Saturday 1 May 2021

Maria Eichhorn Aktiengesellschaft

For her presentation at the Documenta11 in 2002, Maria Eichhorn founded a German Aktiengesellschaft (AG) named Maria Eichhorn Aktiengesellschaft.
In 2007, the Van Abbemuseum purchased the resulting work, likewise titled Maria Eichhorn Aktiengesellschaft, and subsequently published a book containing all the relevant documents concerning its creation in the same year.

In Eichhorn's own words: 'My contribution to Documenta11 is a public limited company to be formed for an indefinite period. Within the structure of the company, its functions are to be adapted and its attributes rewritten, that is to say, the form and content are to be developed and established in ways that differ from those usually practised in companies. The assets assigned to the company when it is founded are to remain unchanged. The assets are not to become part of the macro-economic circulation of money and accumulation of capital or be used to create added value. All of the shares will be transferred to the company itself. The company will therefore be the owner of its own shares - all of its shares. The money assigned to the company in the form of contributions at the time of its formation continues to belong to the company. However, the company no longer belongs to the shareholders because they have transferred their shares to the company. The company belongs to itself, as it were. That is to say, it ultimately belongs to no one. Therefore, the company's assets, its money - no longer have any relation to the shareholders or to anyone else. The concept of property disappears in this case.'

While some of these premises are correct, most of the deductions derived from them are somewhat misguided.
An Aktiengesellschaft is a legal entity that creates a limited financial liability for the owners of said AG. The founders have to buy shares of the company at its formation and this initial capital is then used as the company's collateral. The formation of an AG requires a minimum contribution of € 50.000. This sum of € 50.000 is presumably chosen to be quite a large amount of money for most individuals, yet a somewhat insubstantial amount for the kind of sizeable business the limited liability is aimed at.
Additionally, any AG is considered a commercial business under the German Handelsgesetzbuch, which states in book one, part one, section one, that 'a commercial business is any commercial enterprise unless, by reason of its nature or size, the enterprise does not require a commercially organised business operation.' 
Here we encounter Eichhorn's first possible misconception. It could very well be argued that the nature of the Maria Eichhorn Aktiongesellschaft doesn't require a commercially organised business operation. In fact, 'the assets assigned to the company when it is founded are to remain unchanged' is somewhat of an antithesis to business operation in general. If this is taken literally, then the Maria Eichhorn Aktiongesellschaft isn't a commercial business at all, and therefore couldn't become an AG either. 
However, the watchful legal eye of Eichhorn's collaborator Tilman Bezzenberger stated that the goal of the company is 'to manage and preserve the company's own assets'. Which is a perfectly valid and oft-used purpose of an AG, which are not uncommonly companies that produce nothing of their own and simply exist to direct the flow of capital. That this flow could remain static as a result of the companies' efforts is an improbable, but perfectly possible, outcome. This formulation thereby provides a legal basis for Maria Eichhorn Aktiengesellschaft's existence.

The next step that Eichhorn stipulates is that 'all of the shares will be transferred to the company itself.' According to her, the result of this is that the company will be the owner of itself. 
Ownership is a principal part of law, but one that is not always well understood. Ownership under German law is defined in section 903 of the civil code as: 'The owner of a thing may, to the extent that a statute or third-party rights do not conflict with this, deal with the thing at his discretion and exclude others from every influence.'
In this sense ownership of an AG's shares is not to be taken as a direct ownership of the company as a whole in the same sense that one can own a piece of furniture. While only the shareholders have a right to vote during the general assembly and are ultimately the recipients of the companies' financial gains and losses, the lack of ability 'to deal with the thing at his discretion and exclude others from every influence' certainly steers away from a philosophically naive idea of ownership.
Ownership of an AG, in the full sense of the world, is thus at best shared between the shareholders and the managing board, which sole member in this case is Maria Eichhorn herself. As is stated in the AG's entry to the commercial register: 'She [Maria Eichhorn] represents the company solely even if additional members of the managing board are appointed in the future. She may conduct legal transactions on behalf of the company'. Although Maria Eichhorn, as a person, might not 'own' the shares that represent the assets present in the company, she has free reign to direct the company as she wishes, which I would say lies closer to the idea of ownership as it was outlined before. No one but the managing board has agency over the assets present in the company. The shareholders' influence can only ever be indirect, which reflects their limited personal financial liability for the company.
Furthermore, it must be noted that the possibility of a company being owned by no one has obvious and far-reaching consequences for the proper working of a legal system. Therefore most countries, Germany included, have laws that regulate a company owning shares of itself. As Tilman Bezzenger once again points out in the second supplement to the contract between Eichhorn and the Van Abbemuseum: 'Under German law, a company may not continue to hold a substantial portion of its own shares indefinitely. Rather, Paragraph 71c(2) of the Law on Public Limited Companies provides as follows: "Where the shares which a company has lawfully acquired ... and continues to hold account for over ten percent of the company's subscribed capital, the proportion of shares in excess of this percentage must be sold within three years of the shares' acquisition".'
The solution Bezzenger concocted is that every three years Maria Eichhorn Aktiengesellschaft transfers its shares, free of charge, back to Maria Eichhorn, before she in turn transfers these shares back again to the company. This recurring moment where Eichhorn temporarily becomes the only shareholder of the company also provides the opportunity to work around another law that bars a company from voting its own shares in shareholders' meetings. It is only at these shareholders' meetings that the members of the supervisory board can be elected and such elections must be held at least every five years. These brief, but recurring, moments where Eichhorn is the factual shareholder of the company thus provide an opportunity to arrange these necessities.
While legally sound and effective in yielding the maximum amount of time that an AG could possibly be its own shareholder, the fact that this construction requires active and recurrent intervention by people who are legally allowed to make decisions concerning the company is a severe dent in the idea that Maria Eichhorn Aktiengesellschaft 'ultimately belongs to no one'.

