Are you thinking about setting up a company in Germany? If so, here’s the article you need to read in order to familiarize more with the company formation options this country offers to foreign investors.
In Germany, firms are divided into four classes: very small, small, medium and large. The German classification of companies is determined by three characteristics: money supply, profit and the number of employees. Here are some of the most popular types of companies you could open in Germany. ↓
Private enterprise (Das Einzelunternehmen)
It’s the simplest available legal form. This type is not a legally independent unit - the rights and obligations associated with its activities and existence are directly related to its sole participant, the individual entrepreneur. If you do business via a private enterprise,you can consider yourself a merchant in the sense of the commercial code. That’s why you’ll be required to register your business in the commercial register.
Civil Law Society (Die Gesellschaft bürgerlichen Rechts (GbR))
This is, in fact, a simple partnership and serves as an optimal form for bringing together two or more people to conduct small business activities. GbR doesn’t have to be registered in the commercial register and does not have the right to use a company name, being identified in the civil law circulation via the names of the founders. GbR is not a legal entity and has limited legal capacity. As with the private enterprises, the creation of a GbR must be registered at an appropriate government agency.
Open trading company (Die offene Handelsgesellschaft (OHG))
It is considered to be an association of two or more persons who set up a business under a common brand name. OHG participants can be both individuals and legal entities. The company is created by concluding a memorandum of association in writing or orally. OHG is a merchant and is subject to registration in the trade register.
Limited partnership (Die Kommanditgesellschaft (KG)
A German LP is an association of individuals or legal entities consisting of at least one partner and one limited partner. As a general rule, the limited partner is liable only to the extent of his contributions to the capital of the limited liability company. The LP is a type of open trading company, and it is subject to the same rules applied to the OHGs, including the obligation to register at a commercial register.
Partnership (Die Partnerschaftsgesellschaft)
A partnership is a form of association of two or more individuals practicing a „free profession” (Freiberuf). This includes self-practiced scientific, artistic, writing, teaching, educational or similar activity. Free professions include lawyers, doctors, veterinarians, artists, journalists, directors, designers, translators, teachers, engineers, architects and others. The partnership is not a legal entity, but, like an open trading company, it has limited legal capacity.
Limited liability company (Gesellschaft mit beschränkter Haftung (GmbH))
This is the most common legal form, an independent legal entity. It acts in economic circulation under its individual name, has its own rights and is responsible for its obligation with its property. A GmbH can be established by one or several individuals or legal entities. A foreign company may also act as the sole founder. The law establishes the minimum authorized capital - 25 000 euros.
Mini-GMBH
This new type of business is presented as the initial form of the traditional GmbH. A significant difference between the Mini-GmbH and the GmbH is the amount of registered capital. In order to register your Mini-GmbH, you’ll have to demonstrate a minimum amount of a registered capital of 1 Euro. Moreover, the law requires saving a part of the profit for the further possibility of transferring the company status to GmbH.
Joint Stock Company (Die Aktiengesellschaft (AG))
It may be created by one or more individuals or legal entities.The minimum authorized capital must be at least 50 000 euros. A joint-stock company may issue shares without a specific nominal value, giving their owners the right to a share in the charter capital of the business.
The European Joint Stock Company (Societas Europaea (SE))
SE is a business intending to sell goods or services in several EU countries. The legal regulation of SE is based on two fundamental acts of the European Union - the Statute on European Joint-Stock Companies and the Basic Provisions on the Status of Employees of European Joint-Stock Companies. An SE can be formed in several ways: by setting up a parent company, establishing a subsidiary or merging joint-stock companies in several EU member states, as well as by transforming a national joint-stock company into SE.
Still, not all the mentioned above company formation opportunities are available for business emigrants and foreign investors. Setting up a GmbH, MiniGmbH, AG or SE might be your best chance, because they require less paperwork and certification.
If you want to find out more about company formation on Germany, Bizonaire is always here to help you!
Contact us right away and bring your cool business idea to life ASAP!
