ESTABLISHMENT OF NEW COMPANIES
CHOICE OF LEGAL FORM
Foreign investors can choose the most suitable legal form to conduct business through a German branch. The procedures are simple with well-defined steps.
Decisive criteria for the choice of legal form are generally: the function of the shareholders or members, the responsibilities and the terms of taxation.
The basic structure of all forms of commercial society is required by law. The same legal conditions are applied to foreign or local entrepreneurs.
Choosing the ideal legal form of a company to start a business is usually the first step for great economic realities.
There are four main types of German company:
Limited liability company (GmbH)
Business limited liability ( “Mini GmbH”)
Partnership limited by shares (KGaA)
REGISTER OF GERMAN COMPANIES
At the establishment of a company and before taking commercial activities a company must be registered in the commercial public register (Handelsregister) and at the local trade office (Gewerbe- / Ordnungsamt).
This registration creates transparency and gives businesses the highest level of security in the day to day activities.
The business register (Handelsregister) provides information on all the relevant relationships between traders and commercial companies. The information is public and can be viewed by other companies.
The commercial register contains information on:
The business of the company
The name of the partner (s) and/or personally liable partner (s)
The CEO of companies
The company’s share capital
Limitations of liability of the partners
The issuance and revocation of power of attorney
The opening of insolvency proceedings
The dissolution and the end of a society
Companies required to register
The companies obliged to register are those who carry out a commercial enterprise activities.
This is determined by criteria such as the use of commercial accounting, annual turnover, capital resources and the total number of employees. As a general rule, all relevant actions the company statutes are subject to registration.
Small businesses, civil unions (GBRS), freelancers and branch office employees are not to be registered.
The application for registration in the register of German companies is filed electronically in the form certified by a notary public to register sales manager.
A basic rule is the possible liability of partners limitation, effective only after the date of entry in the commercial register. If the business is carried out before this point in time, the partners can be held responsible for any losses of the company with their private assets (especially in the case of companies).
The total cost of registration in the register of German companies varies depending on the type of company.
The costs are: notarization and tariffs applied by the district court for entry and publication in the Federal Gazette (Bundesanzeiger).
The cost for registration and publication in the register of a business partnership is currently 250 euro minimum. For a GmbH, this amount is at least € 400, and for an AG of at least 500 € the additional costs involved are those of the notary.
The costs and charges are not applied in an arbitrary manner, but are governed by law. They depend largely on the number of partners and the share capital. Additional costs may be incurred by an additional legal advice provision.
The Federal Chamber of German Civil Law Notaries (Bundesnotarkammer) provides information on the exact composition and level of notary costs on its website. Here, companies can also find a German notary.
In addition to this, the log can also be viewed online through the portal of shared registers of the German federal states (Gemeinsames Registerportal der Länder).
Some of the business data stored in the register of companies are also available via the register of companies in the Federal Gazette (Bundesanzeiger).