As is the case in most countries trading companies can easily be established including those where the extent of their liabilities do not exceed the value of their share holding.
In Germany a GmbH is the most popular form of company. It is the most flexible format and is not constrained by too many rules and obligations. Setting up a GmbH is quite straightforward and does not take long.
As with all companies, a GmbH is responsible for the usual tax liabilities.
A GmbH requires a minimum shareholding of 25,000 euros. Of this 50% (12,500 euros) must be in cash value and credited to one of the company’s bank accounts. Apart from the minimum cash value for shares, the remainder can be issued in receipt of other fixed assets.
It normally takes a period of two to three weeks to establish a basic company – that is where there are no more than three shareholders plus a managing director and where the minimum shares issued are paid for in cash. The deeds and articles need to be documented. These can be written by a lawyer (who would normally charge around 700/800 euros for the service) but not necessarily. However, these documents always have to be signed in the presence of a lawyer who is registered as someone who is deemed to be a “notary”. There will be a fee for this service as well.
A list of lawyers able to carry out this work is available from the German Bar Association.
The managing director has overall responsibility for managing the company on a day to day basis but the company is owned by the shareholders and they can issue instructions and directives to the MD. They also have the power to replace the MD if they choose to do so. There has to be an MD but there can be more than one if required. The MD is the legal head of the company.
All GmbH have to be registered at the trade office for the locality and entered into the commercial register that is kept there. The signing of this register has to be done in the presence of a notary by the managing directors. Without this there is no valid registration and the company does not exist.