Legal form of your business in Germany. Opening the business and develop it.

Main1Many immigrants from the former Soviet Union came to Germany with a good intention to start their own business and gain financial independence. Some succeed, others waiting for, as it is sad, disappointed. From my own experience of dialogue with businessmen from Russia, I can say that many of them have suffered from their own mistakes, which can be avoided with better training and timely treatment advice from a specialist. The purpose of this article – to explain the basics of German law on trading companies, in order to facilitate the start-up entrepreneurs meal choices and protect them from possible errors.

How difficult is to understand the many legal norms, the following case shows. Once I came to the reception, Mr. H., who had recently arrived from Russia and to establish, in Berlin, a limited liability company. Because he is not a good command of the German language, then to do business manager hired, with whom he had a conflict because of the fact that the manager was working on your own and do not follow the instructions of the founder. “My company is or not?” – Indignantly asked H. and requested to summon the control order. From a conversation with H. became clear that although he has invested in the company a lot of money, but little idea what it is that he founded, and the company operates. I had to explain the reasons for H. groundlessness of his claims and at the same time to explain the basics of German corporate law.

Any business idea requires embodiment in an appropriate and optimal for each case form. The question of choosing the form of the organization of the new enterprise will sound differently depending on the intended field of activity, the number of participants and the nature of the relationship between them, the value of the initial capital and many other factors.

For a typical novice businessman choice in the first place, will be determined taking into account the value of invested assets, the risks specific to this type of business and complexity of management. Will there be enough funds for initial development? What happens if the consumer to file a claim because of defects in the goods, default or delay in the performance of obligations? How not to lose control of his hands by?

First – a few general provisions. Enterprising activity (Gewerbebetrieb) can be carried out by one person or group of persons. For commercial activity is the purchase and sale of movable property (goods) and securities, working or processing of goods and their subsequent disposal, insurance and banking, transportation, storage of goods in stock, the activities of commission agents, forwarding agents, brokers, publishing and so forth. Kommersant – a sole entrepreneur or a company which carries out independent and time-consuming activities aimed at making profit. Depending on the scope and volume of business are different and full of small businessmen (Vollkaufmann, Minderkaufmann). Small traders are exempted from the duties on entering in the commercial register and accounting; they operate under its own name and can not have a brand name.

The simplest form in which there may be a company with two or more participants – a society of civil law (Gesellschaft des buergerlichen Rechts – GbR). It is formed in accordance with the rules of civil and commercial law, and not a union of several persons in order to achieve a common goal, in Vol. H. Commercial. For institutions GbR enough oral agreement between the parties.

According to the German legal tradition, the company must first acquire a certain weight and value, before it can use all provided to commercial companies freedoms and bear all risks and responsibilities. Abstracting from the particular cases, it can be said that the transition of the enterprise into a state of a merchant (Kaufmann) is when it is on the nature or volume of activity (the value of turnover capital, the number and functions of employees and so on.) Ceases to comply with the simple organizational forms and the minimum requirements for accounting. In this case, in accordance with Commercial Code (Handelsgesetzbuch) can operate as a sole merchant (Einzelkaufmann) or create commercial companies, which are associations of persons (Personengesellschaft).

The main form of companies, associations of people is an open trading company (Offene Handelsgesellschaft – oHG). Such a company created by two or more persons to engage in commercial activity under one firm with unlimited liability for the obligations of each party oHG. Open trading company is a legal entity, but may own property, to enter into commitments, to act on his behalf in court as plaintiff and defendant.

For the formation of the company drawn up a written contract between the founders. There are no special requirements for this document as regards its form is not shown – it only needs to be signed by all participants.

The founders of the company can be both physical and legal entities, they play a very important role in an open trading society. For each participant, unless the contract provides otherwise, it has the sole right to represent the company in dealings with the outside world. However, they voluntarily give up such commercial and other activities that can create competition created by them oHG. Guide oHG can be carried out individually by any member or members of a group. Any member has the right to monitor ongoing activities of society, that is. E. To get acquainted with its trading books, treaties, and so on. N.

Participants are jointly and severally liable with all its assets. In addition, third-party entities may demand that any of the participants to return the debt, made on behalf of the oHG. Any of the parties for five years after leaving oHG liable for the debts of the company that emerged when he was a member. Any new participant entered the oHG, is responsible for all liabilities of the company in its entirety, even if they occurred before its entry.

Name (company) of the Company consists of the names of at least one participant, and indications of the company (oHG, & Co., And so on. N.) Or the names of all participants. Open trading company shall be registered in the district court (Amtsgericht), which puts it in the commercial register.

If one of the members of the company is ready to answer for the debts of the company only within a certain amount, then its contribution to the capital of the company shall be registered in the commercial register, and its liability is limited only by the size of this contribution. In this case, a limited partnership (Kommanditgesellschaft – KG). It is formed by the participants, some of which are unlimited, while others -only limited liability for the obligations of the company; last name of the limited partner. The company is not a legal entity under German law. The legal form KG is typical for medium-sized enterprises.

Manual current affairs KG by the participants whose liability is unlimited; limited partners excluded from governance.

A limited company established and registered similarly oHG. The company is a private limited partnership, the surname of at least one member with unlimited liability and gives an indication of the presence of the company – usually the addition of the words “KG”.

