Corporate Law at Germany
Certainly! Here’s an overview of Corporate Law in Germany:
Corporate Law in Germany
Germany has a well-developed, detailed corporate legal framework rooted in civil law traditions, with extensive regulation designed to protect shareholders, creditors, employees, and other stakeholders. The main source of corporate law is the German Stock Corporation Act (Aktiengesetz, AktG) and the German Limited Liability Companies Act (GmbHG).
1. Legal Framework
German Civil Code (Bürgerliches Gesetzbuch, BGB): Governs general contract and commercial law.
Stock Corporation Act (AktG): Governs public companies (AG).
Limited Liability Companies Act (GmbHG): Governs private limited liability companies (GmbH).
Handelsgesetzbuch (HGB): Commercial Code regulates commercial practices.
German Commercial Register (Handelsregister): Companies must register here to obtain legal personality.
EU Directives and regulations also influence German corporate law.
2. Types of Companies
The main corporate forms in Germany are:
Gesellschaft mit beschränkter Haftung (GmbH) — Limited Liability Company
Most common company form.
Minimum share capital: €25,000.
Shareholders' liability limited to their capital contribution.
Aktiengesellschaft (AG) — Public Stock Corporation
Suitable for larger enterprises and public listings.
Minimum share capital: €50,000.
Shares can be publicly traded.
Offene Handelsgesellschaft (OHG) — General Partnership
Kommanditgesellschaft (KG) — Limited Partnership
Unternehmergesellschaft (haftungsbeschränkt) (UG) — Entrepreneurial Company (mini-GmbH)
A simplified form of GmbH with minimum capital of €1.
Designed for startups.
3. Key Features
Capital Requirements:
GmbH: minimum €25,000 (half must be paid in upon incorporation).
AG: minimum €50,000.
UG: minimum €1.
Limited Liability: Shareholders are liable only up to their capital contribution.
Corporate Governance:
GmbH managed by one or more managing directors.
AG has a two-tier board system: Management Board (Vorstand) and Supervisory Board (Aufsichtsrat).
Share Transfer:
GmbH shares are not publicly traded and transfer requires notarization.
AG shares can be freely transferred and publicly traded.
Annual General Meetings: Required for AGs and GmbHs.
Accounting and Auditing: Companies must comply with German GAAP (HGB) or IFRS for consolidated accounts. Larger companies must have audits.
4. Company Formation and Registration
Formation requires notarized articles of association.
Registration at the Commercial Register (Handelsregister) is mandatory.
Registration typically takes 1–3 weeks.
The company obtains legal personality only after registration.
Tax registration with the local tax office is required.
5. Taxation and Compliance
Corporate Income Tax: Approx. 15% plus 5.5% solidarity surcharge on tax, plus trade tax (varying rates depending on municipality, approx. 14–17%), totaling ~30-33%.
VAT: Standard rate of 19%.
Mandatory bookkeeping and annual financial statements.
Social security and labor law compliance are strictly enforced.
6. Dispute Resolution
Commercial disputes are handled by civil courts.
Arbitration is commonly used, especially in international contracts.
Courts are generally efficient and reliable.
Summary
Germany’s corporate law system is robust and highly regulated, providing clear rules on company formation, governance, and shareholder protection. It offers various company types tailored for startups, SMEs, and large public corporations, with strong enforcement of compliance and transparency.
RELATED Blog
0 comments