By Mark Redmond, 28th October 2015
Germany has both the largest and most important economy in Europe and is often considered the most attractive location for business to incorporate within the EU. One of the leading exporting countries in the world, Germany is world-renowned for its technical, operational and engineering and automotive industries.
Germany has a well-developed financial and banking market and with Frankfurt one of the leading financial centres in Europe. Germany provides stable and secure legal, financial and political systems to set up operations in Europe.
The four most popular business entities that are set up in Germany:
- Mini – GmbH
- Limited Liability Corporation (GmbH)
- Stock Corporation (AG)
- Partnerships
Mini – GmbH (AnUnternehmergesellschaft -UG)
A “mini-GmbH” is highly popular with international investors setting up in Germany. This type of company can be incorporated with as capital of as little as €1. Each year, 25% of a mini-GmbH’s annual profit must be contributed to its capital reserves until the company has reached €25,000, at which point the UG can become a regular GmbH.
Limited Liability Corporation (GmbH)
The most incorporated company type in Germany is The Limited Liability Corporation (GmbH). When incorporating a GmbH, a minimum share capital required of €25,000 is required. However, this can be made up of contributions in kind. When incorporating a GmbH at least €12,500 must be contributed. The company only requires one director and one shareholder.
Stock Corporation (AG)
In Germany, the standard corporate form for a public company is ta Stock Corporation (AG). An AG requires a share capital of €50,000 and the company may have a minimum of one shareholder. As a listed company, an AG is subject to heavy regulation. The structure of an AH is often reoffered to as a “two-tiered board”. This consists of both a management board and a supervisory board. The management board operates the company however the members of this board can be removed by the supervisory board at any time. In most cases, the company’s shareholders would make up the supervisory board.
Partnerships
There are two main partnerships used in Germany; A General Partnership (OHG) and Limited Partnership (KG). In a General Partnership, all partners are fully liable for the debts of the partnership. On the other hand, a Limited Partnership usually consists of general partners who have unlimited liability and limited partners whose liability is restricted to their fixed contributions to the partnership. Partnerships are widely used in Germany for family-owned and small businesses.
If you require more information on business entities in Germany or Company Registration in Germany, please do not hesitate to contact us on +49 3088789328 or +3531 687 4518. Alternatively, you can fill out a contact form on our website and an expert will be in touch as soon as possible.