Company Registration in Germany

German law distinguishes between partnerships and incorporated companies. The main feature of a partnership is that the individual partners manage business themselves, while the focus of incorporated companies lies on the financial participation. Furthermore, in incorporated companies there is a stonger differentiation between shareholders and management.

Registering a company with the commercial register in Germany is a prerequisite for its coming into existence as a legal entity. The most important incorporated companies are:

• Aktiengesellschaft (AG) [joint stock company] as the basic type,
• Gesellschaft mit beschränkter Haftung (GmbH) [limited liability company],
• and Kommanditgesellschaft auf Aktien (KGaA) [partnership limited by shares], which has a tendency towards partnership.

In addition to capitalist elements, the Genossenschaft [cooperative] has characteristics of an association in particular. The cooperative also comes into existence as such only with registration in the commercial register. The Gesellschaft bürgerlichen Rechts (GbR) [partnership under the Civil Code] and the organizationally more distinct offene Handelsgesellschaft (OHG) [general partnership] are regarded as models for the partnership. The Kommanditgesellschaft (KG) [limited partnership] is a partnership with capitalist elements.

Additionally, the partners may combine characteristics of both basic types. Also, hybrid forms can be formed, such as the Publikums-KG [capital investment company] and the GmbH & Co.KG [limited partnership with a limited liability company as general partner].

Partnerships and incorporated companies differ, among other things, in the liability for obligations of the company.

• In partnerships, at least one natural person is liable to the company's creditors with all of his private assets.
• In incorporated companies, however, the liability is in principle limited to the corporate assets. Only in exceptional cases, measures are taken against the individual shareholder. The prerequisite for the limitation of the liability to the corporate assets, however, is the registration of the company with the commercial register.

Liability may also depend on your individual arrangements: The raising of a specific capital amount, which serves as collateral for the creditors, is stipulated by law for establishing an incorporated company. The capital stock of a joint stock company is at least EUR 50,000, the nominal capital of a limited liability company must be at least EUR 25,000, while an entrepreneurial company (with limited liability) can already be established with a nominal capital of only EUR 1. The raising of nominal capital or capital stock is the condition for company registration.

In a limited partnership, it is only stipulated that the limited partners have to make contributions; their amounts are not set by law. Partnerships do not have to provide separate corporate assets in order to establish the company.