Limited Liability Company in Germany
Foreign businesses may establish their German operations as companies, partnerships, or branches of the parent body. The most used company form in Germany is the Limited Liability Company. This legal form is favoured for its simple and flexible corporate and financial structure. The liability of shareholders is limited to the LLC share capital.
LLC registration conditions
Company registration has requirements that can be seen below.
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The minimum share capital of a GmbH (LLC) is EUR 25.000,00, and it is payable in cash or increase in kind. Only 25% of the share capital has to be paid in upon establishment. On registration, each shareholder receives a single share in the share’s amount capital he holds. If contributions in kind should be made, both the object of the contribution in kind and the amount of the share, to which the contribution referrers must be fixed in the contract.
A LLC does not issue share certificates, and its shares are not openly transferable. Shares may be transferred to another shareholder or a third party by appointment. The contract of assignment requires a notarized arrangement in order to be effective. Apart from any restrictions that may be laid down in the articles of association, shareholders have the right of initial refusal before a shareholder may transfer his interest to an outside party.
For incorporation of a LLC there must be at least one shareholder. Any additional people can take part at the constitutive act. Possible partners are both natural and legal persons, and other incorporated entities. The corporation requires a company agreement which must include at least the firm, headquarters and business purpose of the GmbH, and the amount of share capital and the acquisition of capital contributions by its shareholders.
The supreme and deciding authority of the LLC is the shareholders’ meeting in which they represent the entirety of the shareholders. Its competence covers all matters of the company, unless the LLC Act or the articles of association provide otherwise. In these meetings the shareholders adopt decisions. If a resolution is adopted unanimously, the shareholders may waive any formal conditions provided that stricter requirements are not specifically required by statute or the LLCs articles of association.
In the absence of specific majority requirements set out by statute or in the company’s articles of association, a simple majority is required to pass the shareholders’ resolutions. Nevertheless, certain decisions require a majority of at least 75 % of the votes cast. This is necessary for e.g. amendments to the articles of association, capital increases or decreases, mergers etc.
The liability of the shareholders is limited to the paid-up capital. The limitation of the shareholders’ liability becomes effective only upon registration of the GmbH in the Commercial Registry. The personal assets of the shareholders are not involved in the responsibility of the company. For losses from ordinary business activities of a GmbH, the shareholders are liable only if they caused these losses in an unlawful failure.
Registration costs for filing with the Commercial Registry for a GmbH is currently 400 Euro. Also, there are fees for the notary and for the district court for entry and publication in the Federal Gazette.
All quoted businesses in Germany, that means those with stock or capital market listing, and other “public interest entities” must follow the German Code of Corporate Governance issued by the Federal Ministry of Justice. The Code is intended to make the rules applicable to corporate management and supervision transparent for national and international entrepreneurs in order to strengthen their trust in the corporate management of German enterprises.
Get together necessary documents for the notary appointment. Registrant need:
- Articles of association
- Shareholder’s list
- Founding documents needed to open a bank account
Consultation about company registration
The specialists of our law company have many years of experience and the necessary knowledge to register a company in Germany quickly and easily. Our lawyers, accountants, and business consultants will help you with the process of registering a company in Germany and with the further conduct of your business.
Other types of companies
If you feel like Limited Liability Company does not fit your needs, click the button below and you will see other legal forms like Public Limited Company, Branch Office, Holding Company, and more.
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