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Orrick US-Flip Questionnaire

Version June 2023

Important Notes:
The sole purpose of this questionnaire is to collect certain information for drafting of the US-flip documentation. Further information might become necessary which in turn might require amendments to any drafts. The (legal) concepts and aspects outlined in this questionnaire merely constitute general principles, may not be exhaustive, and cannot substitute comprehensive legal, tax and other advice in the individual case. Orrick, Herrington & Sutcliffe LLP only advises the company / start-up, respectively the civil law partnership (Gesellschaft bürgerlichen Rechts) preceding the company to be incorporated (as the case may be). At no point, does Orrick, Herrington & Sutcliffe LLP advise the founders or their holding entities and accordingly assumes no liability towards any such persons or entities whatsoever.

Questions marked with an asterisk (*) are required fields.

Before We Get Started – OLNS

For additional information regarding the matters addressed in this questionnaire (including the documents we list below), please refer also to our Orrick Legal Ninja Series #7 and Orrick Legal Ninja Series #11.


We have put together OLNS#7 to provide an overview of challenges German start-ups face when considering a flip into / set-up of a US holding structure. With OLNS#7, we want to help start-ups and investors alike to better understand the mechanics behind it and how to implement it cleanly.

Additionally with our new OLNS#11 we provide an introduction to US Venture Capital Financing and how transaction in Germany and the US differ.





General Questions

Is the contemplated flip linked to the participation of the company / founder team in a US accelerator program (hereinafter "Accelerator")?*
Please specify (priority).*
Are there any outstanding founder agreements with individuals NOT participating in the Accelerator?*
Are you currently interviewing for or participating in another accelerator's program other than the abovementioned priority? *
Does the company / founder team have sufficient cash to operate for the next 3 months (not including any investment from the Accelerator, if any)?*
Are you working with a law firm in Germany or the US for corporate or financing matters?*

Corporate Set-up of German GmbH or UG (haftungsbeschränkt) (hereinafter "German OpCo")

Has the German OpCo already been incorporated?*
Please provide the full legal name incl. the legal form, e.g., GmbH.

Please note that the contemplated company name, coordinated by the acting notary, will be reviewed by the Chamber of Commerce (Industrie- und Handelskammer) with a view to certain requirements.

However, this review process does explicitly not extend to any restrictions under name, competition or trademark law. Respective checks should be conducted separately by the founders.

(Contemplated) Business address*

The German OpCo must ensure that mail can be received at the German business address. For this purpose, nameplates with the company name should be in place. A c/o address is also allowed (please use the address line 2 input for that).

The registered office may be, inter alia, also located at the premises of an address services provider (such as Zieher Business Center, Regus or YouCo). Incubators and accelerators also often provide a business address. If the personal address of a founder is used, then the founder should check whether this is permissible under his or her lease agreement / check with the landlord.

A discrepancy between the statutory seat (Satzungssitz) (i.e., the seat of the company as stated in the articles of association) and the business address is legally possible, but should only be considered as a temporary solution. If you want the statutory seat of OpCo to be located in a city other than that of the business address, please inform us separately in the additional comments below (last item of this questionnaire).

Please provide us with a short description of the intended business activities in the German language, which will be included into the company's articles of association. It is important that the focus of the company's business activities is recognizable to the public by describing the business object of the company in reasonable detail. Please begin with "Gegenstand des Unternehmens ist".

Example: "Gegenstand des Unternehmens ist die Entwicklung, Integration, Anpassung und Vertrieb von Software und damit im Zusammenhang stehende IT-Beratung." In contrast, "Vertrieb von Software" as sole description of business object would arguably be too narrow.

A GmbH can not be incorporated with a share capital below the minimum of EUR 25,000.00. A UG (haftungsbeschränkt) can be incorporated with a share capital as low as EUR 1.00. However, we recommend providing for a share capital of at least EUR 500.00 in order to avoid an over-indebtedness of the UG immediately after its incorporation. If the founders need to contribute their interest in a GbR (see below) as part of the incorporation act, the share capital of the UG should be set at least at EUR 900.00 (for more information, please see the Know-how Memo "Choice of Legal Form", which is also linked at the bottom of this questionnaire).

