Company Registration and Formation in Germany

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Company Registration
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Legal Solutions Made in Germany

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Whether you are choosing the appropriate corporate form, drafting the articles of association or registering the established company in Germany, Schlun & Elseven Rechtsanwälte is at your side to answer all your questions about setting up a company under German law. We use our expertise to support you in creating a business plan, reviewing and designing contractual agreements, and in matters relating to intellectual property rights under German law so that you as a company are legally secure in each of your areas of activity. The interdisciplinary cooperation of our practice groups enables us to provide particular expertise and diligence even in the case of complex, cross-disciplinary issues. Our German lawyers will support you throughout the

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Our Services for Entrepreneurs

Advice on company formation

Your rights and obligations as a company founder
Choice of company form
Business plan: draft and review
Drafting a partnership agreement | Articles of association
Business registration
Entry in the commercial register | Transparency register

Services in context

Advice on corporations and partnerships
Franchise law in Germany | Start-up company legal support
Employment and labour law | Contract law
Legal compliance
Intellectual property law
Legal advice in all areas of law relevant to business
Litigation: legal representation | Arbitration proceedings

Necessary Steps for Company Registration and Formation in Germany

Here are some of the critical steps to be considered in the company registration process.

Business Plan: A detailed business plan should be designed when establishing a company. This business plan will be used when seeking investment, tracking progress and evaluating solutions to potential difficulties in the future. A good business plan will outline an enterprise’s unique aspects and where the gap in the market is for this business idea. It will provide investors, potential partners and employees clarity regarding the company’s aims, direction, and opportunities that the company is seeking to exploit. Our team of legal professionals are available to oversee your company’s business plan.

Company form: A well-designed business plan will also determine which type of company should be set up to achieve the goals as outlined in the plan. As a client of our firm, we will provide you with the necessary advice so that the type of company established will be suitable for its goals.

Finances: Once the type of company has been decided on, the next step is to ensure that the necessary financing is available to the company sought to establish.

Name of the Company: If the plan, type of company and finances are all available, the next step is the company’s name. Creating a unique and memorable name is not easy, but it is vital. It is worth knowing that the German Commercial Code (in German “Handelsgesetzbuch” or HGB) regulates how names can be used, and it includes provisions such as the non-allowance for misleading names (§ 18 HGB) and the need for a name to be distinguishable from other companies (§ 30 HGB).

Public and Private Limited Companies in Germany (“The AG”, “The GmbH” and the “UG”)

No matter whether you want to operate as a stock corporation (AG), a limited liability company (GmbH) or an entrepreneurial company (UG) – the lawyers at Schlun & Elseven Rechtsanwälte will be happy to advise you on all matters relating to the entry of your company in the commercial register.

The GmbH is the most common form of corporation in Germany. Our legal team advises company founders in Germany and abroad on registering their GmbH companies in the commercial register and ensures that the process is carried out correctly.

The ‘Unternehmergesellschaft‘ is a newer addition to the recognised corporations in Germany. This form of company was developed especially for start-up companies in Germany. The UG has many of the characteristics of the GmbH. However, it is a more flexible form of company, and the financial hurdles to setting one up are lower than for the GmbH. The UG was legally established in 2008 by § 5a GmbHG. Since then, this form of company has contributed to Germany becoming an increasingly popular place for start-ups.

The AG stock corporation is a form of company that makes it possible to raise capital by selling shares. The ownership rights in the company are thereby distributed among the shareholders. The liability of the shareholders, in turn, is limited only to their contributions. Due to the complexity of an AG stock corporation in Germany, expert legal advice is always recommended – regardless of whether the goal is to convert a GmbH into a stock corporation or to expand into the German market. Our legal team advises entrepreneurs and managing directors worldwide on these matters.

Public Limited Company: Advantages and Disadvantages

The stock corporation (AG) is the closest equivalent of the public limited company (plc). The AG is subject to the same taxes as the GmbH and offers limited liability. There are fewer stock corporations than GmbHs, as they usually comprise much larger companies operating in different markets. When setting up an AG in Germany, the following points should be noted:

Higher requirements for share capital: stock corporations require a minimum share capital of €50,000. This includes both contributions in kind and other assets, as well as direct financing. However, it should be noted that a cash value of at least €12,500 must be deposited when the company is founded.

Easy transfer of shares: As shares can be transferred on the stock exchange, it is easier for new investors to acquire shares. This can help with financing new and expensive projects. Access to more or new funding is generally easier for an AG than for a GmbH or UG.

Transparency: AGs are companies that operate in a way that obliges them to publish their balance sheet annually. This allows outsiders to check the company’s financial status in detail at any time. An AG must, therefore, operate at a particularly professional level.

Administration and bureaucracy: The level of complexity and amount of bureaucratic requirements associated with this form of company require qualified support to ensure that the AG operates to the highest possible standards.

