The Founding of a GmbH with only two partners, known as a two-person GmbH, is a popular choice for entrepreneurs who want to start a new business venture in a clearly defined partnership. This specific form of GmbH offers both flexibility and the security of limited liability. This article discusses the key aspects of such a formation and shows which special considerations and legal arrangements are necessary to minimize potential risks.
General information about the two-person GmbH
The two-person GmbH represents a special form of company formation that is specifically tailored to the needs and dynamics of two partners. This constellation enables close cooperation and simplified decision-making, which is often more complex in larger corporate structures. At the same time, this form of company requires a high level of willingness to cooperate and mutual trust, as every decision and every corporate action has a direct impact on both partners. It is therefore of utmost importance that the partners not only share common business goals, but also a similar vision and way of working. Due to the intensive shared responsibility and the need to act in harmony, the partners of a two-person GmbH can make optimal use of their resources and create synergies that contribute to the success and stability of the company.
Basics of Founding a Two-Person GmbH
Establishing a two-person GmbH means that two people jointly establish a limited liability company, with each partner taking on at least one share in the business.
The minimum capital of a GmbH is 25,000 euros. The founders are free to choose how they participate in the share capital. Typically, each founding partner acquires a notional share of 50% of the share capital. Each of the two partners must contribute at least half of their share capital when the company is founded. It is not legally required that both partners participate equally and therefore pay in a lot, but their shares and thus contributions must total at least the minimum capital.
The partnership agreement plays a central role, as it not only determines the amount of contributions, but also the individual rights and obligations of the partners. It is crucial that this agreement contains specific provisions tailored to the special situation of a company with only two participants.
Liability
As with any GmbH the shareholders are liable the two-person GmbH is only liable to the amount of its contributions. However, this limited liability only applies as long as the company does not violate legal regulations by omitting or providing false information when it is founded or during ongoing business operations.
regulations in the articles of association
The social contract of a two-person GmbH must contain detailed clauses on management and representation. In a two-person GmbH, management can be taken over by either one or both partners.
In many cases, both partners take over management together, which is a different arrangement from the usual sole representation. This arrangement should clearly define how decisions are made, especially when it comes to important business transactions. If each managing director is to be authorized to represent the GmbH individually, it is advisable to include a list of transactions and measures requiring approval in the partnership agreement in order to protect the other managing director from going it alone.
An important aspect that must be addressed in the partnership agreement is the potential exclusion of a partner. The exclusion of the other partner is only possible under certain circumstances specified in the partnership agreement, such as gross breach of duty or grossly negligent behavior. It must be precisely defined what counts as an "important reason" for such an exclusion. These regulations are crucial to ensure legal clarity.
conflict management and exclusion procedures
Shareholder disputes in a two-person GmbH can be particularly problematic, as both shareholders often have equal rights and this can lead to a stalemate. The partnership agreement should therefore provide for mechanisms for conflict resolution, including mediation and arbitration, to avoid the need for lengthy legal disputes.
The exclusion of a shareholder from the company is a complex procedure that requires precise regulations. In practice, in the event of a conflict, it is not just a question of exclusion as a shareholder, but also of dismissal as managing director. At the same time, the list of shareholders must be amended and the dismissal as managing director must be entered in the commercial register. In addition, no shareholder may take part in a vote that affects his own exclusion, because no one may be "judge in his own case". It follows from this that every exclusion is initially effective and the shareholder concerned must defend himself by filing a lawsuit to contest the shareholders' resolution on his exclusion. At the same time, interim legal protection measures are necessary to prevent the list of shareholders from being changed. In these complex procedures, it must also be noted that any of the shareholders can resort to these measures, so that the number of proceedings can be doubled in the event of a shareholder dispute.
It is therefore essential that the partnership agreement also stipulates who is the chairman of shareholders' meetings, that every shareholder has the right to be managing director, and how exclusion is implemented, i.e. by withdrawal of shares or compulsory assignment.
The compensation of the excluded shareholder and the effects on the GmbH should also be taken into account. Payment of the compensation is usually agreed in three to five annual installments. Provisions in the articles of association for determining the amount of the compensation are also useful.
dissolution and liquidation
The dissolution of a two-person GmbH can also bring with it special challenges. Here, the shareholders must decide whether they want to liquidate the GmbH or sell it. In the event of liquidation, the GmbH's assets must be distributed fairly, which can lead to differences of opinion.
Tax considerations and final thoughts
The tax treatment of a two-person GmbH is not significantly different from other GmbHs, however, the partners of a two-person GmbH should conduct detailed financial and tax planning to take advantage of all potential benefits. It is also important that both partners understand the long-term financial obligations and potential tax consequences of their business decisions.
In summary, although establishing and running a two-person LLC represents an excellent opportunity for entrepreneurs, it also requires extensive planning and careful legal consideration. By carefully drafting the partnership agreement and implementing effective dispute resolution mechanisms, the shareholders of such a company can establish and maintain a stable and successful business relationship.