The share capital must be divided into shares with a  value of at least EUR 1.00 per share. The nominal value of a share can only be denominated in full Euros. Although it is theoretically possible to create shares with different nominal values and nominal values above EUR 1.00, it is usually advisable to stick to a nominal value of EUR 1.00 for each share.

Has the share capital already been paid in full?
If the Company is a GmbH: Payment of Share Capital

For incorporation of a GmbH, at least EUR 12,500.00 (and not less than a quarter of the company's share capital) of the share capital need to be paid in upfront in cash.

If you neither want to pay in the full share capital nor exactly EUR 12,500.00 at the time of incorporation, please still select EUR 12,500.00 here and inform us separately in the additional comments below (last item of this questionnaire).

Share Capital Economically to be Borne By*

If the share capital is borne by the founders, they will economically bear the immediately due portion of the share capital of the German OpCo and will not be reimbursed for the payment.

If the share capital is borne by the US HoldCo, the founders would grant the immediately due portion of the share capital to the US HoldCo as a loan and would be reimbursed by the US HoldCo once it has sufficient funds to repay the amount to the founders and to pay the outstanding portion of the share capital to German OpCo.

Information Regarding Managing Directors of the German OpCo

Managing Director(s) (Geschäftsführer)*
Signature Authority of Managing Director(s)*
Release of the Managing Director(s) from the Restrictions of sec. 181 German Civil Code:*

A release of the managing director(s)from the prohibition to enter into legal transactions in the name of the GmbH with her-/himself as an agent of a third party is advisable if the relevant managing director is also appointed director/representative in other group companies.

Has German OpCo established an employee participation program (equity-based or virtual)?*
Please provide us with a copy thereof and copies of all allocation letters / agreements
No File Chosen
File uploads may not work on some mobile devices.
Has German OpCo issued any shares or have any shares in the German OpCo been transferred in the last 12 months?*
Please provide the documentation relevant to the issued or transferred shares.
No File Chosen
File uploads may not work on some mobile devices.
Do all founders have vesting on their shares, i.e. is there a vesting arrangement in place already?*
Please provide copies of the relevant agreements.
No File Chosen
File uploads may not work on some mobile devices.
Have the founders created (or do the founders own a controlling interest in) any legal entity other than German OpCo, those entities listed above, or the holding entities that will be listed below?*

Founder 1

Founder Name*
Date of Birth*
Address (with city in English language)*
US taxpayer*
Whether or not at least one founder who also holds an officer position has a Social Security Number or an Individual Taxpayer Identification Number is, inter alia, relevant for the question as to whether the Delaware Inc. can use the online application service of the US Internal Revenue Service (IRS) for the assignment of an Employer Identification Number (EIN) which is required for opening a US bank account for the Delaware Inc.
Married or in a civil partnership (eingetragene Lebenspartnerschaft)?*
Name of spouse*
Which matrimonial property regime (ehelicher Güterstand) applies?*

The community of joint gain is the standard / default under German law. So if the founder and his or her spouse have not made any special arrangement, the community of joint gain applies.

Should the founder hold his or her shares in US HoldCo through a holding entity (hereinafter "Founder HoldCo")?*

As a rule of thumb, primarily for tax related reasons, it is often advisable for a founder who is subject to German taxation to hold his or her shares through a separate founder holding entity rather than directly ("Founder HoldCo"). For more information, please see the Know-how Memo "Founder HoldCo", which is also linked at the bottom of this questionnaire.

Founder 1 HoldCo

Please provide the full legal name incl. the legal form, e.g., "UG (haftungsbeschränkt)".
  • We assume that Founder HoldCo should be a UG (haftungsbeschränkt). If it should be a GmbH, please let us know. For more information, please see the Know-how Memo "Choice of Legal Form", which is also linked at the bottom of this questionnaire.
  • Please note that the contemplated company name, coordinated by the acting notary, will be reviewed by the Chamber of Commerce with a view to certain requirements. However, this review process does explicitly not extend to any restrictions under name, competition or trademark law. Respective checks should be conducted separately by the founders.
  • Also, from our experience, you should avoid using the words "holding" or "HoldCo" in the company name because some courts are reluctant to accept such designations.
Business address (with city in English language)*

The Founder HoldCo must ensure that mail can be received at the German business address. For this purpose, nameplates with the company name should be in place.

