Objective efficiency evaluation of a national legal system and its perfection are unattainable without the knowledge and comprehension of foreign legislative systems. In this concern, I suggest you a closer acquaintance with the law regulating activity of German partnerships. The law not only reflects but to a considerable degree determines the course and level of development of economic system; it can boost up the efficiency of entrepreneurial activity. Below will be examined the definition of partnership in the German Law and the system of its types according to different criteria of classification.

The law of partnership is a separate ununified branch of the German private law which is closely connected with the civil and commercial laws as well as fiscal, employment, banking and other laws. The law of partnership contains norms describing possible forms of partnerships in Germany, norms delineating the procedure of their foundation and liquidation and regulates internal relations between the partners and partners’ relations with third parties[1].

The basic distinguishing characteristics of partnership are displayed in its definition:

Partnership is an association of two or more persons based on a private treaty for the purpose of realizing a common goal. Thus, conclusion of a respective treaty and partners’ aspirations to reach a common goal are the necessary prerequisites of partnership founding. At that, German lawyers point out that not all goals can possibly be a sufficient cause for that, and provide ‘the desire to have a common property and on this basis assume common rights and obligations’ as an example of such an invalid goal[2]. Besides, concerning the procedure of founding a partnership it is significant to mention peculiar correlation between the principle of free agreement and imperative norms. So, imperative norms for the most part regulate partners’ relations with third parties largely leaving out internal relations between the partners and for the most part apply to the partnerships based on the association of persons (in the narrow sense, special partnerships and public trade partnership).

Among the primary sources of the law of partnership are:

• Civil Code of 1896 which contains norms on Verein-partnerships (Verein) and partnerships (Gesellschaft, BGB-G)
• Commercial Code of 1897 which defines the rules of foundation and functioning of a public trade company (die Offene Handelsgesellschaft, OHG), special partnership (die Kommanditgesellschaft, KG), secret partnership (die stille Gesellschaft, StG), steam company (die Reederei)
• Law on limited liability partnerships of 1892 (die Gesellschaft mit beschrдnkter Haftung, GmbH)
• Law on joint-stock companies of 1965 which regulates activity of stock company (die Aktiengesellschaft, AG) and special stock partnership (die Kommanditgesellschaft auf Aktien, KGaA)
• Law on cooperative societies of 1889 edited in 1994
• Law on insurance of 1992 which contains norms on mutual insurance association
• Council of Europe’s Directive 2137/85 of 1985 on the creation of the European association of common economic interests (die Europдische wirtschaftliche Interessenvereinigung, EWIV).

To systematize numerous types of companies German lawyers use different criteria of classification. Below will be examined classifications based on the three central features of the company as a legal phenomenon: company as an association of people, common goal of a company, and the forms of concluding a private treaty.

Classification by the character of association

All companies are founded by means of association of people. However, legal registration of their foundation, structure and activity differs just as aims and priorities of their founders do. The most important for classification seems to be the character of association which divides companies in partnerships (associations in the narrow sense) (Personengesellschaften) and companies (associations in the broad sense) (Vereinen)[3].

The category of partnership includes partnerships on the Civil Code as a basic type, public trade partnerships, special partnership, secret partnership and the European Partnership of common economic interests.

All other forms of partnership should be referred to verein-partnerships. The most widespread of them are trade partnerships: joint-stock partnership, special stock partnership, limited liability partnership and verein-partnership on the Civil Code as a basic type. It is significant to mention that German legislation distinguishes legally capable and incapable verein-partnerships and only capable are held as legal entities. Court practice and doctrine though do not support this division and regard all verein-partnerships as legal entities[4].

The fundamental distinction between partnerships based on the association of people and verein-partnerships is clarified through an analysis of the relevant legislative norms which state that partnerships based on the association of people to a much greater extent depend on the personality of the participants which is manifested in internal relations between the partners as well as partners’ relations with third parties. Verein-partnership in contrast acts as a self-sufficient unit relatively independent from its founders.

