{"id":987,"date":"2021-01-31T19:07:41","date_gmt":"2021-01-31T19:07:41","guid":{"rendered":"https:\/\/kanzlei.wente.de\/fachgebiet\/corporate-law-law-of-associations\/"},"modified":"2023-11-20T16:44:28","modified_gmt":"2023-11-20T16:44:28","slug":"corporate-law-law-of-associations","status":"publish","type":"workarea","link":"https:\/\/kanzlei.wente.de\/en\/fachgebiet\/corporate-law-law-of-associations\/","title":{"rendered":"Corporate Law, Law of Associations and Foundations"},"content":{"rendered":"

The most common legal form of entrepreneurial activity in Germany is the sole entrepreneur (2018: 2.146.043 Einzelunternehmer<\/a>). However, as soon as an entrepreneur joins forces with others for the joint pursuit of a business purpose, he must deal with company law. This is all the more true when he seeks to limit the personal economic risk.<\/p>\n

In the Statistics<\/a> capital companies (e.g. GmbH, AG) are in second place with 736,279, partnerships (e.g. OHG, KG) are in third place with 395,415 companies, while other legal forms are used by 205,954 enterprises. However, the number of employees that each entity employs reflects its actual macroeconomic significance. Here, capital companies are far ahead, followed by partnerships, other legal forms and, finally, sole entrepreneurs. It follows from this:<\/p>\n

Corporate law is the basis of almost all relevant entrepreneurial activities.<\/h4>\n

\"Member<\/a>
\nThe most important corporate forms commonly used in Germany are the stock corporation (AG), the limited liability company (GmbH) and the limited partnership (KG). In fact, however, there are at least 27 different corporate\/partnership forms. Which corporate form is the right one for you can only be determined by a detailed consultation with a lawyer, in which the business model pursued and the associated economic risk, the short-, medium- and long-term intended shareholder structure, the intended capital investment, the cost\/benefit ratio and many other factors play a role. For this reason, we will only briefly describe the conceivable options below.<\/p>\n

\n

What and how many corporate\/partnership forms are there anyway?<\/h4><\/div>
\n

German law alone knows (at least) 28 different corporate bodies including their variants and combinations, namely<\/p>\n

    \n
  1. the German Civil Code (BGB) partnership according to \u00a7\u00a7 705 ff.<\/a><\/span> BGB,<\/li>\n
  2. the EEIG (European Economic Interest Grouping)<\/li>\n
  3. the KG (limited partnership)<\/li>\n
  4. the oHG (general partnership)<\/li>\n
  5. Partenreederei<\/li>\n
  6. PartG (Partnership),<\/li>\n
  7. PartG mbB (limited liability partnership)<\/li>\n
  8. Stille Gesellschaft (\u201cSilent society\u201d)<\/li>\n
  9. the unregistered association<\/li>\n
  10. the registered association according to \u00a7 21 BGB<\/li>\n
  11. the economic association according to \u00a7 22 BGB<\/li>\n
  12. the foundation with legal capacity<\/li>\n
  13. AG Stock Corporation<\/li>\n
  14. eG registered cooperative<\/li>\n
  15. Ltd. limited liability company,<\/li>\n
  16. UG (limited liability) entrepreneurial company<\/li>\n
  17. KGaA Partnership limited by shares<\/li>\n
  18. REIT-AG Stock corporation, exclusive activity in the real estate sector<\/li>\n
  19. SCE European Cooperative<\/li>\n
  20. SE European Stock Corporation<\/li>\n
  21. AG & Co. KG<\/li>\n
  22. AG & Co. KGaA<\/li>\n
  23. AG & Co. OHG<\/li>\n
  24. GmbH & Co.<\/li>\n
  25. GmbH & Co. KG<\/li>\n
  26. GmbH & Co. KGaA<\/li>\n
  27. GmbH & Co. OHG<\/li>\n
  28. Stiftung & Co. KG<\/li>\n<\/ol>\n<\/div>\n

    Partnerships<\/h4><\/div>
    \n

    The basic form of societies per se is defined in \u00a7 705<\/a><\/span> BGB (German Cicvil Code). A so-called BGB partnership exists if several persons (the partners) mutually undertake to promote the achievement of a common purpose in the manner determined by a contract, in particular to make the agreed contributions. The BGB partnership is the mother of all so-called partnerships. Accordingly, the statutes stipulating the OHG and KG (German Commercial Code HGB) as well as the statute on Partnership Societes refer to a considerable extend back to the regulations of the BGB.<\/p>\n

    The liability of the individual partner is in principle unlimited in the case of a partnership under the German Civil Code (BGB) as well as in the case of a general partnership (OHG).<\/a> The general partners of a KG<\/a> also bear unlimited liability, whereas the liability of the limited partners is limited to their so called liable capital contribution<\/em>. If the general partner is a GmbH (limited liability company), this constiutes a GmbH & Co. KG. In a GmbH & Co. KG the liability of the partners is limited to the sum of their respective liable capital contribution<\/em> and their share in the share capital of the GmbH, which in turn caries the burden of unlimited liability. If all contributions have been paid in and also not granted back, the individual partner is no longer liable at all for liabilities incurred by the GmbH & Co. KG, but only has to cope with the loss of the contributions made if the company becomes insolvent.<\/p>\n

    In the case of partnerships registered under the \u201cStatute on Partnerships of Members of Independent Professions<\/em>\u201c, all partners are liable for the partnership\u2019s liabilities (\u00a7 8 Abs. 1 PartGG<\/a>) with the exception of claims for incorrect professional practice, i.e. malpractise; for these, in addition to the assets of the partnership, only that partner is liable who is responsible for the malpractise, \u00a7 8 Abs. 2 PartGG<\/a>. However, if the partnership maintains a professional liability insurance for this purpose as prescribed by law, this liability can also be excluded. To achieve this, the partnership has to take out the liability insurance as prescribd in the statute and then has to add to its name the wording Partnerschaft mit beschr\u00e4kter Berufshaftung (partnership company with limited professional liability), abbreviated as PartG mbB, \u00a7 8 Abs. 4 PartGG<\/a>.<\/p>\n<\/div>\n

    Capital based Corporations<\/h4><\/div>
    \n

    Capital based Corporations are legal entities. In the ocurse of the errection process, the founding shareholders make contributions which therupon belong to the legal entity which has exclusive and full right and titel in those contributions. It is important to internalize this asset allocation, because the taking away of assets by the shareholder not only triggers his liability, but may even result in criminal consequences.<\/p>\n

    Only the legal entity itself is liable for the liabilities of the legal entity; in principle, there is no recourse to its shareholders, but only in the case of very special circumstances. If the assets of the corporation are used up, i.e. if it can no longer meet its liabilities, its executive bodies are obliged to file for insolvency.<\/a><\/p>\n

    The most important corporations are<\/p>\n