The registered office may be, inter alia, also located at the premises of an address services provider (such as Zieher Business Center, Regus or YouCo).

Should Founder HoldCo have a managing director other than the founder?*

A UG can be incorporated with a share capital in an amount as low as EUR 1.00. However, we recommend providing for a share capital of at least EUR 300.00 in order to avoid an over-indebtedness of the UG immediately after its incorporation. If the respective founder needs to contribute his or her interest in a GbR (see above) as part of the incorporation act, the share capital of the UG should be set at least at EUR 900.00 (for more information, please see the Know-how Memo "Choice of Legal Form", which is also linked at the bottom of this questionnaire).

Founder 2

Founder Name*
Date of Birth*
Address (with city in English language)*
US taxpayer*
Whether or not at least one founder who also holds an officer position has a Social Security Number or an Individual Taxpayer Identification Number is, inter alia, relevant for the question as to whether the Delaware Inc. can use the online application service of the US Internal Revenue Service (IRS) for the assignment of an Employer Identification Number (EIN) which is required for opening a US bank account for the Delaware Inc.
Married or in a civil partnership (eingetragene Lebenspartnerschaft)?*
Name of spouse*
Which matrimonial property regime (ehelicher Güterstand) applies?*

The community of joint gain is the standard / default under German law. So if the founder and his or her spouse have not made any special arrangement, the community of joint gain applies.

Should the founder hold his or her shares in US HoldCo through a holding entity (hereinafter "Founder HoldCo")?*

As a rule of thumb, primarily for tax related reasons, it is often advisable for a founder who is subject to German taxation to hold his or her shares through a separate founder holding entity rather than directly ("Founder HoldCo"). For more information, please see the Know-how Memo "Founder HoldCo", which is also linked at the bottom of this questionnaire.

Founder 2 HoldCo

Please provide the full legal name incl. the legal form, e.g., "UG (haftungsbeschränkt)".
  • We assume that Founder HoldCo should be a UG (haftungsbeschränkt). If it should be a GmbH, please let us know. For more information, please see the Know-how Memo "Choice of Legal Form", which is also linked at the bottom of this questionnaire.
  • Please note that the contemplated company name, coordinated by the acting notary, will be reviewed by the Chamber of Commerce with a view to certain requirements. However, this review process does explicitly not extend to any restrictions under name, competition or trademark law. Respective checks should be conducted separately by the founders.
  • Also, from our experience, you should avoid using the words "holding" or "HoldCo" in the company name because some courts are reluctant to accept such designations.
Business address (with city in English language)*

The Founder HoldCo must ensure that mail can be received at the German business address. For this purpose, nameplates with the company name should be in place.

The registered office may be, inter alia, also located at the premises of an address services provider (such as Zieher Business Center, Regus or YouCo).

Should Founder HoldCo have a managing director other than the founder?*

A UG can be incorporated with a share capital in an amount as low as EUR 1.00. However, we recommend providing for a share capital of at least EUR 300.00 in order to avoid an over-indebtedness of the UG immediately after its incorporation. If the respective founder needs to contribute his or her interest in a GbR (see above) as part of the incorporation act, the share capital of the UG should be set at least at EUR 900.00 (for more information, please see the Know-how Memo "Choice of Legal Form", which is also linked at the bottom of this questionnaire).

Founder 3

Founder Name*
Date of Birth*
Address (with city in English language)*
US taxpayer*
Whether or not at least one founder who also holds an officer position has a Social Security Number or an Individual Taxpayer Identification Number is, inter alia, relevant for the question as to whether the Delaware Inc. can use the online application service of the US Internal Revenue Service (IRS) for the assignment of an Employer Identification Number (EIN) which is required for opening a US bank account for the Delaware Inc.
Married or in a civil partnership (eingetragene Lebenspartnerschaft)?*
Name of spouse*
Which matrimonial property regime (ehelicher Güterstand) applies?*

The community of joint gain is the standard / default under German law. So if the founder and his or her spouse have not made any special arrangement, the community of joint gain applies.

