a comparison of the taxation of employee shareholdings in Germany with foreign markets.

The forum was attended by practitioners and interested parties from the industry from all over Germany, Austria and the Czech Republic. This enabled a lively exchange of views on the advantages and disadvantages of different legal approaches in the context of venture capital financing, as well as revealing insights into the application of law in this field.

Translated with www.DeepL.com/Translator (free version)