Commonly Asked Questions About Setting Up A GmbH In Germany
GmBH is one of the
most popular business setups used by both local and foreign investors in
Germany. It is the equivalent of a limited liability company setup used in
other parts of the world. Even though the process of setting
up a company in Germany is relatively easy, there are various queries
and doubts that investors might have about the process. The most common of these
questions and their answers are discussed in brief as follows.
What Is GmBH?
A GmBH is the most
widespread business structure and is a company with limited liability. The
company can be as big or as small as the investors want it to be and can be run
by a single individual without any support staff. At the same time, a GmBH can also
take the form of a massive conglomerate, although it cannot trade publicly.
How Is GmBH Incorporated In Germany?
For setting up
GmBH in Germany, the founders need to draw up and then notarize the articles of
association as well as the formation deed for the company. Each of the
documents needs to be signed by the founders, who also need to appoint the
company directors and members of the supervisory board. After the establishment
of the legal entity, the investors need to pay the minimum share capital as
applicable for the type of legal entity of their choice. The legal entity then needs to be registered
with the Commercial Register before it can be considered as an establishment
with due capabilities.
What Does The Registration Of GmBH Involve?
The registration
of GmBH is a straightforward process and is generally completed within a few
days. The investors are not allowed to carry out any business transaction or
activity until the registration process with the Commercial Register is
completed. Any such activities performed before the registration is completed, will
make the shareholders of the GmBH liable for any legal action.
What Is The Minimum Share Capital Required For
Setting Up GmBH?
Investors are
required to submit a minimum share capital of 25,000 EUR for setting
up a GmBH in Germany. This capital contribution can be made both in
cash and kind and in case the capital is divided into shares, these shares
cannot be traded publicly or even transferred. Moreover, a minimum of 25% of
cash contributions made to the share capital as well as 100% of non-cash contributions needs to be
deposited before the company is registered.
What Is The Management Structure Of A GmBH?
A GmBH in Germany
is made up of managing directors and they represent the company in all business
matters. As mentioned before, the managing directors are appointed by the
investors or shareholders. In fact, it is possible for a shareholder to take on
the role of a managing director in the GmBH.
What Is The Process Of Verification Of A GmbH
In Germany?
Verification is an
integral part of the process of GmBH company
formation Germany. For this, all the GmBH and limited liability
companies are required to maintain financial records. In addition, they need to
keep a record of all the commercial transactions besides submitting annual
financial statements, balance sheet, and income statement.
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