Should the founder hold his or her shares in US HoldCo through a holding entity (hereinafter "Founder HoldCo")?*

As a rule of thumb, primarily for tax related reasons, it is often advisable for a founder who is subject to German taxation to hold his or her shares through a separate founder holding entity rather than directly ("Founder HoldCo"). For more information, please see the Know-how Memo "Founder HoldCo", which is also linked at the bottom of this questionnaire.

Founder 3 HoldCo

Please provide the full legal name incl. the legal form, e.g., "UG (haftungsbeschränkt)".
  • We assume that Founder HoldCo should be a UG (haftungsbeschränkt). If it should be a GmbH, please let us know. For more information, please see the Know-how Memo "Choice of Legal Form", which is also linked at the bottom of this questionnaire.
  • Please note that the contemplated company name, coordinated by the acting notary, will be reviewed by the Chamber of Commerce with a view to certain requirements. However, this review process does explicitly not extend to any restrictions under name, competition or trademark law. Respective checks should be conducted separately by the founders.
  • Also, from our experience, you should avoid using the words "holding" or "HoldCo" in the company name because some courts are reluctant to accept such designations.
Business address (with city in English language)*

The Founder HoldCo must ensure that mail can be received at the German business address. For this purpose, nameplates with the company name should be in place.

The registered office may be, inter alia, also located at the premises of an address services provider (such as Zieher Business Center, Regus or YouCo).

Should Founder HoldCo have a managing director other than the founder?*

A UG can be incorporated with a share capital in an amount as low as EUR 1.00. However, we recommend providing for a share capital of at least EUR 300.00 in order to avoid an over-indebtedness of the UG immediately after its incorporation. If the respective founder needs to contribute his or her interest in a GbR (see above) as part of the incorporation act, the share capital of the UG should be set at least at EUR 900.00 (for more information, please see the Know-how Memo "Choice of Legal Form", which is also linked at the bottom of this questionnaire).

Founder 4

Founder Name*
Date of Birth*
Address (with city in English language)*
US taxpayer*
Whether or not at least one founder who also holds an officer position has a Social Security Number or an Individual Taxpayer Identification Number is, inter alia, relevant for the question as to whether the Delaware Inc. can use the online application service of the US Internal Revenue Service (IRS) for the assignment of an Employer Identification Number (EIN) which is required for opening a US bank account for the Delaware Inc.
Married or in a civil partnership (eingetragene Lebenspartnerschaft)?*
Name of spouse*
Which matrimonial property regime (ehelicher Güterstand) applies?*

The community of joint gain is the standard / default under German law. So if the founder and his or her spouse have not made any special arrangement, the community of joint gain applies.

Should the founder hold his or her shares in US HoldCo through a holding entity (hereinafter "Founder HoldCo")?*

As a rule of thumb, primarily for tax related reasons, it is often advisable for a founder who is subject to German taxation to hold his or her shares through a separate founder holding entity rather than directly ("Founder HoldCo"). For more information, please see the Know-how Memo "Founder HoldCo", which is also linked at the bottom of this questionnaire.

Founder 4 HoldCo

Please provide the full legal name incl. the legal form, e.g., "UG (haftungsbeschränkt)".
  • We assume that Founder HoldCo should be a UG (haftungsbeschränkt). If it should be a GmbH, please let us know. For more information, please see the Know-how Memo "Choice of Legal Form", which is also linked at the bottom of this questionnaire.
  • Please note that the contemplated company name, coordinated by the acting notary, will be reviewed by the Chamber of Commerce with a view to certain requirements. However, this review process does explicitly not extend to any restrictions under name, competition or trademark law. Respective checks should be conducted separately by the founders.
  • Also, from our experience, you should avoid using the words "holding" or "HoldCo" in the company name because some courts are reluctant to accept such designations.
Business address (with city in English language)*

The Founder HoldCo must ensure that mail can be received at the German business address. For this purpose, nameplates with the company name should be in place.

The registered office may be, inter alia, also located at the premises of an address services provider (such as Zieher Business Center, Regus or YouCo).