Shareholders: Successful AGs can attract a wide variety of shareholders, with the most influential often represented on the board of directors. Paying a suitable dividend to shareholders is the best way to ensure they are happy with the company. The shareholders’ AGM decides on the appointment of the board of directors.

Advantages of the GmbH

Limited liability: The personal assets of managing directors and shareholders cannot be accessed should the company run into financial difficulties. The company is a separate legal entity. Therefore, the personal assets of the managing directors are not considered part of the company’s assets.

Credibility: Due to its long-standing establishment in the German legal system, the GmbH structure is essential when recruiting potential investors and shareholders. A GmbH requires a minimum share capital of €25,000 at the time of its formation. This requirement provides a certain degree of confidence that the company has sufficient assets to meet its liabilities.

Independent legal entity: As an independent legal entity, the company can enter into contracts, litigate and acquire its own property.

Not restricted to German citizens: To found a GmbH, the entrepreneur, the managing directors, or the shareholders need not be German citizens or citizens of the European Union. However, at least one managing director must be a resident of Germany, as this is a mandatory requirement for registering the GmbH in the commercial register.
Certain tax advantages: Although the GmbH has to pay some additional taxes in the form of trade tax, there are significant advantages in the form of tax breaks. Certain company assets can be written off at a favourable rate. However, it is advisable to obtain comprehensive advice in advance.

Our corporate law team will be happy to advise you on whether the GmbH is the appropriate corporate form for your company and which aspects need to be considered in particular when establishing a GmbH.

Advantages of the UG

Lower share capital requirements: Unlike the GmbH, the UG does not require a minimum share capital of €25,000. The required amount is only €1. However, the initial payment obligations must still be met, and the company’s further financing should also be considered.

Lower financial requirements: Since the UG is primarily aimed at start-up companies, the general financial outlay for setting up a company is significantly lower.

Limited liability/independent legal entity: As with the GmbH, the managing directors and shareholders benefit from limited liability when setting up the UG. The company established is an independent legal entity with rights and obligations and, as such, can conduct legal proceedings, among other things.

Option to convert to a GmbH: The UG can be converted to a GmbH if it can demonstrate reserves totalling €25,000. As soon as the UG has reached this stage, the company’s conversion into a GmbH can be reconsidered, but it is not mandatory. We would be happy to show you the corresponding advantages and disadvantages and explain the necessary steps for conversion and registration.

Partnerships: General Partnerships & Limited Partnerships

A distinction must be made between a corporation and a partnership, the main difference being liability. In Germany, corporations such as the GmbH or UG offer structural advantages for smaller companies that rely on stability and limited liability. These corporate forms enable minimising liability risks and provide a high degree of legal certainty through clearly defined legal regulations. By contrast, the liability of partners in a partnership is unlimited and usually personal. However, this form of company offers the advantage of an uncomplicated merger to establish itself on the market as quickly as possible. A distinction is also made between different forms of partnership, which differ significantly in terms of liability, purpose and formation. The common forms of partnership in Germany include, among others, the civil-law partnership (Gesellschaft bürgerlichen Rechts, GbR), the limited partnership (Kommanditgesellschaft, KG) and the general partnership (offene Handelsgesellschaft, OHG).

At Schlun & Elseven Rechtsanwälte, our German corporate lawyers will be happy to explain the differences to you, support you with the registration, and assist you after your company is established and registered. Furthermore, we can also advise you on expanding into new markets.

Advantages and Aspects to be Considered of a General Partnership (OHG)

Advantages of an OHG

Similar to sole traders, the advantages here arise from the ease of formation, the flexible management by the partners and the fact that the profits flow exclusively to the partners.

Independence: The partners can manage the OHG independently and do not have to meet the requirements of a board of directors.
Simplicity of formation: The only thing required for the OHG is a partnership agreement. Articles of association or similar bureaucratic formalities are not necessary for its formation. The costs of forming an OHG are also lower than those of other company forms. Furthermore, no share capital is required.
Flexibility: Besides the straightforward formation and flexible management, the possibility of a basically form-free contract design also speaks in favour of the OHG. However, the written form protects against hasty declarations and preserves evidence, and this is why it is advisable to record the contract in writing.
Taxes: If the partners are natural persons, the tax liability includes the partners’ income tax. However, no corporate tax rates apply to the OHG.
Disclosure: The OHG is not obliged to publish its annual financial statements.

Points to note

The usual critical aspects of companies with unlimited liability must be considered with the OHG. The unlimited liability of the partners is particularly relevant. The liability issue can also affect the individual partners even after the dissolution of the company or withdrawal from the company in the context of secondary liability.

