Читать книгу The Limited Liability Company under German Law (the GmbH) - Dr Alexander Schröder-Frerkes - Страница 6

I. Introduction

1. Basic concepts underlying the GmbH

The GmbH is a limited liability company (Gesellschaft mit beschränkter Haftung) under German law, being a separate legal entity distinct from its shareholders. A GmbH may have one or several shareholders, and shareholders in a GmbH may either be an individual or another legal entity. The total number of shareholders is not limited. As a separate and distinct legal entity, the GmbH itself and not its shareholders holds title to its assets, is bound by agreements it enters into, is the partner acting in legal relationships of any kind, and is the entity which may sue other parties or entities or be sued itself in court.¹ The GmbH is also entitled to acquire ownership of real property and other legal rights in real property.

Regarding its liabilities, only the GmbH itself is liable for the fulfilment of its obligations towards third parties.² The shareholders in a GmbH are generally not liable towards third parties for the fulfilment of the obligations of the GmbH. There are, however, some exceptions to this principle within German case law (for details see Section 65 et seq. below).

A GmbH under German law is established upon its registration in the commercial register.³ All GmbHs have two mandatory corporate bodies: (i) the managing directors (Geschäftsführer), and (ii) the shareholders’ meeting (Gesellschafterversammlung). According to statutory law, the shareholders’ meeting is the principal corporate body which reaches decisions (passes resolutions) on fundamental corporate matters such as, for example, changes to the articles of association, an increase or decrease in the share capital, the approval of financial statements, and the nomination or removal of the managing directors etc. The GmbH is represented by one or several managing directors who also manage the daily business of the company. In contrast to many other countries, in Germany the managing directors all have an executive function and none of them can take on a supervisory role in overseeing the other managers or the company as a whole. The supervision of the managing directors is the task of the shareholders’ meeting or of a supervisory board. Such a supervisory board may be established at any time on a voluntary basis unless a supervisory board is mandatorily required under certain Co-Determination laws.⁴ Speaking very generally, the Co-Determination laws prescribe the appointment of a supervisory board if the number of employees of the company or associated group companies goes beyond a certain threshold, in which case, the employees must be mandatorily represented within the supervisory board, either with a quota of one third or 50% (half of the seats on the board).

In order to establish a GmbH a minimum share capital of at least €25,000 is required.⁵

The Act on Limited Liability Companies (GmbHG) sets out the basic rules that apply to a GmbH. Since most of the provisions of the Act on Limited Liability Companies are flexible regulations, to a large extent the shareholders may establish their own (tailor-made) set of rules in the articles of association.

2. Other important legal forms of entities in Germany

Other forms of legal entity which are often used for conducting business in Germany are the stock corporation (Aktiengesellschaft – AG), the general partnership (offene Handelsgesellschaft – OHG), the limited partnership (Kommanditgesellschaft – KG) and limited partnerships with a GmbH as the (sole) general partner (GmbH & Co. KG).

A stock corporation under German law (AG) is a separate legal entity distinct from its shareholders which is itself responsible for the fulfilment of its obligations. In other words, the corporate veil protects the shareholders from personal liability towards third parties as is the case where the GmbH is concerned. An AG has three mandatory corporate bodies: (i) the board of directors (Vorstand), (ii) the shareholders’ meeting (Hauptversammlung), and (iii) the supervisory board (Aufsichtsrat). The statutory rules on stock corporations (in particular the German Stock Corporation Act – AktG) are in most cases mandatory laws, which makes it more difficult to establish a ‘tailor-made’ company designed to meet the special requirements of the shareholders. This makes the GmbH the simpler form for doing business. If, however, the company is supposed to be listed on the stock exchange, this is only possible with an AG, as a GmbH does not issue shares to be traded on the stock exchange. To establish a stock corporation, a minimum stated capital of €50,000 is required.

