The GmbH is the most common form of all new companies incorporated in Germany and can be compared to the French Sàrl, the Spanish SL or the well-known Private Limited in the UK. Most foreign investors incorporate a GmbH in order to have a representative office in Europe which allows them to start and grow their sales operations in both Germany and the rest of Europe.
The German GmbH is successfully established by having the Deed of Formation documents as well as the Articles of Association signed by the director in front of an official German notary. The GmbH can also be represented by further natural persons. Those representives are required to hold power of attorney, which has to be notarized by the German notary as well.
To complete the process of incorporation, the proposed GmbH must be registered with the local Chamber of Commerce and Industry. For registration the managing director has to sign the application in front of the German notary. The notary certifies the signatures, informs the managing directors about their duties and finally files the application.
Upon registration in the commercial register, the GmbH becomes a legal entity and gains full legal capacity. Furthermore a newly-incorporated GmbH must also be registered at the local trade office. The GmbH can already start its business without this last registration, however, the limitation of liability of the shareholders will only become effective when the registration is filed.
The time period which needs to be considered for the successful incorporation of the new company in Germany is subject to the individual business objectives and complexity of the defined business model. To provide a rough guideline, approximately three working weeks have to be taken into consideration.
Consultinghouse has the experience to support foreign investors in designing a tailor-made business plan which will minimze risk and will support the overall incorporation process.
To form a GmbH, a minimum share capital of EUR 25,000 is required (paid on a company bank account or made of contribution in kind). To facilitate the formation, at the time of registration it is sufficient for half of the minimum capital, (EUR 12,500), to have been actually and verifiably contributed. According to the newest legislation, a so-called mini-GmbH can be formed. According to this form of investment, the investor does not have to pay the whole sum of EUR 25,000.00, but the mini-GmbH will have to retain a part of its profits until the minimum share capital of EUR 25,000.00 is reached. If the mini-GmbH only has a single shareholder, this shareholder is liable for any unpaid amount of the minimum share capital and must provide security for it.
The Mini GmbH (UG) is a kind of sub-form of the regular GmbH and has the suffix UG, standing for (haftungsbeschränkte) Unternehmensgesellschaft, or limited liability business corporation and was actually designed to be an entrepreneurial company. The difference between the UG and the GmbH is the amount of share capital required to incorporate this legal form. Here the share capital amounts to at least one Euro for the mini-GmbH (UG) in comparison to least EUR 25,000 for the incorporation of the German GmbH. Please refer to our section German legal forms to find more information about the German UG.
A GmbH is managed and legally represented by its managing directors (Geschäftsführer). The corporation must have at least one managing director which can be a legal or a natural person. The managing director does not have to be a shareholder or a German resident and may receive an income for carrying out his duties, although this is not required by law. The shareholders have the power to exercise direct influence on the GmbH's management by issuing binding instructions or directions to the managing director. When no binding instructions are given, the managing director is free to act.
