Who did not hear this question at least once? How can I – as fast as possible – found a company with limited liability (Gesellschaft mit beschränkter Haftung – GmbH)?
The beginning is usually quite simple but just as dangerous. Someone has a business idea and starts with his preparatory acts like preparing a business plan, renting office rooms or working out the company agreement. These preparatory acts are rendered in a so called pre-foundation company (Vorgründungsgesellschaft), during this time the shareholder is liable with all of his private property!
In the first instance, after the company agreement is notarized, a GmbH in the course of incorporation is generated. For this the company agreement has to include at least the following contents:
- Name of the Company
- Company’s domicile
- Business purpose
- Amount of the share capital
- Quantity of initial contributions
- Shares of every shareholder
The amount of the share capital has to be at least € 25,000.00 (formation by cash subscription).
While the company agreement is notarized the first shareholders meeting has to be held, in which the founding protocol is being issued (in the founding protocol the assumption of initial contributions by the respective shareholder is being declared). In most cases the executive manager will be furthermore appointed as the legal representative, as far as it is ensured that the legal representative is able to meet the legal obligations (e.g. obligation to keep records or to file for insolvency).
The managing director is obligated to register the company in the commercial register (Handelsregister). For that it’s necessary that at least a quarter of the share capital is paid into the bank (but not less than € 12,500.00). Every shareholder has the burden of proof that he has paid his initial contribution. When registering the company in the commercial register the managing director is obligated to ensure that these parts of the share capital have been paid and that they are freely available to the company. For the registration in the commercial register the following documents have to be attached:
- Company agreement
- Shareholders resolution with which the executive manager got appointed
- List of shareholders
- Assurance that the executive manager meets all personal requirements and that the share capital was paid into the bank
- Extent of the power of representation of the managing director and
- Domestic business address
If all of the formalities are done you should wait until the GmbH is registered in the commercial register. In your own interest you should not act in the name of the GmbH until it is officially registered in the commercial register. Otherwise you risk that you are liable for the losses that happen between the notarisation and the registration in the commercial register. You avoid this by not starting right away, but wait for the notification about the registration in the commercial register. In former times this took quite a long time but nowadays you can expect this to happen in 3 – 5 weeks.
Authors: Dr. iur. Peter Mook, Claudia Keidies and Mathieu Pietz