What is the main source of law authorising this entity form?
German Civil Code ( “Bürgerliches Gesetzbuch”, BGB)
English translation available under:
https://www.gesetze-im-internet.de/englisch_bgb/index.html.
Give a brief summary of this entity form, including
Does the entity possess separate legal personality?
The GbR does in general not possess separate legal personality (in rare individual situations, the courts accept the legal personality as exception from the general rule).
(Maximum) period of existence
No maximum period of existence. The GbR may be entered into for an indefinite period, but a limited period may be stipulated in the partnership agreement.
Governing document(s)
The GbR is governed by its partnership agreement.
Liability of incorporators / shareholders
The partners are directly, personally, unlimited, jointly and severally liable.
(Governing) bodies
The partnership is represented by the partners jointly, unless agreed otherwise within the partnership agreement.
The foundation of a partnership does not require any written agreement. In some cases, the mere mutual promotion of a common achievement/goal is sufficient for courts to assume the existence of a partnership.
Within the partnership agreement, the partners may broadly deviate from the statutory regulations within the BGB.
Other particularities
N/A
Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?
Acquisition of assets, equity, etc. abroad is possible without limitation.
Cross-border structuring is possible inside the EU based on legislation (mergers) or jurisdiction of the ECJ (e.g. cross-border relocations with change of legal form).
Can this type of entity be publicly listed or held?
No.
Can this type of entity be used for a non-profit or charitable organization?
No.
Give a brief summary of the process of incorporation, formation, or organization, including
Main documents required
Setting up a private corporation under the BGB requires a contract (partnership agreement “Gesellschaftervertrag” ) between at least two legal personalities with a common purpose and become active on the market (the agreement does not necessarily need to be in writing).
Involvement of notary, company register, governmental authorities
In principal, there are no formal requirements. Exception: contracts which contain form-requiring components (e.g. including property contracts).
Timing (estimate)
To the extent that no exception regarding the formalities is applicable, the foundation takes as long as the negotiation of the partnership agreement takes (so may be done within days).
Main costs, including registration and similar fees (excluding legal fees).
No minimum capital requirement, however personal and unlimited liability of partners with private property is required. Registration with competent authorities may lead to costs of about 100 Euro (only required in some circumstances where the formal requirement is based on assets held by the partnership).
Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?
N/A
Minimum number of incorporators / shareholders and residency requirements
Two (natural persons or a legal entities or mix thereof). No residency requirements.
Minimum number of directors (or other applicable officers) and residency requirements
No external management (representative has to be one of the partners).
Minimum share capital, or equivalent, and payment requirements (including opening a bank account)
No minimum capital required. Opening of a bank account is optional.
Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?
With registration of GbR in the Commercial Register, it automatically becomes a General Partnership ( “Offene Handelsgesellschaft – OHG”) under German Commercial Code (“Handelsgesetzbuch – HGB”).
Is a tax identification number, or equivalent, required? If so, how is it obtained?
Tax identification number will be provided by tax authorities on registration. VAT-ID will be provided by tax authorities on request.
What is the title of the applicable company registry?
A partnership is not registered. In case of registration with the Commercial Register, the GbR automatically becomes an OHG.
What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles, Ownership identification (direct and/or indirect ownership, 'beneficial owners'), Group structure, Share capital, Directors, Accounts, Insolvency, good-standing, liquidation, Liens and encumbrances on the shares, Liens and encumbrances on assets of the entity, Other (e.g. litigation, tax matters)
None applicable / necessary.
What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?
Partner (“Gesellschafter”), legal representative of the partnership; joint management, can be modified in partnership agreement. One or more partner can be appointed as Managing Partner (“Geschäftsführer”).
How are the members of the executive body appointed, dismissed and replaced?
Appointed by partnership agreement. Dismissed with liquidation of the company (termination, insolvency, death of a managing partner) or according to the regulations within the partnership agreement – if any.
Is it possible to appoint corporate directors or must all directors be natural persons?
No.
Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?
No.
What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?
Partners’ meeting (“Gesellschafterversammlng”); passing unanimously resolutions.
What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?
Unanimous decisions by the partners; can be modified in the partnership agreement.
Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?
No.
What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?
Annual financial statements have to be submitted to the tax authorities.
Is the entity permitted to determine its own financial year?
Partners may agree in the partnership agreement on a different fiscal year.
Is the entity subject to any statutory (external) auditor obligations?
No.
Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?
No.
What is the title designated for ‘ownership interests' (e.g. shares, quota, interests, membership)?
Partnership interest (“Anteil am Gesellschaftsvermögen”).
Are different classes of ownership interests possible? If so, what are some examples of different classes?
The partners may within the partnership agreement regulate the rights of the individual partner (e.g. increased or decreased profit participation). If nothing is provided for within the partnership agreement, all partners have the same rights and obligations.
What documentation is required for the transfer of ownership interests?
In general, if one partner intends to leave the partnership, it is dissolved unless provided otherwise in the partnership agreement or agreed otherwise among all partners.
Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?
None, unless otherwise agreed upon within the partnership agreement.
Are there any applicable stamp duties imposed when transferring ownership interests?
No.
How are shares issued? (including information on payment obligations, registration requirements)
No issuance of shares. By contribution into the partnership the partner receives a partnership interest (usually in the amount of his/her contribution).
Further information on equity contributions, e.g. , Non-cash payments on shares; (Share premium) contributions without issuance of shares , Can partially paid shares/ownership interests permitted and what are the restrictions on them?
Contributions in kind are possible.
Any requirements with respect to share cancellation, share repurchase and other capital reductions
See above regarding the transfer of shares.
Unless provided otherwise within the partnership agreement, the partnership needs to be resolved completely, before one partner leaves it.
Any requirements with respect to distributions to shareholders?
If not regulated by the partnership agreement, profit and loss are equally divided between partners.
Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?
Yes, however, absolutely unusual as all regulations are usually directly included in the partnership agreement.
Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?
None.
What are the general corporate tax rates? (Specify if there is a national versus local distinction).
For 2021: local trade tax (“Gewerbesteuer”) with tax exemptions and 7% or 19% sales tax (“Umsatzsteuer”).
There is no corporate tax for the GbR, but each partner has to pay tax on earnings; income tax (“Einkommenssteuer”).
Summary of any specific matters, e.g. recent or prospective major legal developments
Ongoing discussions on a new Act on the Modernisation of the Law on Private Limited Companies (“Gesetz zur Modernisierung des Personengesellschaftsrechts MoPeG”) with unknown entry into force.