Explanation of the term: Going
The term Going originally comes from the English language and is commonly used in various areas of law in both German and international legal contexts. Legally, Going generally refers to processes or proceedings focusing on the continuation, transition, or maintenance of a particular state within economic, social, or sporting contexts. The precise meaning depends on the specific field of application, ranging from corporate law, insolvency law, and labor law to cases in sports law.
Going in corporate and insolvency law
Going Concern Principle
In the context of commercial and corporate law, the Going Concern Principle (German: Principle of Going Concern) is of central importance. This principle stipulates that assets and liabilities of a company must fundamentally be valued on the assumption that the business will continue operating. Only if actual or legal circumstances contradict the continuation is a different valuation required.Legal basis
- Section 252 Paragraph 1 No. 2 of the German Commercial Code (HGB): Here it is explicitly established that the continuation of business operations is to be assumed, as long as there are no actual or legal obstacles to such continuation.
- Insolvency Code (InsO): In the course of filing for insolvency, the assessment of the company’s ability to continue is crucial for decisions regarding potential restructuring measures, especially protective shield proceedings or the insolvency plan.
Valuation and disclosure obligations
If there are significant doubts about the ability to continue as a going concern, the statutory representatives have enhanced information and disclosure obligations. Companies must explain the going concern assumption in the notes to the annual financial statements and point out any existing uncertainties.
Going in labor law
Business transfer (Going Concern)
In the context of labor law, the term Going Concern is often used synonymously with the term business transfer. According to Section 613a of the German Civil Code (BGB), a business transfer occurs when a business, operation, or part thereof passes to a new owner by virtue of a legal transaction and the economic unit is preserved.Legal consequences:
- Automatic transfer of employment relationships to the new owner
- Continuation of existing working conditions
- Protection of employee rights pursuant to Section 613a BGB
Notification obligations and right to object
In the course of a business transfer, there are comprehensive notification obligations towards employees. Employees may object to the transfer of their employment relationship, which can lead to a certain uncertainty regarding the continuation of business operations.
Going in sports law
Use of the term in motorsports
In equestrian and motorsport, Going describes the respective track or ground conditions under which a race is held. In legal contexts, determining the ‘going’ is particularly significant for liability issues as well as the regularity and safety of competitions. Organizers are obliged to provide appropriate conditions and to disclose them transparently to minimize damage and liability claims.
Going in international commercial law
Relevance in the context of corporate acquisitions (Mergers & Acquisitions)
In international commercial law, Going plays a role in the valuation of companies, especially in the context of acquisitions or mergers. If the ability of the company to continue its business operations (going concern) is at risk, this significantly affects the company’s value and the allocation of liability between the parties.
Due diligence and representations and warranties
As part of due diligence, it is examined whether any risks exist that could impede going concern. Contractual clauses are then implemented to secure or allocate such risk to certain parties to the contract.
Liability and disclosure obligations in connection with going
Company management
Managing directors and board members are required to continuously monitor the ability to continue as a going concern and to promptly take appropriate action in the event of impending insolvency or illiquidity. Failure to comply with these obligations can result in civil liability for damages as well as criminal consequences.
Information obligations towards third parties
In particular, in the context of financing, companies have an extensive duty to inform investors, financial institutions, and other third parties. Failure to properly disclose risks to the continuation of the company may entitle such parties to rescission or compensation.
Conclusion
Going is a key concept in numerous areas of law and always concerns the question of the continuability, transfer, or state of a company, business, or legal position. The legal implications are extensive, ranging from accounting and disclosure obligations to labor protection rights and international liability issues. Its importance is increasing, particularly with the growing demand for transparency, risk management, and legal certainty in the modern economy.
Frequently asked questions
Who holds legal responsibility in the context of going?
In connection with going, the question of legal responsibility of the involved parties arises in particular. In principle, responsibility lies with the company’s management bodies, especially the management board (AG) or the managing directors (GmbH). They must ensure that all legal requirements for going are met, especially regarding contractual obligations, potential antitrust regulations, and compliance with notification duties to authorities and shareholders. Improper execution or omission of legally required measures can lead to personal liability risks, such as in the context of managing director liability (Section 43 GmbHG, Section 93 AktG). Additionally, management bodies must take care to safeguard the rights triggered for minority shareholders, creditors, or employees by the going process, in order to avoid legal challenges.
What participation and approval rights do shareholders have in the context of going?
Depending on the company’s legal form, shareholders (such as partners, shareholders) must approve the going in a specified manner. In a stock corporation, a resolution of the general meeting is required, which, depending on the structure, may need a qualified majority. The approval of the partners is usually given during a shareholder meeting, where the threshold for the required majority arises from the articles of association or by-laws. In case of breach of these participation rights, actions for annulment and nullity may threaten the entire going process. Information and transparency obligations associated with going must also be observed to ensure shareholders are thoroughly and promptly informed.
What legal framework must be observed in cross-border going processes?
In cross-border going processes, such as relocation of the administrative seat or change of structure to another country, increased legal requirements apply. This includes compliance with international company law, tax regulations, and—depending on the destination country—specific rules regarding employee rights, creditor protection, and the amendment of corporate agreements. There may also be registration and approval obligations both in Germany and in the target country. Failure to observe cross-border registration duties or compliance with notification rights of foreign authorities can result in significant penalties or render the going process invalid.
What role do contracts and existing obligations play in going from a legal perspective?
All ongoing contracts, especially continuing obligations and supply agreements, must be legally reviewed in the context of going. Particularly relevant are change-of-control clauses, which may grant particular contracting parties special termination or approval rights in the event of a structural change (such as going). Overlooking such clauses can result in sudden contract terminations or claims for damages. Existing employment contracts and works agreements must also be checked for compliance with labor law to minimize legal risks.
What employment law consequences arise from going?
When implementing a going process, labor law aspects must always be taken into account. This includes compliance with information and consultation obligations towards the works council, as well as safeguarding codetermination rights under the Works Constitution Act (BetrVG). If a business change occurs in the course of going, reconciliation-of-interests and social plan negotiations may be mandatory. If these rights are ignored, labor disputes and injunctions may occur. Furthermore, going may impact existing employment contracts, pension commitments, and works agreements, which may then require legal adjustment.
What notification and publication obligations exist in relation to going?
Going is subject to numerous notification and publication obligations depending on company form and structure. For instance, register entries (commercial register, transparency register) must be updated. In particular, listed companies are additionally subject to ad hoc disclosure obligations under Section 15 WpHG and further notification and publication obligations under the Market Abuse Regulation (MAR), to prevent market abuse. Failure to properly fulfill these obligations may result in fines, claims for damages, and reputational losses.
How are creditors’ interests legally protected in the context of going?
Safeguarding the interests of creditors is a central aspect of going. According to statutory provisions, such as the German Transformation Act (UmwG), creditors have the right to demand collateral if their risk increases as a result of going. There are also rights of challenge, particularly in cases of intent to circumvent or disadvantage. If these requirements are not observed, individual or collective legal actions by creditors may block or even reverse the going process. Therefore, early and legally secure communication and safeguarding mechanisms are indispensable.