The conclusion that Eichhorn finally arrives at, that 'the company's assets no longer have any relation to the shareholders or to anyone else' is thus plainly false. Nor can it be said that 'the concept of property disappears in this case'. 
The company's assets comprise of nothing but € 50.000. And as is stated multiple times in various documents regarding the registration of the company: 'This paid amount of Euro 50,000.00 is definitively at the free disposal of the managing board.' As the only member of the managing board, the full amount of € 50.000 has thus always been available to Maria Eichhorn. It doesn't matter who is or isn't a stakeholder in the company for this to remain the truth.
In all of practical reality, the € 50.000 has thus always been the property of Maria Eichhorn and despite what many people think, law follows reality, not the other way around. It doesn't matter what you call something, it matters how one acts. Simply saying that something 'doesn't belong to anyone' doesn't make it so and despite her best efforts, Eichhorn hasn't overcome such a legal impossibility. 
Out of all the 40-odd legal documents that are reproduced in the book Maria Eichhorn Aktiengesellschaft, I found that the most telling document was the only one that was considered an 'illustration'. This document was the original loan agreement between the organiser of the Documenta11, documenta und Museum Fridericianum Veranstaltungs-GmbH, and Maria Eichhorn.
The legal team working on behalf of the documenta understood the ramifications of Eichhorn's project quite well and took a very level-headed approach to it. The organisers of the documenta agreed to provide Eichhorn with the sum of € 50.000 required for the foundation of the AG, but only as a loan with a limited duration. The loan, issued on March 12, 2002, had to be repaid in full by December 31, 2007, or whenever one of two things would occur. The first is if the work would be sold and the second is if the AG would be liquidated and dissolved. 
The people who drafted these conditions understood full well that despite Eichhorn's assertions to the contrary, at no point would there be a situation where she doesn't have full control over that € 50.000. Legally speaking there is nothing to stop her from simply taking the money and running, except in a situation where the money was provided as a loan that had to be repaid.

More interestingly, in the document that details the agreement between Eichhorn and the Van Abbemuseum there is only an implicit assumption that the Maria Eichhorn Aktiengesellschaft will continue to operate in a similar manner in the indefinite future. A stipulation does exists that says 'the Artist will work towards ensuring the continued operation of the public limited company until the end of 2012', but please note that this does not entail any real obligation on Eichhorn's part.
Further it is stated that: 'In the ninth year of the public limited company's existence, that is to say in March 2021, new rules on the organisational and legal maintenance of Maria Eichhorn Aktiengesellschaft shall be agreed between the Van Abbemuseum and the Artist'. Presumably this means that every few years the agreement is extended, without significant changes, for another few years. That is, until it isn't and the € 50.000 somehow has to be placed back into the 'macro-economic circulation of money' it was supposedly removed from.
While such stipulations are completely understandable from a practical point of view, they hardly adhere to the idealism that seems to be the raison d'ĂȘtre of the work. 
Far from finding a 'form and content [...] that differ from those usually practised in companies', Maria Eichhorn's project fits snugly in the current existing framework of legal and financial practices. Ultimately, her construction doesn't factually do what it's supposed to do and it is only the concepts that her work relies upon which disappear in that case.