In a general partnership, all shareholders are jointly and severally liable for any and all obligations of the general partnership, even though the general partnership is a separate legal entity in its own right. In other words, a debtor of a general partnership may sue the partnership itself along with any of its shareholders in full for the fulfilment of its obligations. The general partners are accessorily liable for the liabilities of the partnership. This makes this type of company rather uncommon as an investment vehicle for foreign entities in Germany. The same applies to limited partnerships. In these kinds of companies, the liability of at least one shareholder is limited to the contribution he or she has undertaken to pay – as set down in the articles of association and entered in the commercial register (Kommanditeinlage).⁶ Additionally, a limited partnership requires at least one general partner whose liability towards a third party is unrestricted as is the case in a general partnership. Like the general partnership, the limited partnership is therefore not the preferred vehicle for foreign investments in Germany. Moreover, both kinds of partnerships are associated with tax disadvantages and may give rise to complicated tax compliance issues compared with a corporation such as a GmbH.

In the case of a GmbH & Co. KG, it is possible to combine a limited partnership (KG) with a GmbH. In principle, such a company is a limited partnership. The GmbH is the general partner, which is fully liable towards the debtors of the GmbH & Co. KG. However, since the liability of a GmbH itself is limited to its assets and not the assets of its shareholders, the liability of the general partner in a GmbH & Co. KG is as a matter of fact limited to the assets of the GmbH. Aside from this, the (limited) liability of the limited partner in a KG remains unaffected. There is no minimum amount which the limited partner must undertake to contribute and thus his or her liability in the KG may be as low as just €1.00. A GmbH & Co. KG is a company form which is typically chosen when the founders wish to avoid the applicability of certain Co-Determination laws or if potential company founders wish to attract a large number of investors. The investors typically acquire the status of a limited partner, thus bypassing the strict regulations which apply to a stock corporation (so-called capital investment entities – Kapitalanlagegesellschaften).

3. Advantages of the GmbH

A GmbH under German law combines two important advantages: adaptability and limited liability. As for adaptability, the body of regulations applying to a GmbH is much more flexible than in the case of a stock corporation (Aktiengesellschaft). The articles of association of a GmbH may be adapted to the particular needs and requirements of the shareholders, especially regarding the division of powers between the shareholders’ meeting and the managing directors. The Act on Limited Liability Companies also allows the establishment of additional corporate bodies such as a supervisory or advisory board.

Finally, as a corporation, the GmbH protects its shareholders from being personally liable for the obligations of the corporation. With very few exceptions,⁷ creditors may only have recourse to the assets of the GmbH itself as a means of satisfying the company’s obligations. In contrast, the partners of a general partnership or a limited partnership may be held personally liable for the obligations of their entities. The GmbH thus combines adaptability to the needs of the shareholders with the protection of a corporate veil. These two elements make the GmbH by far the most successful legal form under German law.

4. Statistics

In the year 2015, the total number of GmbH registrations in Germany amounted to 529,268, compared with approximately 7,862 stock corporations (AG).⁸ The second most popular legal form, with numbers far below those recorded for the GmbH, is the limited partnership, with approximately 240,000 registrations. These figures clearly show that the GmbH is by far the most popular legal form for business and non-commercial purposes in Germany.

1Gesetz betreffend die Gesellschaft mit beschränkter Haftung (GmbHG) (Act on Limited Liability Companies) 1892, s13, para. 1 (FRG).

2Gesetz betreffend die Gesellschaft mit beschränkter Haftung (GmbHG) (Act on Limited Liability Companies) 1892, s13, para. 2 (FRG).

3Gesetz betreffend die Gesellschaft mit beschränkter Haftung (GmbHG) (Act on Limited Liability Companies) 1892, s11, para. 1 (FRG).

4For details see Sections 141–156.

5For the exception with regard to the so-called Unternehmergesellschaft, see Section 34.

6Handelsgesetzbuch (HGB) (German Commercial Code) 1897, s171, para. 1 (FRG).

7For details on these exceptions, see Sections 65–70.

8Statistisches Bundesamt für das Jahr 2015. Approximately 40% of all exisiting companies.