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Company Forms In Germany Explained
Consulting House have kindly put together a handy reference to company forms in Germany.
Consulting House have kindly put together a handy reference to company forms in Germany.
Company forms
If you intend to engage in any commercial activity in Germany, it is wise to establish your own company. This, unless the business is trivial, can protect you from a lot of inconveniences and trouble with the authorities. Here are the most widespread forms.
Gesellschaft mit beschrnkter Haftung (GmbH) (Company with limited liability)
This is the most widespread company form. Its shareholders are not personally responsible for the companys debts. One person is sufficient to set up a GmbH and to be its shareholder. The share capital must be at least € 25,000. A notarial agreement must be drawn up between the shareholders and the company being set up. The company comes legally in existence only when it is entered into the
Register of Companies (Handelsregister)
The name of the GmbH must derive either from the purpose of the enterprise or the names of the shareholders, and must contain the abbreviation "mbH. Shares in a GmbH are not embodied in a certificate and cannot be quoted on stock exchanges. However they may be transferred through properly notarial documents. A GmbH must appoint al least one managing director (Geschftsfhrer), who may also be shareholder of the company; he is the only person entitled to represent the company.
Aktiengesellschaft (AG) (Joint-stock company; public limited company; corporation)
In order to set up this kind of company there must be at least one person who may be the only shareholder of the company, too. A share capital of € 50,000 is required; the shares may be (but need not be) listed on the stock exchange. Articles of association, authenticated by a notary, are needed to set up an AG. The company becomes legally existent as an AG when it has been entered into the Register of Companies. The name of the AG is usually taken from the purpose of the enterprise and it must contain the words "Aktiengesellschaft" or a common abbreviation of it (e.g. AG).
An AG must have a board of directors (Vorstand) empowered to decide all matters relating to the operation and the management of the business. The board of directors is appointed by and responsible to the directorate (Aufsichtsrat). The shareholders of an AG exercise their power in regard of the company at regularly scheduled general meetings (Hauptversammlungen).
Offene Handelsgesellschaft (OHG) (General partnership)
In contrast to GmbH and AG, the partners in an OHG have unlimited liability. Every partner is legally obliged to participate actively in operating the business unless the articles of partnership (Gesellschaftsvertrag) otherwise provides. The OHG can sue or can be sued in a court of law. For internal matters decisions should be made unanimously, but articles of partnership usually allow decisions by a majority of votes.