Unlimited liability: The partners are liable with their private assets.
Record keeping and annual financial statements: The OHG must keep records and current yearly financial statements, which are profit and loss statements.
Dissolution of the company: The dissolution of an OHG is generally straightforward since it only requires an agreement between the shareholders. However, the shareholders must be aware that the dissolution does not end the liability for the company’s debts but that there is a continued liability.

Advantages and Aspects to be Considered of the Limited Partnerships (KG)

A particular feature of a limited partnership is that two partners are required to set one up: a limited partner with limited liability (see § 171 (1) German Commercial Code (HGB)) and a general partner with unlimited liability. The latter’s flexible management is one of the advantages of this form of company. Since a KG is a company with commercial purposes, it is subject to the German Commercial Code (HGB) provisions and must be registered in the commercial register.

Advantages of the KG

Easy to set up: A KG is straightforward to establish. The articles of association, which define, among other things, the company’s purpose, the address details of the shareholders and of the company itself, any regulations and the designation of the general partner and the limited partner, are fundamental to establishing a KG.
Share capital: No share capital is required to establish a KG.
Element of limited liability: Because the KG affords limited liability to the limited partners, it offers an incentive for more significant investments.
A greater degree of control: Because it is structured as a partnership, the managing general partners have more control over the company’s objectives than in a GmbH. Depending on the type of KG, the share of the company’s profits is also often higher.

Points to note

Bookkeeping: The accounting requirements for a limited partnership are less demanding than for a GmbH or AG. However, as with all companies, you must document and store your records securely. At the end of the year, you must submit your profit and loss statement and balance sheet to the commercial register.
Taxes: A KG is not subject to corporate income tax as such. However, if the general partner with unlimited liability is a GmbH or UG (Gmbh & Co. KG/UG & Co. KG), the tax liability of the KG is part of the corporate income tax payable by this corporation. Otherwise, the tax liability is calculated as part of their income tax liability for natural persons.
Unlimited liability of the general partner: It should be noted that the general partner in this model takes on a particular risk. In the event of legal or financial problems for the KG, not only the company’s assets but also the personal assets may be at risk.

Partnerships: legal advice

Formation of a Civil Law Partnership (GbR)

A civil-law partnership (Gesellschaft bürgerlichen Rechts, GbR) is a form of company with unlimited liability, as are the general partnership (Offene Handelsgesellschaft, OHG), the sole proprietorship/registered merchant (e.K.) and the general partner in a limited partnership (Kommanditgesellschaft, KG). Unlike the general partnership (OHG), however, the purpose of a civil-law partnership (GbR) is not limited to the operation of a commercial enterprise. It also includes charitable, artistic and other non-commercial purposes. Consequently, the GbR is not subject to the requirements of the German Commercial Code (HGB) but to those of the German Civil Code (BGB). The GbR is particularly suitable for freelancers, start-ups or associations of people who are pursuing a joint project without the primary aim of maximising profits.

When setting up such a partnership, the following aspects should be considered:

Capital requirements: There are no formal requirements for minimum capital. However, if capital is necessary to achieve the company’s purpose, it is advisable to ensure it is available at the outset.
Articles of association: In principle, articles of association can be concluded orally, but it is advisable to set them out in writing to avoid disputes at a later date. A written contract regulates, among other things, the company’s purpose, the shareholders’ responsibilities, voting procedures and the distribution of profits and losses. When formulating and drafting such a comprehensive contract, it is advisable to seek expert legal advice.
Registration: Since the MoPeG entered into force, the GbR can optionally be entered in the new company register (eGbR), particularly if it acquires real estate or participates in companies. This registration is even mandatory in some instances, such as entry in the land registry. In contrast to the OHG, registration in the commercial register is only required for the company if the GbR engages in commercial trade.

Advantages of the Civil Law Partnership (GbR)

Flexibility: The GbR is a flexible legal form. It does not necessarily have to be profit-oriented but can also pursue other social or charitable goals.
Expertise/division of labour: By setting up a civil-law partnership, the partners can concentrate more on their own expertise to improve the business or the company’s purpose.
Capital requirements: Setting up a GbR is relatively straightforward because, unlike other types of companies in Germany, there are no requirements regarding financial resources or the provision of share capital.

Aspects to Consider about the Civil Law Partnership (GbR)

Unlimited liability: The GbR is a company with unlimited liability and, therefore, represents a greater liability risk for the shareholders. Should one shareholder encounter legal or financial difficulties, the other shareholder may be held liable. The shareholders are liable with their private assets in addition to the company’s assets.
Conversion of GbR into OHG: After the MoPeG comes into force, the previous automatic conversion of a civil-law partnership (GbR) into a general partnership (OHG) when certain thresholds are reached, such as a turnover of over €250,000 or the employment of more than five people, will no longer be explicitly required by law. Instead, the MoPeG allows for the voluntary entry of the GbR in the new company register (eGbR), which gives it legal capacity. However, this entry may be mandatory under certain circumstances, such as if the GbR must be entered in the commercial register or land registry, for example, when acquiring real estate or investing in other companies. In the future, conversion to an OHG will depend less on turnover or personnel figures and more on whether the GbR actually engages in commercial trade, thus meeting the requirements for an OHG.
Choice of name: The company name must include at least one partner’s name. It may also include information about the company’s purpose.
Taxes: The partners pay the taxes for the GbR as part of their own income tax returns. The partnership itself pays trade tax and may have to pay sales tax.

