Celtus Trustee Services

Capital

The company can choose to form as a normal GmbH, or can start as a limited liability entrepreneurial company, should it not wish to raise the whole GmbH capital immediately.

With a simple, ordinary GmbH, share capital must total a minimum of €25,000 and be divisible into shares with a minimum face value of €100. Capital contributions may be made either in the form of cash subscription, or in the form of investments in kind. With regard to the establishment of GmbH on the basis of cash subscription, 25% of the total cash investment, nevertheless a minimum of €12,500 must have been paid prior to registration in the Trade Register. When incorporating, you need to open the bank account immediately AFTER you have signed a deed of incorporation with the notary, and deposit the share capital in the bank. A bank statement stating the capital blocked for the company incorporation needs to be filed with the Court of Registration, along with the Company Statutes. 

Name and business of a GmbH

The name of a GmbH must be derived from the surname of one or all of its shareholders. Alternatively, it must contain a component from which the object or nature of business may be sufficiently inferred, and readily comprehensible to outsiders. The company name may contain a mixture of both the surnames of the shareholder(s) and the nature of the business. Other than that, one may choose to add an imaginary designation. Further demanded by law is an indication of the corporate form, in this case the German equivalent for a private company limited by shares, 'Gesellschaft mit beschränkter Haftung', or 'GmbH'.

Managing Directors 

Managing Directors are appointed by the shareholders and need not be German nationals. If, for the large part, business is run from the Federal Republic of Germany, then care must be taken with regard to the requirements concerning residence or work permits. It is the responsibility of the Managing Director(s) to represent the business enterprise to third parties. Managing Directors are to submit a written assurance that no circumstances prevail which could impair their appointment as Managing Director. Circumstances of this nature are, by means of example, any previous bankruptcy offences, or a court ruling prohibiting the pursuit of business activities ('Gewerbeuntersagung'). Further to be included in the assurance submitted is a confirmation on the part of the Managing Directors that they have been instructed as to their unrestricted duty to provide information to a court of law.

Legal verification and registration in the Trade register

A notary will document the articles of association as well as verify the application for registration in the Trade Register. 

The application form together with the documents mentioned in §8 of the Private Limited Company Law (GmbH-Gesetz) are forwarded by the notary to the cognisant Court of Registration. The responsible Chamber of Industry and Commerce will be requested by the local court to submit an expert statement of opinion. In the course of inspecting the registration requirements should any doubts as to the correctness of the application arise, then the local court will inform the applicant of such, either directly, or via the applicant´s notary. Opportunity will be given to revise the application. Provided that there are no further grounds for the rejection of the application, registration in the Trade Register will then ensue. The GmbH acquires the rights of a legal entity from the point of having been registered in the Trade Register. Prior to registration, a distinction is made by German law between the period subsequent to the decision on the part of the shareholders to found the company up until the notarial documentation of the articles of association on the one hand, and between the period thereafter up until the official registration in the Trade Register on the other. The company in the making is subject to different legal requirements for the time periods mentioned, particularly with regard to the liability of the already engaged shareholders.

The GmbH is subject to compulsory registration as is every newly founded business enterprise. Hence, registration in the Trade Register must be followed by registration at the cognisant Office for Public Order ('Amt für öffentliche Ordnung'), or Mayor´s Office ('Bürgermeisteramt'). The official form used for this purpose is supplied with carbon copies which are to be forwarded to the other obligatory places of registration, for example, the Finance Office and the mutual indemnity association. 

Registration of the trade process

The duration of the registration process is determined, to a large extent by any additional difficulties which may arise during the course of the application, and which must necessarily be dealt with. Otherwise, one may calculate a period of 6 weeks, starting from the date on which the notary sends the registration documents to the local court.

Basic charges

Basic charges will be determined by the level of share capital as much as by the corporate value involved. Thus, the current charge for the documentation of the articles of association for a GmbH with a share capital of €25,000 is set at €168. Public certification of the application will cost €20, and the charge for registration in the Trade Register is currently set at €100. Costs will be increased by a further €20 in the case of the notary wording the application  for the Trade Register himself as opposed to using a pre-formulated application form. To this must be added the costs for the publication of this application in the 'Bundesanzeiger' (the Federal Gazette), and for possible publication in further state announcement papers. Costs in the region of €60 should be calculated per publication. Not included in the costs so far mentioned are those arising from recourse to notary’s assistance for any specific wording, or indeed for writing the articles of association in preference to a standardised contract.

