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Company Formation In Germany

In this article, our colleague from Gurcan Düsseldorf Office, Att. Hülya Oruç will mention Company Formation in Germany with all required steps and processes.

Limited Liability Company (So-Called GMBH)

What is GMBH?

A Gesellschaft mit beschränkter Haftung (GmbH) is the best-known form of corporations in Germany. With more than 1 M. companies, the formerly popular partnerships are overtaken now by this form of company (as of 2013).

So far we have assisted over 400 companies.

The GmbH in a legal entity that has its own rights and obligations. In consequence, the GmbH is an independent legal personality, e.g. it can sue and be sued independently from the shareholders. The GmbH itself can be the owner of movable properties.

Bodies Of The GMBH Are:

  1. The managing director,
  2. The shareholders
  3. The meeting of the shareholders.

Further, under certain circumstances, a board of directors can be appointed.

How Can I Incorporate GMBH In Germany?

Company Formation in Germany might look like an easy process. However, incorporation has several steps until your company is able to make invoices.

The Checklist Of The Company Formation In Germany

The formation of a GmbH is not bound to a certain number of shareholders.

Even one shareholder can find a GmbH.

The checklist is the following:

  1. Consideration Regarding the Purpose of the Company
  2. Written Articles of Association (AoA)
  3. Notarization of the AoA
  4. Seizure of the Share Capital
  5. Notarial Application for the Commercial Register
  6. Examination Procedure of the Commercial Register
  7. Registration of the GmbH in the Commercial Register and Announcement of the Registration
  8. Business Registration

Gurcan Partners International Law Firm assists you during the whole process of Company Formation in Germany. Our multinational professional team is ready to assist you.

What Is The Meaning Of Vorgründungsgellschaft?

The GmbH is born with the registration in the commercial registry. Before the registration into the commercial registry, it is a so-called ”Vorgründungsgesellschaft“ Association before formation) in the form of a BGB company ( Company organized under the German civil code) which has the purpose of formation of a GmbH.

With the notarization of the AoA, the so-called Vor-GmbH (before Gmb) comes into existence. It may also – like the Vorgründungsgesellschaft –  be the bearer of rights and obligations, but then the suffix “i.G.” should be used to make it clear that the GmbH has not been registered yet in the commercial register.

With the registration with the commercial register, the GmbH is ”born“. The GmbH’s purpose can be any legally permitted purpose.

How Much The Minimum Share Capital Of The GMBH?

The share capital of a GmbH must amount to at least EUR 25.000,00.

According to § 7 GmbH-Law half of the share, capital has to be contributed when the notary applies for registration at the commercial register. The company has the obligation to hold the minimum share capital. This capital can be provided in cash or kind.

Upon the registration of the company, the managing director must assure that the minimum regular share capital has been paid. The GmbH is represented by one or more managing directors who can be appointed indefinitely or for a certain time by the shareholders in the AoA with the formation or afterwards.

Managing directors can only be natural persons, who are absolutely Sui Juris (unlimited legal capacity). Managing directors are subject to special and due diligence requirements that have to be met, amended by responsibilities developed by case law.

The GmbH is liable only with its own assets, the shareholders are exempt from personal liability. By way of exception, the shareholders can have personal liabilities.

The Article Of Association of GMBH

The AoA can be customized. Since the reform of the GmbH-La,w there is, on the other hand, the possibility to use a sample for the AoA (so-called “Musterprotokoll”). Given the premise of a maximum of three shareholders and only one managing director, this sample can be used. Also, only cash and no contributions in kind may be provided.

The shareholders make their decisions at the shareholders’ meeting by means of shareholder resolutions. Required majorities can be specified in the AoA. The AoA must indicate the number and nominal value of the shares of the shareholders. The nominal sum has to be in full Euros, therefore the minimum nominal sum is EUR 1,00.

Registration Of The GMBH

When the nominal capital is contributed and the AoA is notarized, the notary has to apply for registration of the GmbH at the commercial register.

The following documents are needed for that:

  1. AoA
  2. Legitimation of the managing director, if not appointed in the AoA
  3. List of the shareholders (Surname, name, date of birth, domicile and the nominal sum as well as the serial numbers of the shares of the shareholders), signed by the managing director
  4. In case of contributions in kind: documents for proof that the worth of the contribution in kind is equal to the nominal sum
  5. Guarantee of causing the contributions on the shares and that these are now completely in the hand of the GmbH

Business letters of the GmbH have to have at least the following details:

  1. Name of the GmbH,
  2. The legal form,
  3. The seat of the GmbH, (We provide seat addresses for companies. Please contact us)
  4. Name of the registered commercial registry
  5. The registry number.
  6. All managing directors have to be named.

Company Formation In Germany For Non-Residents

The formation of the association is not bound to the nationality of the shareholders or the managing directors. Even foreigners can found an association or be appointed a managing director without authorization.

Three constellations are possible:

A foreign managing director with a residence or settlement permit, meaning with domicile in Germany, can manage a GmbH without any difficulty.

The same thing applies to EU-Citizens because of their EU freedoms, namely the freedom of movement. Entry and residence as well as admission to work, be it self-employed or dependent, is possible without any permission.

Company Formation In Germany For Non-Eu-Residents

For non-EU-Citizens, it has long been controversial in Germany whether managing directors had to have a residence permit.

In some cases, it is argued that the managing directors shall at least have the possibility to be able to enter Germany for at least three months within a calendar year. But even this point is judged differently. It is advisable to clarify with the respective commercial registry because there is nationwide inconsistency regarding this point.

Company Formation in Germany and post-incorporation works are quite important to start the business in Germany efficiently.

Gurcan Consultancy provides accounting services in Germany. Please get in touch with us for accounting in Germany: [email protected]