The organs of the GmbH are the shareholders` meeting and the managing director(s). A supervisory board may be appointed, but is only mandatory under certain conditions. The Managing Director(s) represents and manages the GmbH externally. The articles of association may specify the areas in which the chief executive officer or directors are required to give instructions to the shareholders` meeting. The Chief Executive Officer is (are) largely bound by the instructions of the shareholders` meeting. In addition to day-to-day management, the general meeting is also responsible for approving the annual accounts and the allocation of profits, appointing and dismissing directors, taking supervisory measures and supervising management, appointing authorized signatories and officers with general commercial authority, regulating the legal relationship between the company and its shareholders, etc. Upon request, the managers must immediately provide each shareholder with information on the company`s activities and give him access to the company`s books and documents. In the period between the creation and registration of the company, business activity can be started, making participants personally liable. However, the company only takes effect after it is registered, which usually takes up to three weeks, with shareholders protected from personal liability. No. If you do not have the total share capital of €25,000, you can still found a GmbH if you own at least half of the capital, i.e. €12,500. However, the missing share capital should be deposited as soon as possible.
In Germany, the minimum authorized capital of a GmbH is €25,000; The minimum authorized capital of an entrepreneurial company (with limited liability) is €1. The Unternehmergesellschaft (haftungsbeschränkt) was introduced in 2008 in order to offer an attractive form of business for founding entrepreneurs. The entrepreneurial (limited liability) company must gradually save the minimum capital required for an ordinary GmbH; He is not allowed to distribute all his profits, but must set aside a quarter of the annual net income in a legal reserve until the legal minimum capital of € 25,000 is reached. The company must use the « Limited Liability » tab so that it is clear to the contracting parties that the company`s capitalization is low. This company is therefore quickly threatened with insolvency. The memorandum of association and articles of association must be notarized, as well as a number of operations, such as the transfer of shares, the issuance of shares and amendments to the articles of association. Many of these measures must be submitted to the commercial register, where they are examined by special judges or other bailiffs. This can be a tedious and time-consuming process, as in most cases the desired measures are not legally valid until they are entered in the register. The startup process is expensive. Normally, the formation of a new GmbH costs about 1000 € – 3000 €.
[5] The LLC Act sets the minimum content of the articles, but it is quite common to have a variety of additional rules in the articles. [ref. needed] Unlike most other EU Member States, however, there is still a high minimum capital of EUR 25,000, half of which (i.e. EUR 12,500) must be available in cash at the time of establishment of the GmbH. The reason for this is that only solvent entrepreneurs can found a GmbH. The general public should be protected from shady people who set up €1 businesses. If you cannot collect at least 12,500 euros, you can create a « GmbH lamp », called « Unternehmergesellschaft mbH », usually called « mini GmbH ». However, this mini GmbH is not taken seriously in the business world, so it is not recommended to go this way. This guide explains the steps involved in setting up a GmbH in Germany: Guide to setting up a German GmbH The GmbH is suitable for small businesses, medium-sized family businesses as well as large companies. By choosing the legal form of an AGM, a company can acquire significant capital and the shares are easily transferable – in the case of listed companies. The GA is the preferred form of enterprise for large companies.
With the introduction of the small joint-stock company, the GA has also become attractive to small companies. The GA enjoys a better image vis-à-vis the outside world, simply because it requires a higher capitalization. This is an advantage when dealing with banks, suppliers, and customers. However, to benefit from these positive qualities, considerable preparatory work is required, as setting up a GA is more expensive than setting up a GmbH and the capital contributions are at least twice as high as with a GmbH. The administrative burden is also higher, due to the strict regulations of the German Company Act. Unlike the managing directors of a GmbH, the members of the board of directors of a GA have more freedom in shaping their management, as they are not bound by instructions. The difference between a GA and a GmbH also lies in the risks for the management: the members of the board of directors have a greater duty of care, but each piercing of the corporate veil applies more quickly to the managing directors of a GmbH, so that they are also responsible for their personal assets. Shares are much easier to transfer than shareholdings in a GmbH, the transfer of which must be notarized. The difference between a GA and a GmbH lies in the possibility for the GA to raise new capital more quickly. The joint-stock company is also more independent of the owners. There are therefore advantages and disadvantages for both forms of society.
The decision on a legal form depends largely on the activities that the founders want to carry out with the company, to what extent and to what extent the influence of shareholders is desirable. Do you want to know what a GmbH is and what it does? Then you`ve come to the right place! Learn the basics of GmbH: what a GmbH is, what limited liability is, what costs are associated with it and what a mini-GmbH is. The members of the Board of Directors of the GA are not liable to third parties for the liabilities of the company and are not obliged to compensate the company for internal losses incurred during their management. The entrepreneurial risk is borne solely by the company. However, board members are legally required to conduct their business with the diligence of a prudent businessman. If a member of the Management Board breaches this obligation towards the Company, the Company may be entitled to claim damages. The member is not liable to members of the Board of Directors or third parties. The question of liability towards third parties arises only if the members of the board of directors have personally committed an unlawful act. The formation of a company with a share capital of less than € 25,000 is risky because shareholders are liable for damages with their private assets up to the amount of the capital contribution remaining due (i.e. if only € 12,500 of share capital has been paid, shareholders are personally liable up to € 12,500). In 2008, a derivative form called Unternehmergesellschaft (haftungsbeschränkt) or UG (haftungsbeschränkt) was introduced. It does not require minimum start-up capital and was introduced to help business founders start a new business.
In addition, the UG must increase its capital by at least 25% of its annual net income (with some adjustments) until the general minimum of €25,000 is reached (at which time the company can change its name to become the most prestigious GmbH).