Gesetz betreffend die Gesellschaften mit beschränkter Haftung – Company Law

The Limited Liability Companies Act and the German Stock Corporation Act are the two main legal resources.

The private limited liability company, the GmbH, accounting for the majority of businesses.  The Limited Liability Companies Act is composed of several parts:

• Part 1: the formation of the company includes the requirements for choosing a purpose and a name for the business, having a registered office and appointing directors as well as the process for company registration in Germany.
• Part 2: the shareholders and the company includes information about the liabilities of the shareholders, the payment of capital and the ownership of shares.
• Part 3: representation and management, included here is information about the appointment of directors, the rights and duties as well as their evocation; also included here are the general principles for company representation as well as general accounting requirements like bookkeeping and balance sheet./li>
• Part 4: the amendments brought to the company’s Articles of Association presents the ways in which changes to the company can be performed (a share capital increase, the allocation of shares, the distribution of profits and others).
• Part 5: winding up a company presents the process needed to dissolve a company and render it null; the liquidation procedure is also presented as well as the requirements for the distribution of assets.

Company Name

The business name must include the designation “Gesellschaft mit beschränkter Haftung” or a readily comprehensible abbreviation of this designation even if it is continued in accordance with section 22 of the Commercial Code or other statutory provisions. If the company exclusively and directly pursues tax-privileged purposes in accordance with sections 51 to 68 of the Fiscal Code, the abbreviation “GmbH” may be used.

The place of the company’s registered office shall be that place in Germany as specified in the articles of association

Articles of Association 

The articles of association require notarial form. They must be signed by all the shareholders.

The company may be formed under a simplified procedure if it has no more than three shareholders and one director. The model protocol provided in the Annex must be used to form a limited liability company under the simplified procedure. No further provisions which derogate from the law may be laid down. The model protocol also serves as the list of shareholders. In all other respects, the provisions set out in this Act concerning the articles of
association shall apply mutatis mutandis to the model protocol.

The articles of association may be signed by authorised representatives only on the basis of a power of attorney established or authenticated by a notary.

The articles of association must stipulate the following:

• The company’s business name and the place of its registered office
• The purpose of the enterprise
• The amount of the share capital
• The number and nominal values of the shares to which each shareholder
  subscribes against payment of the capital contribution into the share capital (original
  capital share)

Directors & Shareholders

The company must have one or more directors. A director can have any nationality; neither a German citizenship nor a domestic residence in Germany is required.
A GmbH requires at least one shareholder

Share Capital

The minimum share capital for the private limited liability company (GmbH) is €25,000. It can be contributed in cash or in kind.

Certificate of Good Standing 

In Germany, companies are registered by the Commercial Register – Handelsregistereintragung.

The HRB Certificate is an extract in German that contains the latest company details filed at the Commercial Register.

The certificate from the Handelsregistereintragung confirms the date issued, the company name, company registration HRB number, registered office, domestic business address, branches of the company, company activity, directors, issued share capital and other filed details.

Winding Up & Dissolution

Grounds for winding up company

The limited liability company shall be wound up

• Upon expiry of the period specified in the articles of association
• By resolution of the shareholders; unless otherwise provided in the articles of association, such a resolution shall require a majority of three quarters of the votes cast
• By court judgement or by a decision of the administrative court or the administrative authority in the cases referred to in sections 61 and 62
• Upon the opening of insolvency proceedings; if the proceedings are terminated upon the application of the debtor or the proceedings are set aside after confirmation of the insolvency plan which provides for the continuance of the company, the shareholders may pass a resolution to continue the company
• Upon the decision to refuse to open insolvency proceedings for insufficiency of assets becoming final
• Upon an order issued by the court of registration establishing that the articles of association are defective in accordance with section 399 of the Act on Proceedings in Family Matters and in Matters of Non-Contentious Jurisdiction becoming final;
• Upon the company being deleted from the Commercial Register due to lack of funds in accordance with section 394 of the Act on Proceedings in Family Matters and in Matters of Non-Contentious Jurisdiction.
• The articles of association may stipulate other grounds for winding up the company.

Dissolution by Court Judgement

The company may be wound up by court judgement if it becomes impossible to achieve the company’s purpose or if there are other important grounds for winding up the company which are rooted in the company’s circumstances.

The action to obtain judicial dissolution shall be brought against the company. It may be brought only by shareholders whose shares together amount to at least one tenth of the share capital. That regional court in whose district the company has its registered office shall have exclusive jurisdiction in regard to such an action.