Definition and Classification of Functional Succession
Die Functional Succession is an important concept in German law, particularly applied in public law as well as civil law and tax law. It describes the transfer of tasks and legal roles from one natural or legal person, authority, institution, corporation, or organization to another, without the complete transfer of legal status or legal identity. This fundamentally distinguishes functional succession from universal succession (Universalsukzession) and singular succession (Singularsukzession). In the latter cases, a person or organization assumes all or specific rights and obligations, whereas, in functional succession, the primary focus is on the continuation of a specific task or function.
Distinction from Other Forms of Succession
Universal Succession (Universalsukzession)
In the context of universal succession, the successor fully assumes the rights and obligations of the predecessor (e.g., inheritance according to § 1922 BGB). Here, the entire estate including debts is transferred to the successor by operation of law. In contrast, functional succession only involves the continuation of a function or task.
Singular Succession (Singularsukzession)
In singular succession, only individual rights or legal positions are transferred, for example through assignment. In this case as well, the identity of the respective legal entities is preserved; however, in the case of functional succession, the transfer does not concern individual rights, but rather the performance of a specific activity or function.
Organizational Succession
Functional succession must be distinguished from organizational succession, in which a former organization is taken over by another. In contrast, functional succession expressly refers only to the transferred task or function, regardless of the organizational unit.
Legal Basis and Areas of Application
Administrative Law
In administrative law, functional succession plays a central role, notably in the restructuring of authorities, in territorial and functional reforms, or the transfer of responsibilities in connection with the dissolution, merger, or outsourcing of agencies and corporations.
Transfer of Tasks and Splitting of Authorities
If an authority is dissolved and its responsibilities are transferred to another authority, the receiving authority regularly assumes the administrative tasks as functional successor. The rights and obligations arising from administrative acts, legal relationships, or public-law contracts do not generally transfer by law to the successor; rather, the mandate to perform the responsibilities is continued. This can affect pending court proceedings, administrative procedures, or permits.
Functional Succession and Administrative Acts
In individual cases, it must be examined whether administrative acts (e.g., building permits, permits for the use of public facilities) remain in force vis-à-vis the functionally succeeding corporation. For example, the collection of fees, prosecution of administrative offenses, or initiation of enforcement measures may be continued by the functionally succeeding authority.
Civil Law
Functional succession also plays a role in civil law, for example in the transfer of certain activities (e.g., management, leadership, curator functions) in companies, associations, or foundations. The respective leadership or supervisory function is assumed without the successor becoming a contractual party in the legal sense.
Tax Law
In tax law, functional succession is particularly relevant when businesses, enterprises, or parts of businesses are transferred. The functions relevant for certain tax duties and rights (e.g., business owner, taxpayer, liable representative) may pass to the functional successor. An example is functional succession in a business upon the transfer of individual subunits within the framework of a reorganization under the Transformation Act (UmwG), whereby specific tax obligations continue to exist.
Legal Consequences of Functional Succession
Continuation of Administrative Procedures and Legal Relationships
In functional succession, the principle of continuity applies in administrative law. The administrative procedure and the related legal actions are continued with the succeeding corporation. If necessary, notification or communication to those affected is required; the change of function holder is usually carried out by public announcement or official notification.
Procedural Legal Position
In court proceedings, the procedural status, such as plaintiff, defendant, party to the proceedings, or respondent, may in certain cases be transferred to the functionally succeeding corporation. This is relevant in administrative and tax litigation, where courts may require that notifications be made.
No Automatic Transfer of Assets
Functional succession does not generally entail the transfer of assets, liabilities, or other legal relationships themselves. If, for example, assets or liabilities are transferred to the new corporation, this usually occurs through separate contractual or public-law agreements.
Special Cases and Practical Examples
Functional Succession under Municipal Law
A classic example of functional succession in municipal law occurs when responsibilities are transferred as a result of territorial reform (e.g., incorporation, merger of municipalities). Here, the new or enlarged municipal corporation assumes the responsibilities and functions of its predecessor corporations (e.g., infrastructure management, issuance of statutes, provision of services).
Higher Education Law and Research Organizations
Functional succession may also occur in higher education law and the administration of research institutions. When responsibilities such as the promotion of science or research administration are transferred from a dissolved institution to another, this is referred to as functional succession.
Ecclesiastical Law
In ecclesiastical law, functional succession regularly occurs during the restructuring of parishes or dioceses, for example, when parishes are merged and leadership responsibilities are assumed by successors, without assets and obligations transferring automatically.
Legal Sources and Literature References
The provisions on functional succession are not found in a separate law but are derived from special statutory provisions such as the Administrative Procedure Act, the Transformation Act, state municipal regulations, tax law, as well as from respective statutes and organizational rules. In addition, the concepts and resulting questions have been clarified by case law, especially by the Federal Administrative Court, the Federal Fiscal Court, and the Higher Administrative Courts.
Summary and Significance
Functional succession is an important legal tool to ensure the continuous performance of responsibilities in the public sector as well as in private and ecclesiastical organizations. It ensures that statutory or statutory responsibilities can continue without interruption, even when structural changes occur. At the same time, clear legal boundaries to other forms of succession must be observed in order to guarantee legal certainty for affected parties, administrative offices, and organizations. The exact structure and legal consequences of a functional succession always depend on the specific facts and the relevant statutory provisions.