Should Founder HoldCo have a managing director other than the founder?*

A UG can be incorporated with a share capital in an amount as low as EUR 1.00. However, we recommend providing for a share capital of at least EUR 300.00 in order to avoid an over-indebtedness of the UG immediately after its incorporation. If the respective founder needs to contribute his or her interest in a GbR (see above) as part of the incorporation act, the share capital of the UG should be set at least at EUR 900.00 (for more information, please see the Know-how Memo "Choice of Legal Form", which is also linked at the bottom of this questionnaire).

Founder 5

Founder Name*
Date of Birth*
Address (with city in English language)*
US taxpayer*
Whether or not at least one founder who also holds an officer position has a Social Security Number or an Individual Taxpayer Identification Number is, inter alia, relevant for the question as to whether the Delaware Inc. can use the online application service of the US Internal Revenue Service (IRS) for the assignment of an Employer Identification Number (EIN) which is required for opening a US bank account for the Delaware Inc.
Married or in a civil partnership (eingetragene Lebenspartnerschaft)?*
Name of spouse*
Whether or not at least one founder has a US social security number is, inter alia, relevant for the application process for an employer's identification number for the Delaware Inc., which in turn is a prerequisite for opening a US bank account.
Which matrimonial property regime (ehelicher Güterstand) applies?*

The community of joint gain is the standard / default under German law. So if the founder and his or her spouse have not made any special arrangement, the community of joint gain applies.

Should the founder hold his or her shares in US HoldCo through a holding entity (hereinafter "Founder HoldCo")?*

As a rule of thumb, primarily for tax related reasons, it is often advisable for a founder who is subject to German taxation to hold his or her shares through a separate founder holding entity rather than directly ("Founder HoldCo"). For more information, please see the Know-how Memo "Founder HoldCo", which is also linked at the bottom of this questionnaire.

Founder 5 HoldCo

Please provide the full legal name incl. the legal form, e.g., "UG (haftungsbeschränkt)".
  • We assume that Founder HoldCo should be a UG (haftungsbeschränkt). If it should be a GmbH, please let us know. For more information, please see the Know-how Memo "Choice of Legal Form", which is also linked at the bottom of this questionnaire.
  • Please note that the contemplated company name, coordinated by the acting notary, will be reviewed by the Chamber of Commerce with a view to certain requirements. However, this review process does explicitly not extend to any restrictions under name, competition or trademark law. Respective checks should be conducted separately by the founders.
  • Also, from our experience, you should avoid using the words "holding" or "HoldCo" in the company name because some courts are reluctant to accept such designations.
Business address (with city in English language)*

The Founder HoldCo must ensure that mail can be received at the German business address. For this purpose, nameplates with the company name should be in place.

The registered office may be, inter alia, also located at the premises of an address services provider (such as Zieher Business Center, Regus or YouCo).

Should Founder HoldCo have a managing director other than the founder?*

A UG can be incorporated with a share capital in an amount as low as EUR 1.00. However, we recommend providing for a share capital of at least EUR 300.00 in order to avoid an over-indebtedness of the UG immediately after its incorporation. If the respective founder needs to contribute his or her interest in a GbR (see above) as part of the incorporation act, the share capital of the UG should be set at least at EUR 900.00 (for more information, please see the Know-how Memo "Choice of Legal Form", which is also linked at the bottom of this questionnaire). 

Status Quo

Does your company have existing investors?*
Has your company raised a priced round / equity round?*
Please provide copies of the relevant agreements.
No File Chosen
File uploads may not work on some mobile devices.
Has your company raised convertible notes or convertible loans or other instruments that can be converted into equity?*
The "flip" of such convertible instruments to US HoldCo should be reviewed by the respective investors from a tax perspective
Please provide copies of the relevant agreements.
No File Chosen
File uploads may not work on some mobile devices.
Do any investors have pro rata rights? If applicable, would these apply to the Accelerator's investment?*
Please provide copies of the relevant agreements.
No File Chosen
File uploads may not work on some mobile devices.
Do any investors have Most Favored Nations ("MFN") rights?*
Please provide copies of the relevant agreements.
No File Chosen
File uploads may not work on some mobile devices.
Has your company issued tokens or raised any form of non-equity financing?*
Please provide copies of the relevant agreements.
No File Chosen
File uploads may not work on some mobile devices.
Have you already entered into an IP Rights Agreement with your German OpCo?*
Please provide copies of the relevant agreements.
No File Chosen
File uploads may not work on some mobile devices.
Have you entered into a Service Agreement / Employment Agreement ?*
Please provide us with a copy of the agreements.
No File Chosen
File uploads may not work on some mobile devices.
Are you (if applicable, apart from the Accelerator investment and potential investments following Demo Day) currently raising money or do you have term sheets or similar expressions of interest on the table?*
Please provide us with a copy of the term sheet.
No File Chosen
File uploads may not work on some mobile devices.

