Commonly Asked Questions About Setting Up A GmbH In Germany

GmbH is one of the most popular business setups used by both local and foreign investors in Germany. It is the equivalent of a limited liability company setup used in other parts of the world. Even though the process of setting up a company in Germany is relatively easy, there are various queries and doubts that investors might have about the process. The most common of these questions and their answers are discussed in brief as follows.

What Is GmbH?

A GmbH is the most widespread business structure and is a company with limited liability. The company can be as big or as small as the investors want it to be and can be run by a single individual without any support staff. At the same time, a GmbH can also take the form of a massive conglomerate, although it cannot trade publicly.

How Is GmbH Incorporated In Germany?

For setting up GmBH in Germany, the founders need to draw up and then notarize the articles of association as well as the formation deed for the company. Each of the documents needs to be signed by the founders, who also need to appoint the company directors and members of the supervisory board. After the establishment of the legal entity, the investors need to pay the minimum share capital as applicable for the type of legal entity of their choice. The legal entity then needs to be registered with the Commercial Register before it can be considered as an establishment with due capabilities.

What Does The Registration Of GmbH Involve?

The registration of GmBH is a straightforward process and is generally completed within a few days. The investors are not allowed to carry out any business transaction or activity until the registration process with the Commercial Register is completed. Any such activities performed before the registration is completed, will make the shareholders of the GmBH liable for any legal action.

What Is The Minimum Share Capital Required For Setting Up GmbH?

Investors are required to submit a minimum share capital of 25,000 EUR for setting up a GmBH in Germany. This capital contribution can be made both in cash and kind and in case the capital is divided into shares, these shares cannot be traded publicly or even transferred. Moreover, a minimum of 25% of cash contributions made to the share capital as well as 100% of non-cash contributions needs to be deposited before the company is registered.

What Is The Management Structure Of A GmbH?

A GmBH in Germany is made up of managing directors and they represent the company in all business matters. As mentioned before, the managing directors are appointed by the investors or shareholders. In fact, it is possible for a shareholder to take on the role of a managing director in the GmBH.

What Is The Process Of Verification Of A GmbH In Germany?

Verification is an integral part of the process of GmBH company formation Germany. For this, all the GmBH and limited liability companies are required to maintain financial records. In addition, they need to keep a record of all the commercial transactions besides submitting annual financial statements, balance sheet, and income statement.