Company formation and acquisition in Germany
In Germany, domestic and foreign natural persons and legal entities can establish and/or acquire companies. Below you will find some basic information on this:
Company formation
In German company law, a distinction is made between partnerships and corporations. One distinguishing topic is that partnerships generally have at least one partner with unlimited (financial) liability, while the liability of shareholders of corporations is limited to the capital contribution obligation. Further differences relate, among other things, to taxation, publication obligations or the exercise of shareholder rights and management duties.
Examples of partnerships under German Law are the general partnership (Offene Handelsgesellschaft / OHG) or the limited partnership (Kommanditgesellschaft / KG). Examples of corporations are the limited liability company (Gesellschaft mit beschränkter Haftung) or the stock corporation (Aktiengesellschaft / AG). In addition to purely German legal forms, European legal forms such as the European stock corporation (Societas Europaea / SE) are also available today.
When choosing the right legal form in Germany, accounting, taxation, influence of shareholders, liability of shareholders, organizational duties, flexibility of the legal framework and the minimum investment amount are essential factors. For example, the legal form ” Unternehmergesellschaft haftungsbeschränkt ” (a small version of the limited liability company) has a minimum capital of 1 EUR, the GmbH a minimum capital of 25,000 EUR and the AG one of 50,000 EUR. The GmbH is the most popular legal form among domestic and foreign founders/investors, among other things due to the amount of the minimum capital contribution and due to its high flexibility. There are more than 1,000,000 of these companies in Germany.
When a company is established in Germany, it must generally be registered with the commercial register at the local court at the company's registered office. Prior to this, Articles of Association must be drawn up and the obligations with regard to the contribution must be fulfilled. Depending on the legal form, the Articles of Association must be concluded and notarized before a German notary public. This applies in particular to the GmbH and the AG. However, the founders can be represented at the notarization, provided that a (certified) power of attorney is available. Today, it is also possible in some cases to notarize the Articles of Association by video conference.
In addition to the legal establishment and the registration of the company with the commercial register, a business registration with the competent authority or a business license is also required – depending on the branch of business. Furthermore, registrations with the Chamber of Industry and Commerce, the transparency register and the competent tax office, among others, must be made. Depending on the type of business, a trademark application may also be helpful.
Further opportunities for entrepreneurial activity in Germany
Alternatively to founding a German company, there are also other options for doing business in Germany.
One example is the establishment of a dependent branch of a foreign (e.g. Indian) company. In this case, however, minimum legal requirements must be met, such as the registration of the German branch office in the commercial register.
Another possibility is the acquisition of already existing companies in Germany. This can be done by means of an asset deal or a share deal. Depending on the legal form, the conclusion of such a contract must also be notarized before a German notary.
Article written by
Andreas Hecker, LL.M. oec.
Rechtsanwalt ∙ Partner
Hoffmann Liebs
Partnerschaft von Rechtsanwälten mbB
Goltsteinstraße 14
40211 Düsseldorf
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