Gesellschaft mit beschränkter Haftung - GmbH

The company name is the name in which a Limited Liability company (GmbH) is entered in the Commercial Register and with which it transacts business. The company name of a limited liability company (GmbH) can include the object of the business (non-personal company name), the name of one or more of the proprietors (personal company name) or freely invented suffixes. Combined versions are also possible; the company name including the subject of the business (non personal company-name) must always contain an individualising suffix. In normal cases, the suffix 'Gesellschaft mit beschränkter Haftung' or the abbreviation GmbH must always be appended to the company designation.

Shareholders

There is no requirement for a minimum number of shareholders and it is possible to incorporate a one person GmbH. The shareholders of a limited liability company (GmbH) can be individuals and legal entities, including foreign ones.

Capital

Share capital of a limited liability company (GmbH) must be at least €25,000.

Memorandum and Articles

Memorandum & Articles of a limited liability company The Articles must include the following details: company name, registered office, object of business, amount of share capital, amount payable by each proprietor as his share of the proprietors capital.

Otherwise Articles can be drafted reasonably freely. But it is advisable to cover the following areas in the Memorandum & Articles: duration of company, appointment of managers, extent of representative powers of managers, convocation of general meeting, allocation of votes, disposals of shares, inheritance of shares, production of annual accounts, allocation of profits, repurchase of shareholdings, departures and disputes, formation costs, exemption from ban on managers contracting with themselves.

Object of business

A company can be established for any legally admissible purpose. The object of business has to be clearly stated in the Memorandum and Articles. However, since the Federal Republics legal culture maintains the traditions of medieval gilds, there are some lines of business which may require, that the company employs at least one person, who is in possession of the right qualifications to be member of the relevant gild. This is valid for building contractors, drug stores, tax advisory and accountancy. Any line of business dealing with real estate trade or the brokerage of financial service products requires permission in accordance with article 34 of the German trade law (HGB) and maybe subject to regulative reporting towardsthe Federal Regulating Authority for Financial Servcies (BAFin). Please verify with our consultants first, whether your intended business maybe subject to permission and licenses granted by the German authorities. 

Shareholders capital and Shareholders capital contribution

Capital contributions of varying amounts can be made by the shareholders to make up the share capital. However a capital contribution must be at least €100 and must be divisible by 50. Shareholders contributions can be in cash or in the form of non-cash contributions. In the case of a non-cash formation the shareholder must furnish a report justifying the underlying valuation of their contribution.

Entry in the Commercial Register

Entry in the Commercial Register must be notified to the relevant District Court in writing by the directors and the signature and the formal style used by the company must be duly certified by a notary. Entry in the Commercial Register must include the company name, its registered office, object of the company, amount of proprietors’ capital, date on which the shareholders’ agreement was concluded, personal details of directors and their powers of representation. An annexe to the notification must also include the following:

• The shareholders' agreement in notarially certified form,
• A list of shareholders countersigned by the directors Entries in the Commercial Register must be published in the Federal Gazette and in at least one other paper.

Management of a limited liability company (GmbH)

A managing director must be an individual. A foreigner or a German national living permanently abroad can be appointed as managing director.

Do I need to visit Germany?

No, Powers of Attorney can be signed with a Notary in the majority of German embassies and consulates around the world, so that you can appoint us to incorporate your company and open your bank account for you. However, we strongly recommend being present at the moment, when the notary deeds get signed. Using proxies or trustee can be a costly affair

• We clear the company name at the local Chamber of Industry and Commerce.
• We draft for the notary the articles of association and foundation agreement.
• We assist with the opening a bank account and deposit the share capital.
• The Notary Public files the articles of association with the local Commercial Register, kept at local courts.
• We then notify the local Office of Business and Standards of the establishment of the business.