Getting Familiar With The Features Of Forming A Company In Germany

A Basic Overview Of Company Formation

The German law provides for the established of different types of companies within the country. These are primarily categorized as limited companies, joint companies and other types of companies. There are five main types of companies that can be formed by investors within the provisions of the law. These are explained in brief as follows.

German UG : This type of company is similar to an English Ltd company and is often referred to as “mini GmbH”. This is the most popular choice for setting new businesses and can be established with a capital investment of just €1 and the formation of such companies can be completed within a period of one week.

German AG – Joint Stock Company : This type of company is generally formed by large businesses and publically traded companies. Formation of an AG company requires a minimal investment of €500 and while the company is managed by a board of directors, a separate board is set up to supervise them. It is also mandatory for an Ag company to get its accounts audited by a registered auditor.

German KG – Limited Partnership : A KG type company is generally formed with the collaboration of two or more partners. The parnerts can be either silent or active and while silent partners can be held liable only for the capital invested, the active partners are responsible for every business activity. However, the silent partners do not have any say in the day-to-day working of the business.

German GmbH : This type of company is also known as a private limited liability company and is the most preferred type of company in Germany. The capital required for forming a GmbH in Germany can be brought in the form of cash or assets. The value of the underlying assets brought into the company must be presented in the company articles of association. However, the shares of such companies cannot be listed on the stock markets and the shares may not be traded publicly. The day-to-day decisions of such companies are made by the corporate director, who is appointed by the meeting of shareholders.

Germany is one of the leading economies of the world, which is why it is not really surprising that the country is known to attract significant foreign investment as well as business. Being the second largest importer in the world, Germany offers a huge scope for trading which make it a great destination for setting up a business. In addition, the fact that the economic opportunities are scattered across different regions within the country, further makes it a preferred choice for investors seeking an opportunity for forming a company in Germany. However, before starting the process of establishing their business in the country, it is essential for the aspiring entrepreneurs to familiar with the below discussed key aspects of this process.