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Establishing a German Company |
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 Several options exist for establishing a German company,
three of which will be discussed here. The first is the "Gesellschaft
mit beschränkter Haftung"
(private
limited company), the second being the legal form of an
"Aktiengesellschaft (public limited company) and finally the
"Gesellschaft mit beschränkter Haftung & Co. KG" (private limited
company with a limited partner). Actually there exist more options, for
example the cooperative (Genossenschaft), the mutual insurance
association, the partnership limited by shares (Kommanditgesellschaft
auf Aktien) and the European Economic Interest Grouping (Europäische
Wirtschaftliche Interessenvereinigung).
Private international law
Corporations raise a variety of conceptual problems. Assuming a german
court has jurisdiction you next need to think about which state´s laws
should apply where the case involves contact with several different
states. Under German private international law traditionally all rights
and obligations respecting a company were deemed to be created by the
law of the situs of the company. The situs of a company was determined
by the seat of the legal headquarter of the company. Thus all questions
concerning the legal status of a corporation, such as whether the
individual members are personally liable, whether its transactions are
ultra vires, or whether it may be represented in legal proceedings by
its directors, were determined by the rules of the state in which the
corporation had its social seat (headquartes). Consequently foreign
companies created by the law of the place of incorporation and having
their headquarters in Germany could not be recognized. Since the ECJ
decided in 2002 in the Überseering-case (C-280/00) that German
international company law was not conform to EC-law, the
Bundesgerichtshof (German Federal Supreme Court) held that,
notwithstanding the fact which company law has to be applied, foreign
companies have to be recognizied in Germany even if they have their
headquarters in Germany. This has been decided expressely for
US-corporations in 2003 (BGH, 29.01.2003, VIII ZR 155/02).
1. Private limited company
A private limited company can be established by just a single
shareholder. A minimum nominal capital of EUR 25,000.00 is required for
this form of business. The original shares must be fully subscribed.
Shareholders are obliged to pay their contributions into a special
account of the company at the time of its establishment. The
establishing of the company must be notarised. Pursuant to section 11,
subsection II of the German limited-companies act, the shareholders who
are about to establish the company and hence become its owners are
personally liable until the company has been registered. Registration
takes place a few weeks following notarisation if all the applicable
requirements are fulfilled. The local court where the company is to be
registered occasionally requires amendments to or modifications of the
partnership agreement, specifically with regard to the company's name.
The company may, however, start doing business even prior to its
registration once the partnership agreement has been notarised and
registration has been applied for. Personal restrictions with regard to
a company's shareholders do not exist. Nationality, religion or other
personal criteria are not relevant. Even foreign companies can be
shareholders. Their legal capacity is subject to the law of the country
where the corporate shareholder has its registered office.
2. Public limited company
The minimum number of shareholders required for establishing a public
limited company is five. The minimum share capital of such a company
totals EUR 50,000.00. The establishing of the company must be
notarised. Establishing a public limited company is a very
time-consuming process because preconditions are very complex and
subject to strict regulations.
3. GmbH &Co. KG
Under certain conditions, it may be favourable to establish a
"Gesellschaft mit beschränkter Haftung & Co. Kommanditgesellschaft
(KG) which is in fact a partnership with just one fully liable partner.
The legal form of the GmbH & Co. KG is as follows: the GmbH is the
fully liable partner of the KG which, for its part, is a limited
partnership. German law requires the existence of a GmbH as a condition
precedent for the KG. The liability of the partners of the KG is
limited by their shares. The shareholders of the GmbH may be identical
to the shareholders of the Kommanditgesellschaft (KG). The GmbH &
Co. KG is a very flexible company. It offers a number of advantages,
including, but not limited to reduced risk in the event of bankruptcy
and certain tax benefits.
The internal structure of the KG is as follows: pursuant to the German
commercial code, one fully liable partner and one limited liable
partner can establish a Kommanditgesellschaft. The fully liable partner
can be a private limited company which has managerial power. The chief
executive officer (Geschäftsführer) of the private limited company is
hence the only legal representative of both the GmbH and the KG.
However fully liable partner of a private limited company may also be a
public limited company, a cooperative or any other legal entity or
natural person.
The GmbH and the GmbH & Co. KG can be registered within a short
time, whilst registration of a public limited company takes longer.
Setting Up
The first step for establishing a German company is setting up its
memorandum of association which must be notarised by a notary public in
Germany. The following information and documents are normally required
to this effect:
- the number of shareholders
- the shareholders' names
- the shareholders' professions
- the shareholders' dates of birth
- in the event that a foreign company is a
shareholder, its registered office and the
names of the members of its
board must be recorded
- German translations of the instruments
appointing the members of the boards as
representatives for the
company's shareholders.
It is not necessary for a person wishing to establish a company to come
to Germany. All the necessary contracts can be made by a representative
who requires a written power of attorney. The signature of the person
who is represented must be authenticated by a notary public (or by a
German consular officer, respectively). The company's future chief
executive officer (Geschäftsführer) must personally sign the
application for registration. This signature must also be authenticated
by a notary public. Under certain conditions, the German notary public must refuse a
company's registration if this registration would violate German
immigration laws. These cases are extremely rare, however.
The whole registration procedure, including notary public's and legal
consultant's fees costs no more than EUR 3,000.00. I hope that these
explanations have answered your questions in
sufficient detail. Should you need any further information, however,
please feel free to contact me at any time.
 LAW OFFICE Dr. Hök, Stieglmeier & Kollegen
Contact: Advocate Dr.Götz-Sebastian Hök
Eschenallee 22
14050 Berlin
Tel.: 00 49 (0) 30 3000 760-0
Fax: 00 49 (0) 30 3000 760 33
e-mail:
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