The Limited Liability Company under German Law (the GmbH)

The Limited Liability Company under German Law (the GmbH)
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With over one million entities, by far the most common and, thus, the most important legal company form used in Germany is the limited liability company (the GmbH). The GmbH has a number of advantages: it limits shareholder liability; it can be adapted to the specific needs of shareholders and their business model; and it provides a platform for small businesses as well as for holding companies for international groups and not-for-profit organisations. Given its ample scope, and the fact that it can be very easily established and requires minimal administrative effort, the GmbH is also the most frequent legal form used by foreign investors in Germany.
Against this backdrop, The Limited Liability Company under German Law, published in association with German Law Publishers, explores the most relevant legal issues and topics for investors seeking to establish or acquire a GmbH in Germany and is aimed at investors with a legal background as well as those without. In addition to providing an overview of the requirements of the formation process, this comprehensive edition demonstrates the GmbH’s inherent flexibility as well as helping legal practitioners (based in Germany and elsewhere) decide on whether a GmbH is most suitable for their needs.
Key topics covered include: •Establishing a new GmbH •Shareholder rights, obligations and liabilities •Shareholder meetings •The appointment, rights, obligations and liabilities of managing directors •Share capital •Changes in shareholding •Financial statements and distribution of profits •Company transformations •Supervisory boards •Taxation issues •Liquidation and insolvency

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Dr Alexander Schröder-Frerkes. The Limited Liability Company under German Law (the GmbH)

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The Limited Liability Company under German Law (the GmbH)

Dr Alexander Schröder-Frerkes

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Within the application, the managing directors must issue a declaration to confirm that all contributions towards the stated share capital have been duly made according to the minimum statutory requirement (ie, half of the amount in the case of a cash contribution, the full amount in the case of a foundation on the basis of an in-kind contribution) and that the respective amounts are ultimately at the free disposal of the managing directors.49 If the court has serious doubts regarding the correctness of these declarations, it may request additional documentation.50 If a shareholder and the GmbH have agreed that his or her contribution shall be repaid to him or her, this arrangement must also be recorded in the commercial register.51 For details regarding the conditions for the fulfilment of the shareholder’s obligation to contribute towards the stated share capital please refer to Section 162.

In addition, the managing directors must issue a declaration to confirm that they are not prohibited from practising certain professions which are either wholly or partly identical in nature to the business purpose of the GmbH, and that they have not been sentenced either in Germany or abroad under, inter alia, certain provisions of the German Criminal Code, the German Commercial Code and the German Law Regulating the Transformation of Companies.52 The managing directors must also confirm that they have been instructed by the court, a domestic or foreign notary, a person practising a similar legal profession or a consular clerk as to their unlimited disclosure obligation towards the court. Such instruction may also be given in written form.53

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