A German Limited Company - The GmbH

The Limited Liability Company (Gesellschaft mit beschränkter Haftung/GmbH) is the most common form of incorporated company in Germany. It can be incorporated by one or more persons (individuals or corporate entities) and requires a minimum signed up (gezeichnetes) or paid-up (Einlage) share capital of €25,000. The GmbH's capital is not issued in the form of share certificates, but shareholders own a business interest according to the amount of his initial contribution. The minimum participation is €250, or any higher amount divisible by fifty.

Shareholders will draft the Articles of Association (Gesellschaftsvertrag) of the company. These statutes have to include name, seat and business purpose of the company and the amount of the initial contribution of each holder. Non-mandatory provisions laid down in the articles can include issues such as conditions for the transfer of ownership rights and procedures for altering the firm's capital base.

The GmbH requires the appointment of one or more business managers (Geschäftsführer) to run the company. Geschäftsführer are allowed to hold an interest in the company. They have to be individuals but are not subject to restrictions on nationality and place of residence.

Annual meeting of a GmbH company are normally called by the business manager(s) or, if it exists, the supervisory board. Holders of at least 10% of the share capital are also entitled to call a general meeting. The meetings need not be held in Germany and, unless stated otherwise in the articles of association, have the statutory rights to appoint and dismiss managers, review the managers' activities, approve financial statements, decide on the distribution of profits and amend the articles of association. Decisions require a simple majority of votes, unless stated otherwise in the articles, and each €50 participation entitles the owner to one vote.

GmbH companies are required to keep books and records in accordance with Germany's general principles on proper accounting (Grundsätze ordnungsgemäßer Buchführung). The books of account must be kept in Germany. There is a general requirement to compile an annual report that is to present a true and fair view of net assets, financing and results of operation.