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Founding a GmbH – What you need to know

Being your own boss is the dream of many. And more and more people are convinced that they have the perfect business idea. That's why more and more people are starting their own companies. The GmbH is the most popular legal form, at least among corporations. As a specialist lawyer for commercial and [link text=“Corporate Law Munich” id=“74″], I would like to explain to you what you should pay attention to when setting up a GmbH.

##GmbH Founding – What is a GmbH?

The GmbH is a legal form for corporations. GmbH is the abbreviation of “limited liability company”. A legally prescribed minimum capital of 25,000 euros is required to found a company. The shareholders are therefore not liable for the GmbH's business and liabilities with their private assets. This is a decisive advantage over partnerships. The limitation of liability is one of the reasons why the GmbH is so popular as a legal form.

###Performance of share capital

The share capital of EUR 25,000 must be paid in cash into the GmbH's business account after the founding certificate has been signed at the notary. Only then will the incorporation be completed in the commercial register. However, the share capital can also be provided as a contribution in kind, such as the transfer of a property, a vehicle or patents that are transferred to the GmbH. When founding a company in kind, however, it must be taken into account that the true value of the contribution in kind must be proven. Setting up a GmbH is therefore somewhat more complex.

###How does the GmbH formation process work?

The company can be founded by a single partner. The shareholder can be both a natural person and a legal entity, such as a GbR or OHG. In addition to the starting capital mentioned above, a notarized partnership agreement is required to found a GmbH.

The following information must be provided in the partnership agreement of the GmbH, also known as the articles of association:

– Company name and location
– Corporate purpose/object of the company
– Share capital and deposits

Optional information (selection):

– Number of shareholders
– Management and representation
– Start and duration of the company
– Carrying out shareholder meetings
– Provisions in the event of the death of a partner

This partnership agreement is then used to register the company in the commercial register, during which the company is also entered in the commercial register. After completion, the company is officially founded and registered and can pursue its corporate purpose. In addition, a business must be registered for the GmbH.

###Obligations of the shareholders

After founding a GmbH, you have certain obligations that you should fulfill as a shareholder. It is important to know about this in advance. Duties include:

– Keeping a balance sheet
– Holding shareholder meetings
– Appointment of a supervisory board (from 500 employees)
– Monitoring of business management
– Duration and costs of establishing the GmbH

The duration of the start-up and the start-up costs cannot be generalized as they depend on individual factors –
are dependent. You can only determine this in a detailed discussion with a lawyer. However, I can tell you what kind of costs they are:

– Costs for drawing up the partnership agreement
– Notary fees
– Business registration costs
– Costs for commercial register entry
– Costs for the opening balance sheet
– Any legal fees
– The starting capital

Capital is not really a cost, but, as already mentioned, it is a prerequisite for founding a GmbH.

###UG instead of GmbH?

The UG, also popularly known as a mini-GmbH, is also a corporation to which largely the same rules apply as for the GmbH. The advantage of a UG, however, is that it requires significantly less start-up capital - just one euro. However, in the case of a UG, no foundation is possible. In addition, a UG is required to hold back a quarter of its profits as reserves each year, which is not the case with a GmbH. If the UG has raised the share capital necessary to found a GmbH, it may be converted into the legal form mentioned.
If you would also like to seek legal start-up advice in order to avoid possible mistakes or not to forget important steps, you can contact me at any time. As a specialist lawyer for commercial and corporate law, I would be happy to help you found a GmbH.

Copyright note: ©

Anwalt Gesellschaftsrecht und Handelsrecht

dr Andrelang, LL. M

Specialist lawyer for international business law

Specialist lawyer for commercial and corporate law


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