Frequently Asked Questions
What must be considered regarding liability law when transferring a functional succession?
In the transfer of a functional succession, liability law plays a central role, as the successor person or organization may be held liable for the actions and obligations of the previous function holder. Typically, it must first be distinguished whether the functional succession takes place within the context of an employment or official relationship and whether contractual arrangements with third parties exist. Liability can arise from statutory provisions (e.g., § 278 BGB – liability for vicarious agents), internal service instructions, as well as, if applicable, special statutory rules (e.g., in public law or association law). Proper documentation of the transfer of office, a comprehensive handover protocol, and, if applicable, legal notification (e.g., to the register of associations or the courts) of the change are of decisive importance. Without these measures, a successor may remain liable for previous cases. In addition, personal liability exists in cases of culpable breach of duty, for instance in the event of omissions or violations of law and statutes, if these are attributable to the successor. It is therefore recommended to seek legal advice in the context of functional succession to exclude or minimize liability risks as much as possible.
What legal formal requirements apply to functional succession?
Depending on the legal form and context, different formal requirements apply for functional succession. In association law, it is often stipulated that functional offices (such as the board) may be transferred only on the basis of a proper resolution of the general meeting or the competent body. Appointment or removal must, according to the Civil Code (§ 27 BGB for associations), often be made in writing and registered with the competent registry court if the office is subject to entry. In the public sector, promotions, transfers, or releases must also be fixed in writing and properly pronounced by the competent authorities or bodies. Moreover, statutes, by-laws, or rules of procedure may provide for additional formal requirements, such as notification within certain deadlines, handover of documents, or observance of blocking periods. Failure to comply with mandatory formal requirements can result in nullity or invalidity of the succession.
How are business secrets and data protection between the former and new function holder regulated?
Upon transfer of functional succession, sensitive data and business secrets within the meaning of the GDPR and the Trade Secrets Act often pass to the successor. The new function holder is obliged to comply with all data protection requirements: for example, access to personal data may be granted only insofar as it is required to fulfill the new responsibilities (principle of purpose limitation and data minimization). Business secrets must be protected by suitable technical and organizational measures, and the successor assumes existing confidentiality obligations. The predecessor remains obliged to maintain confidentiality after leaving office, unless an express release has been agreed. Breaches of these obligations can lead to claims for damages or sanctions by supervisory authorities under Art. 83 GDPR. It is advisable to document a comprehensive confidentiality agreement as well as any data protection instructions with the successor.
How can legal certainty be ensured in the process of functional succession?
To ensure legal certainty in functional succession, full documentation of all handover actions is essential. Already in advance, it should be verified whether the legal requirements in the respective context (e.g., statutory election, term limits, necessary resolutions) have been met. Relevant protocols and resolutions must be carefully retained and notified to the pertinent offices (registry court, authorities, contracting parties). A comprehensive handover protocol should include all relevant legal transactions, deadlines, open tasks, as well as central documents and passwords. If international law or multiple national legal systems are involved, it must also be checked whether the respective regulations on functional succession (e.g., for subsidiaries abroad) have been observed. Legal advice is particularly essential for complex or disputed successions to avoid errors and liability risks.
What reporting obligations exist in connection with functional succession?
Upon assuming a function, statutory or statutory reporting obligations frequently arise. In association law, there is an obligation to promptly report the appointment or removal of board members to the competent registry court (§ 67 BGB). In company law, changes of managing directors may have to be reported to the commercial register, while in the public sector, the relevant authorities or staff representatives must be informed. Obligations to notify may also exist toward contracting parties, banks, or insurance companies, for example, to update authority to act. Missed or delayed notifications may result in the invalidity of legal transactions and liability risks. Often, specific deadlines must be observed and mandatory information provided, sometimes including proof of proper resolution or legitimation of the successor.
What role do internal regulations (statutes, corporate governance) play in functional succession?
Internal regulations such as statutes, rules of procedure, and corporate governance guidelines are of considerable legal importance for functional succession. These provisions usually regulate in detail how functional successors are to be appointed or dismissed, the procedure for handover, the documentation obligations, and how transition periods or induction phases are structured. They specify and supplement legal requirements and are binding for all parties involved. Violations of these internal regulations may lead to the contestability of resolutions, liability of the bodies, or nullity of the succession. In cases of dispute or uncertainty, they therefore serve an orienting and restrictive function. To avoid legal uncertainties, it is essential to thoroughly review and comply with internal regulations before and during the transfer of office.
Can pending legal disputes or proceedings be assumed with functional succession?
As part of functional succession, ongoing legal disputes, administrative or disciplinary proceedings may automatically pass to the new function holder, provided the office has been assumed in accordance with the law. Under German law, the successor assumes all rights and obligations of the predecessor that are directly attached to the respective function (organ liability, representation in proceedings, ongoing proceedings). It is essential that the handover covers all relevant files and ongoing matters so that the new officeholder can properly fulfill responsibilities. Courts and parties to the proceedings must be informed in a timely manner of the change; otherwise, proper service or legally effective action may not occur. Omissions in information or in the assumption of pending matters may lead to delays or suspension of proceedings, and even to claims for damages. It is recommended to legally review all open and possibly pending proceedings before succession.