Close connection between partnership based on the association of people and its participants (partners) reveals in the fact that German legislation does not give the status of legal entity to such partnership but invests its partners with all its rights and obligations. It is partners who represent the partnership in external relations. Thus, cooperation and personal participation of partners in the partnership’s activity is obligatory, partners have mutual rights and obligations, changes in the membership entail considerable difficulties.

Verein-partnership on the other hand is an autonomous personable unit based on the association of people in the broad sense. It is regarded as a legal entity and therefore has certain rights and obligations and acts sui juris (of its own name). Verein-partnership realizes its competence through special organs which exercise administration, management and representation for the most part independently from the founders.

To the Belarusan lawyer accustomed to regarding all types of partnerships as legal entities the German approach of not giving the status of legal entity to partnerships based on the association of people in the narrow sense can seem interesting. This however does not mean that in the latter case partners have exclusively personal legal capability — participants of public trade partnership, special partnership or partnership on the Civil Code still have joint ownership which serves as evidence of the principle of jointedness and a factor of a certain severalty and personability of these partnerships[5].

The above classification by the character of association (Personengesellschaften) should not be confused with the classification by the character of capital pooling (Kapitallgesellscaften). The latter is based on the way of reaching the business purpose: either by means of active participation in the partnership’s activity or through a more impersonal capital investment (holding)[6]. Although in both classifications characteristics partly coincide one should be very careful making inferences for the only pure example of partnership based on the association of people is public trade partnership, while the only pure example of partnership based on capital pooling is joint-stock partnership. It is necessary to mention that legislation refers limited liability partnership and special stock partnership also to the second category.

Classification by the character of business purpose

The majority of partnerships including joint-stock, limited liability and special partnerships can be founded for reaching any legal goal. Special forms of partnerships are conversely limited only to a certain line of activity: public trade partnership to trading, European partnership of common economic interests to supporting economical activity of its members. It is significant that engaging in some activities is solely allowed to special forms of partnership provided by the law. Thus, e.g. investment fund can only exist in the form of joint-stock partnership or limited liability partnership.

It is also important to tell the difference between commercial and nonprofit partnerships depending on the kind of partnership’s business purpose which can be respectively commercial or noncommercial (ideal). This difference determines the order of acquiring legal capability by verein-partnership on Civil Code.

Classification by the character of foundation

Actually there is only one way to found a partnership in the German law — conclude a private treaty which in its turn can be formalized by the treaty of foundation or by-laws. Classification by the form of the document of foundation is rather perfunctory because statute and treaty are organizational documents and contain founders’ desire and agreement to act legally in cooperation to achieve common goal.

Thus, to systematize companies in the German law it is paramount to divide them into partnerships based on the association of people (associations in the narrow sense) and companies (associations in the broad sense). Reference to one of the above groups characterizes the rights and obligations of the partners and the partnership itself. Such division is absent in the Belarusan doctrine. Similarly Belarusan legislation is not acquainted with companies not regarded as legal entities. The differences however do not testify greater or lesser efficiency of the legal systems. Inferences about the efficiency seem to be possibly made only on the basis of a thorough analysis and comparison of the norms on certain forms of partnership which is a theme of its own.

Sources

1. Основы немецкого торгового и хозяйственного права. Gründzuge des deutschen Handels- und Wirtschaftsrechts. — Москва: издательство БЕК, 1995

2. Eisenhardt Ulrich. Gesellschaftsrecht. — 8. Auflage. — München: Beck, 1999.

3. Gehling Alfons. Gratzfeld Klaus. Wirtschaftsrecht: Zivil- und Handelsrecht, Sozial- und Berufsrecht. — 3., überarb. und erw. Auflage. — München: Beck, 2002.

4. Kluzinger Eugen. Grundzüge des Gesellschaftsrechts. — 11., überarb. Auflage. — München: Vahlen, 1999 5. Kraft Alfons. Kreuz Peter.Gesellschaftsrecht. — 10., überarb. und erw. Auflage. — Neuwied: Luchterhand, 1997.