Open trading company and limited partnership are companies, which are based on an association of persons, ie. E. The participants. It is the oldest form of commercial company. About 300 years ago, the rapid development of industry and commerce led to a turnover of risks that were unaffordable even for the wealthy and respected entrepreneurs. So any company, foundation of which is the union of not individuals, and capital (Kapitalgesellschaft). These companies exist independently of their founders, who are not responsible for their obligations.

In German law, there are two main forms of such companies – joint-stock company (Aktiengesellschaft – AG) and limited liability company (Gesellschaft mit beschraenkter Haftung – GmbH). Persons providing public limited company or GmbH their money, do not participate in the operational management of the company and shall not be liable for its debts. They receive income on invested their capital and risk only to these contributions. The joint stock company is a more complex form. Its meaning is to combine the creation of capital in such a mass, which allows to solve the major economic problems. Therefore, in Germany, there are currently only about three thousand corporations.

Limited Liability Company – the most common type of company in Germany, based on a combination of capital: there are over 500 thousand. Such popularity is due to several advantages of this legal form, in particular, the relatively small size of the authorized capital. GmbH is a legal entity, whose members are responsible for its debts only their contributions but not personal property.

The Company can be founded by any natural or legal persons, and only one person. It can be a family business, a joint venture of several independent companies and several businessmen – natural persons, and so on. D.

Limited Liability Company formed on the basis of the memorandum of association (it is needed, even when the founder is the only person). The contract shall be certified by a notary, after which a new company is registered in court, as recorded in the commercial register. From this point GmbH acquires the status of a legal entity.

Share capital recorded in the charter of the company and must not be less than 50,000 DM. The share capital is private property GmbH as a legal entity. It is formed from specified in the memorandum of contributions of participants. Contributions must be made in cash or in the form transmitted to society of things. All this must be set out in the founding documents, as well as the date by which all participants GmbH is obliged to make contributions.

Prior to submission of the registration each participant GmbH must make a contribution of at least 25% of its share – so as to form the sum was equal to 50% of core capital. With delaying payment interest shall be charged. If the company begins operation before the registration in the commercial register, all participants have unlimited and joint and several liability for the debts generated GmbH. After registration, previous commitments go, with some exceptions, to the newly created company. Next, each participant is responsible for the debts of the company only in the amount of its share, as the sole participant GmbH – in the amount of all of the equity capital.

In a society shaped controls: control (Geschaeftsfuehrer) and Assembly members, and in large GmbH – as the supervisory board.

Current management of the affairs GmbH carried out by one or several managers; they can be both participants in the company, and invited persons … The right of representation outside the control can have all or only some of them. Character representation – the defining collective or sole constituent contract and recorded in the Trade Register.

The meeting of shareholders is convened in the cases determined by the memorandum of association. Decisions are taken by simple majority. Every 100 DM, fixed investment GmbH, party give one vote. Accordingly, the magnitude of the contribution depends on the party’s influence public affairs. Obtained on the basis of the profit is distributed according to the size of shares of participants GmbH.

There are also a number of mixed legal forms of commercial companies. The most interesting – a limited partnership and limited liability company (GmbH & Co. KG). This company has almost all the characteristics similar to ordinary KG.

Specificity is that GmbH & Co. KG participant carrying the unlimited personal liability is GmbH, t. E. A limited liability company; Limited partners also can be both physical and legal persons. This legal form allows easy, on the one hand, to limit the scope of property responsibility of the founders, and on the other – to obtain tax advantages.

When choosing a legal form of organization of their business should be carefully weigh the “pros” and “cons”.

If commercial risks can be limited or completely covered by liability insurance for damage that may be caused to customers (Haftpflichtversicherung), and the expected turnover will be small or narrow the scope of the company is limited to the organization of the enterprise rather the simplest form. Besides the legal regulation in this case, less complex and leaves a lot of freedom of entrepreneurs: for example, the law does not require the formation of fixed capital, ie. E. The minimum funds to be invested in venture formed by.

The entrepreneurs who have chosen the form of GmbH, it should be noted that the establishment and activities of the company are subject to complex regulation. The Company shall keep accounting records in accordance with the rules of the trade and tax law. In addition to the current account for the financial year GmbH is an annual report consisting of a balance sheet, profit and loss accounts and the annexes. The Income Tax Act (Einkommensteuergesetz) and the related law on corporate income tax (Koerperschaftssteuergesetz), contain complex rules on the taxation of businesses and companies. Therefore it is necessary to contact the help of a specialist in taxation and accounting.

All these difficulties and problems aspiring entrepreneur should be compared with the benefits of limitation of liability for obligations incurred by the company. For example, when announcing the contest, you can terminate the prisoner a limited liability company (GmbH) lease on which would otherwise have to pay rent for some time. With a lack GmbH from property lenders will have to settle for the few that managed to foreclose – they can not claim to private property of participants of society. On the other hand, the newly formed and do not have large capital society can hardly count on getting a bank loan, if only his party has valuable personal property, will not take the money back guarantee (Buergschaft).

The entrepreneur, starting a business, and sometimes he is not yet aware of, in which the complex relationship it will enter what “pitfalls” on its way, how much will need to learn. Creation of the enterprise – the first step in the business, which will largely depend on the subsequent success or failure.

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