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Types of Companies in Germany

Types of Companies in Germany

Updated on Wednesday 28th September 2016

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Germany benefits from a variable number of business structures. The businesses have to register with the local Trade Office (Gewerbeamt) and also with the Commercial Register. Freelancers, individual trade persons and private partnerships don’t have to register with the Commercial Register. It is also required to register with the local tax office in the first month of the start-up and the company will be given a tax identification number. Banks, insurance companies and hospitals need to obtain special licenses to carry out their activities. Our law firm in Germany can offer assistance for obtaining such licenses and permits. 
 
The most common businesses types in Germany are: 
 
- the joint stock company (AG);
- the limited partnership (KG);
- the limited partnership with limited liability company as a general partner (GmbH & Co KG); 
- the general partnership (OHG);
- the civil law partnership (GBR); 
- the German subsidiary;
- the German branch office.
 

The German Limited Liability Company (Gesellschaft mit beschränkter Haftung)

 
The limited liability company is the most common type of business. It only needs an owner that can also be a shareholder. A particularity of the German limited liability company is that its name has to refer to the nature of the business or the name of the shareholder followed by GmbH.
 
The share capital of a limited liability company must be at least 25,000 euros from which 12,500 have to be deposited in a corporate bank account during the registration procedure. The shares of a GmbH cannot be traded on the stock exchange and they are not certificated either.
 
The incorporation procedure is rather simple, as the shareholders of the company have to sign the deed of formation and the articles of association. The procedure is performed under the assistance of a public notary in Germany
 
A subtype of the limited liability company is the mini limited liability company, which was enabled in 2008 for individuals or group of persons and features a specific characteristic: it only requires a start-up capital of 1 euro. It has to be identified as such and the shareholders are required to put aside at least a quarter of its annual turnover until it reaches a share value of 25,000 euros, and therefore become a GmbH.
 
The incorporation procedure is simpler than in the case of a GmbH, as the local legislation provides standardized articles of association, which are notarized at a public notary. It is advisable to receive assistance during the incorporation procedure from a lawyer in Germany, who can verify if all the provisions respect the applicable legislation. 
 

The German Joint Stock Company (Aktiengesellschaft)

 
In order to start a German joint stock company one needs a capital of 50,000 euros and must be registered in the Register of Companies. A joint stock company requires one shareholder, but a first auditor and a supervisory board that will appoint the management of the company. The board of directors will have the right to decide on the operational aspects of the company, as well as on its management. 
 
Its shares can be listed on the stock exchange. In order to incorporate a German joint stock company, the investor will need to sign the articles of association and the company will become active only after the registration is completed at the Register of Companies.

 

The Limited Partnership (Kommanditgesellschaft) in Germany

 
To start a German limited partnership you need a capital of 50,000 euros. This capital has to be split into shares. The business has to be registered with the Trade Register and the articles of associations have to be notarized. This type of company has a general partner who is the main representative and wholly liable for the company while the limited partners are only liable up to the value of the shares owned in the company. This type of legal entity is more suitable for small and medium sized enterprises (SMEs)
 
The limited partnership with a limited liability company as general partner (GMBH & CO KG) is a subtype of the limited partnership where the general partner is a limited liability company instead of one person. This sub-type is also suitable for SMEs, as well as for family companies.
 
The registration procedure is different than in the case of the above mentioned legal entities, as the investors will have to sign a partnership agreement, but it has to be registered at the Commercial Register and the Trade Register
 
Our German lawyers can offer more detailed information on this structure, as well as personalized consultancy regarding each type of business forms available in Germany.

 

The General Partnership (Offene Handelsgesellschaft) in Germany

 
In order to start a general partnership in Germany there is no need of capital, as each partner has unlimited liability. A general partnership has to be registered with the Trade Register and has to bear the OHG abbreviation at the end of the name for clarification or liability. The structure of a general partnership has to be a board of directors and a supervisory body. An important aspect when forming a general partnership in Germany is that accounting procedures are different (and simpler) than in the case of other types of legal entities. Also, it is necessary to have at least two associated partners in order to start a general partnership

 

Civil Law Partnership in Germany

 
To start a civil law partnership it takes two partners with unlimited liability. The German civil law partnership has to be registered with the trade office if it is a small trade business. If the annual profit exceeds 25,000 euros it will become a commercial business, therefore it will be considered a general commercial partnership (oHG) and it will have to be registered with Commercial Register. The partners should sign a partnership agreement. The regulation is not compulsory, but it is recommended. 
 
Companies can open subsidiaries (Tochtergesellschaft) with self- management, assets and accounting systems located separate from the main German company. Subsidiaries have to be registered with the register of companies.
 
Companies can also be registered as branches. Unlike subsidiaries, the branches have no assets or an accounting systems, the head office being in charge with all administration and therefore a branch needs not be entered in the register of companies. 
 
Businessmen who intend to open a company here are invited to contact our German law firm.
 

 

Comments

  • Thomas 2016-09-28

    I am a rather unexperienced businessman. I'd like to start a company in Germany because the business environment is reliable and there are some opportunities here. However, I am not sure whether I should choose a GmbH or a mini-GmbH.

    Hello Thomas! Thank your for your comment. We can help you choose the right type of company for your business needs and assist you with the entire company registration procedure in Germany. Please send us a detailed e-mail about yout project at office(at)lawyersgermany.com and we will repy with all the required details as fast as possible. Have a great day!

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