YC will invest an aggregate amount of USD 500,000.00 after the flip/incorporation as follows:

  • $125,000 on a post-money safe in return for 7% of the company’s fully diluted capitalization immediately prior to the next priced round;
  • $375,000 on an uncapped safe with a Most Favored Nation (MFN) provision. This MFN SAFE will take on the terms of the lowest cap SAFE (or other most favorable terms) the Company issues between the start of the batch and the company’s next priced round.

Further, Non-founder Shareholders of German OpCo (e.g., investors)

Name of contact person*
Name of contact person*
Name of contact person*
Name of contact person*
Name of contact person*

Information Regarding Delaware Inc. to be Incorporated (hereinafter "US HoldCo")

Please provide the exact proposed name of the US company. In Delaware, the name must end in "Inc.", "Incorporated", "Corp.", "Corporation", "Co.", or "Company." We will then confirm that the name is available in Delaware. However, this does explicitly not extend to any restrictions under name, competition or trademark law. Respective checks should be conducted separately by the founders.

Do you have a US Address?*

In case of an address in Germany, potential tax consequences should be reviewed.

Based on feedback we received from out clients, providers such as "Stable" have proven to offer a satisfactory service for obtaining a US Business Address.

Address (which may as well be located outside the US)*

Background:

  • The standard vesting schedule applicable for founders in typical US-companies is a 4-year vesting schedule with a 1-year cliff. The vesting start date is typically the date that the founder started working full time on the business, even if that date was prior to the incorporation of the company.
  • Note also that vesting for founders typically accelerates upon what we call a “double trigger”, which requires that both (i) the company being acquired and (ii) the founder is terminated without cause in connection with or after the acquisition. We will plan to include the double trigger in your vesting schedules.
Shall some shares in US HoldCo be set aside for a stock plan for issuance to future employees, etc.?*

Background:

We typically have 7% to 10% of the shares in US HoldCo set aside for a stock plan for issuance to future employees, etc. (those shares would be set aside but not issued at first). Please confirm if you want us to create the stock plan at this time. If you have no plan to issue shares to non-founders in the near term, the board and stockholders can always adopt the plan later or increase the size of the plan later, if needed. Please reach out to us if you have different provisions.

Which founders should serve on the board of directors?*

Each US HoldCo will have a board of directors. Further information on the duties and liability risks of directors and officers can be found in our Know-how Memo "Responsibility of Directors & Officers of a US Inc.", which is also linked at the bottom of this questionnaire.

As you may be aware, the board will need to approve certain material transactions involving the company and all issuances of equity.

Should one or more individuals who are not founders serve on the board of directors?*
Which officer positions should be held by each of the founders?*
Which officer positions should be held by each of the founders?
  President* CEO* Secretary* CFO CTO Other None
Founder 1
Founder 2 (if applicable)
Founder 3 (if applicable)
Founder 4 (if applicable)
Founder 5 (if applicable)

Corporations typically have a President, and that office is most typically held by the CEO, although it is possible for the President and CEO to be different people. Corporations should have at least a President, Secretary and CEO. One person can hold more than one officer position. Note that the company can have other offices as well (but is not required to do so), such as CFO, CTO, Chief Operating Officer, Director of Marketing, or any other officer title that you want (please indicate that below). The Delaware Inc. may be required to appoint a Chief Financial Officer (CFO) if it needs to qualify to do business in certain US states (such as California) as certain filings to be made in such states may require the Delaware Inc. to name who holds this office. As the case may be, however, given that it is often advisable for US HoldCo not to engage in any operational business, further roles might not be required (except the CFO, as the case may be).

The officers or their titles can be changed easily at any time by the board of directors.

Should one or more individuals who are not founders hold an officer position?*

Miscellaneous

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