Setting up a Business as a Sole Proprietorship / Registered Trader (e. K.)

In the case of a sole proprietorship, the owner usually does business under his own name. Therefore, there is no legal distinction between the company and the person who runs it. This form of business is not only easy to set up, but the founder also has unrestricted control over their business. However, the distinction between sole traders and freelancers must be considered. The sole proprietorship as a form of business has certain advantages and disadvantages and is generally only suitable for small businesses.

If you are considering setting up a business in Germany, Schlun & Elseven Rechtsanwälte is the first point of contact you should turn to. We are happy to support you in all legal matters with the necessary expertise and commitment.

Advantages of the Sole Proprietorship

Reduced administrative burden: The effort required to set up a business as a registered merchant (e.K.) is less than for other types of business.
Self-employment: As a sole trader, the entrepreneur can make essential decisions for the company without having to consult with shareholders and other parties.
Profit distribution: The absence of other shareholders in the company also means that the company’s profits accrue to the sole trader and are not distributed.
Disclosure of income: The accounting requirements for sole traders are significantly reduced compared to other types of companies. The sole trader is also not obligated to publish their business balance sheet.
Low start-up costs: Compared to other types of companies, the financial burden of setting up a business as a registered merchant is much lower. The fees for registration in the commercial register are usually in the double-digit range. No minimum share capital requirements exist, but appropriate reserves must support the company’s current business.

Our German corporate lawyers will be happy to explain the above advantages to you and point out the risks of the various business models and company forms. Use the online form below to contact us and learn more about our services.

Franchises in Germany: Our Legal Services

Franchise law in Germany is a comparatively new area of law, which is why there are currently no specific franchise-related regulations in Germany. It is, therefore, advisable to consult a lawyer specialising in German franchise law. The lawyers at Schlun & Elseven Rechtsanwälte offer comprehensive legal advice to ensure that nothing stands in the way of successfully setting up your franchise company and developing a franchise system.

Our team can advise you on a range of issues, including drawing up and reviewing the franchise agreement, registering the company, handling any legal disputes between the franchisee and franchisor, and answering everyday questions about running a franchise business.

Start-Up Companies in Germany: Comprehensive Legal Guidance

Germany is considered one of the most important centres for start-ups in Europe. Its popularity as a start-up location is due to access to venture capital funds and the low market dominance of monopolies and large companies. However, start-ups and entrepreneurs face various financial, organisational, strategic and legal challenges. The corporate lawyers at Schlun & Elseven Rechtsanwälte are also at your side for any legal support in this area. We support you in the founding and development phases and are also happy to advise you after your company has been established on the market. As a cross-disciplinary law firm, we advise business clients in all areas relevant to corporate law – for example, labour, copyright, antitrust, and competition law, as well as contract drafting and the enforcement of contractual claims.

Start-up companies: comprehensive legal guidance

Business Immigration to Germany

At Schlun & Elseven Rechtsanwälte, our business immigration team specialises in assisting third-country investors and entrepreneurs to establish themselves in Germany. § 21 German Residence Act. allows entrepreneurs to gain a visa for self-employment in Germany.
However, the business concept must be carefully examined and adapted to the law’s requirements before applying for a residence permit. The three requirements stated for the visa are the following:

It must meet an economic interest or regional need,
It shall have a positive impact on the economy,
The financing must be secured by equity capital or a loan commitment.

The competent authority assesses whether these conditions are met based on a variety of criteria, such as:

The viability of the underlying business plan,
The relevant business experience of the applicant,
The amount of money to be invested in Germany,
The businesses’ impact on the employment and training situation,
The project’s contribution to innovation and research.

At Schlun & Elseven Rechtsanwälte, our lawyers will support you throughout the process, and with the subsequent company registration.

Practice Group: German Corporate Law

Practice Group:
German Corporate Law

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Dr. Matthias Wurm, LL.M.

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Dr. Sepehr Moshiri

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Jens Schmidt

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Martin Halfmann, LL.M.

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Dr. Fatih Kolkilic

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Dr. Simon Krämer, LL.M.

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Please use our online form to outline your request to us. After receiving your request, we will make a brief initial assessment based on the facts described and provide you with a cost offer. You can then decide whether you would like to engage our services.