Probably the best-known legal form for a corporation in Germany is the limited liability company (GmbH).
It is very common to find a company with a personalistic structure, i.e. where a small number of shareholders hold the entire share capital and are also active as managing partners.
The GmbH must be founded with a minimum share capital of EUR 25,000; there is no upper limit for the share capital.
The representative body of a GmbH is the managing director, whose power of representation cannot be restricted externally. However, it is possible to transfer the power of representation to several managing directors jointly; whether individual or joint representation exists can be seen from the respective entry in the commercial register.
However, unlike a stock corporation, for example, the managing director of a GmbH are subject to the authority of the shareholders’ meeting. Despite an instruction to the managing director requires the joint action of the shareholders or a proper resolution within a shareholders’ meeting.
A sub-form of the GmbH is the Unternehmergesellschaft – UG-(haftungsbeschränkt). No minimum capital is required for these. However, it must be examined in each specific case whether this company form is the optimal solution for the intended business purpose.
