Choosing the right legal form is one of the first and most important decisions founders must make for their startup. In Germany, the GmbH as a legal form is particularly popular. But what makes incorporating a GmbH attractive for start-ups? This article takes a closer look at the GmbH as a legal form and explains what requirements for forming a GmbH absolutely must be observed.
- The GmbH as a legal form
- How is a GmbH incorporated?
- What is the share capital of a GmbH?
- Why form a GmbH?
The GmbH as a legal form
The Gesellschaft mit beschränkter Haftung (GmbH) is one of the most frequently chosen legal forms by start-ups. First, because it is a legal entity and can therefore own assets or acquire intellectual property. This means that personnel changes or the admission of new shareholders can be implemented relatively straightforwardly. Second, liability in a GmbH is limited to the company's assets, which provides shareholders with considerable security.
How is a GmbH incorporated?
Forming a GmbH requires at least one shareholder and a written articles of association that must be notarised. At the same time, the GmbH must have at least one managing director who represents the company externally.
After notarisation, the articles of association are forwarded to the commercial register by the notary. The GmbH only comes into existence upon registration in the commercial register. In addition to the notarised articles of association, the following evidence must be provided for registration:
- Authorisation of the managing director, if this was not done in the articles of association
- A signed list of all shareholders with place of residence and date of birth as well as the amount of their contribution (shareholders' list)
- Declaration that the agreed contributions have been made
- In the case of contributions in kind, corresponding evidence of their value and a report on contributions in kind
What is the share capital of a GmbH?
The GmbH is one of the capital companies. This means that the shareholders provide the capital. The required minimum share capital of a GmbH is €25,000; however, it is also possible to initially contribute only half of the share capital (at least €12,500) upon incorporation. Cash contributions as well as contributions in kind are equally possible. As the name suggests, the GmbH has limited liability – namely to the company's assets. The company therefore only answers with its assets; shareholder liability is in principle excluded. An exception applies where not all of the share capital has been contributed upon incorporation of the GmbH. In this case, shareholders are personally liable for the difference.
Why form a GmbH?
Compared with partnerships, the GmbH is distinguished above all by the following:
- Limitation of liability to the company's assets
- Taxation at the corporate tax rate (non-transparent taxation)
- A relatively uncomplicated change of shareholders or sale of the company by assignment of shares
- The legal capacity of the GmbH, which as a legal entity can enter into its own transactions or acquire shareholdings in companies
Further information: www.existenzgruender.de
