Four students decided to draft documents to incorporate a limited liability company in Germany.

They want to formalise their relationship such as member of a pop band. Three of them

periodically play music in pubs and bars; the fourth one helps the others in looking for the

available pubs/bars, in contracting the fees with the owners, in setting up musical instruments

and all the technological supports to play. They are known as "The Watchers". So, all of them

effectively contributed to the band's success: the three musicians, writing new songs and

playing their music; the fourth one, acting as the agent of the others.

The articles of association already drafted contain many clauses: read them, think about their

scopes and their usefulness; try to make comments about the clauses marked in yellow, and

do it in light of the actual relationship between those guys as well as of the (desirably positive)

development of their musical activities.

Each group should deliver me a synthetic report on pros and cons of marked clauses

1. Management 16 Management and Representation (1) The company has at least two managing directors (management). The shareholders decide about the appointment of a third managing director by simple majority. The appointment of a fourth or additional managing directors requires the majority of 75 % of the votes of the shareholders. (2) All managing directors can be awarded sole power of representation and relieved from the restrictions of sec. 181 of the German Civil Code. Shareholders decide with simple majority about the granting or the withdrawal of the sole power of representation and the relief from the restrictions of sec. 181 of the German Civil Code. (3) The managing directors are appointed by the shareholders' meeting with a simple majority of the votes of the shareholders. The shareholders' meeting may recall managing directors with the same simple majority. (4) The managing directors are bound by the legal regulations, the resolutions passed by the shareholders' meeting, the rules of procedure for management as well as the provisions of any service agreement. In case of revocation of the Managing Director, other than forjustified reason, (sec. 626 BGB) the related service agreement shall be considered terminated with the ordinary, contractual period of notice. 17 Actions of the Directors reguiring Consent (1) The following shall be subject to a prior approval of the Advisory Board in an unanimously decision: . The acquisition of real estate, real estate rights and disposals thereof and corresponding commitments. . The establishment and closure of branches. . The acquisition and disposal of shareholdings. . The assumption of a surety or similar liabilities for the benefit of third parties. (2) The service agreements with the managing directors are to be decided and approved by the advisory board unanimously; the managing director concerned has no right to vote. 2. Shareholders' meeting 18 Responsibilities of the Shareholders' Meeting The Shareholders' meeting is responsible for all the affairs of the company unless responsibility is allocated to another executive body of the company by law or the Articles of Association for individual matters. 19 Convening of Meetings Shareholders' meetings are convened by the management. One managing director is sufficient to convene the meeting. The Shareholders' meetings shall take place at the registered offices of the company or a location previously determined by the Shareholders' meeting. non