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Civil Law Partnership – GbR

Limited Liability Company - GmbH

Limited Partnership – GmbH & Co. KG.

Stock Corporation – AG


What is the main source of law authorising this entity form?

German Commercial Code (Handelsgesetzbuch – HGB) [and German Limited Liability Company Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – GmbHG) regarding the general partner, ref. GmbH].


Give a brief summary of this entity form, including

Does the entity possess separate legal personality?

The GmbH & Co. KG has legal personality.

(Maximum) period of existence

There is no maximum period of existence. Regularly the GmbH & Co. KG is incorporated for an indefinite period, but a limited period may be stipulated in the Limited Partnership Agreement.

Governing document(s)

The GmbH & Co. KG is governed by its partnership agreement.

Liability of incorporators / shareholders

The general partner (GmbH) has full liability (but not its shareholders), the limited partners’ liability is limited to their registered contributions, which they can freely define.

(Governing) bodies

The general partner is the legal representative of the limited partnership; in case the general partner is a GmbH, the latter is in turn represented by its Managing Directors.

Other particularities

NA


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. located abroad is possible without limitation.

Cross-border structurings are possible only based on jurisdiction of the ECJ (e.g. cross-border relocations with change of legal form) – the German Transformation Act provides the possibility of mergers only for corporations.


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

Incorporation of the GmbH as general partner (see chapter GmbH).

Involvement of notary, company register, governmental authorities

Drafting of Limited Partnership Agreement (no form required), indicating the contributions of the limited liable partners (note: it is possible that the general partner holds 0% in the capital as its only contribution then is the assumption of the unlimited liability).

Timing (estimate)

Notarial certified filing of the company with the Commercial Register.

Main costs, including registration and similar fees (excluding legal fees)

If there are no peculiarities in exceptional cases (e.g. certain approvals needed), registration may take between a few days and a few weeks, particularly depending on the workload of the Commercial Register.


Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

Costs of notarial certification of filing registration are about 200 Euro plus costs for the incorporation of the GmbH (see chapter GmbH).

A description is necessary, but will not be published.


Minimum number of incorporators / shareholders and residency requirements

At least two (2) partners required for a partnership. In case of a GmbH & Co. KG, the GmbH is the general partner, and the shareholder of the GmbH can at the same time be the limited partner – i.e. at the end one (1) shareholder is required.


Minimum number of directors (or other applicable officers) and residency requirements

The company is represented by its general partner (GmbH), and therefore by the GmbH’s Managing Director(s). The minimum is one (1). No residency requirements.


Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

25,000 Euro in cash or in kind for the general partner GmbH, free to determine for the shareholder’s contributions.


Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

See chapter GmbH for the general partner. For the partnership, no physical presence is required.


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?

Commercial Register – (Handelsregister). Additionally, companies and their shareholders might need to be registered under anti-money-laundering regulation with the transparency register (Transparenzregister).


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)

General partner.

Limited partners and the respective contributions.

Further representatives (authorised signatories – prokuristen).

Representation rights (joint/sole; in-self-transactions).

Liquidation resolution.

Insolvency proceedings.

All information is publicly available.





What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

Managing Director(s) of the general partner is/are (solely or jointly) representing the company entirely.


How are the members of the executive body appointed, dismissed and replaced?

By shareholders’ resolution of the general partner, Managing Directors may be appointed or dismissed at any time (notwithstanding their ongoing employment contracts). The resolutions have to be filed with the Commercial Register but are effective immediately.


Is it possible to appoint corporate directors or must all directors be natural persons?

No. The company is represented by its general partner GmbH (entity), which is represented by its Managing Director(s) which have to be natural persons.


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?

In German corporate law, the concept of non-executive directors does not exist. It is possible to voluntarily appoint a Supervisory Board (Aufsichtsrat) by amending the Limited Partnership Agreement and define its competences freely. However, that does not change the responsibility of the general partner.


What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

Partners’ Meeting (Gesellschafterversammlung) and Shareholders' Meeting of the General Partner.


What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

To be determined by the Limited 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. To be filed with the Business Register (Unternehmensregister), extent depending on balance sheet total, turnover, and number of employees.


Is the entity permitted to determine its own financial year?

Yes.


Is the entity subject to any statutory (external) auditor obligations?

Depending on balance sheet total, turnover, and number of employees.


Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

None.





What is the title designated for ‘ownership interests' (e.g. shares, quota, interests, membership)?

Capital interest.


Are different classes of ownership interests possible? If so, what are some examples of different classes?

Not legally regulated, but possible (e.g. interest participation rights – genussrechte).


What documentation is required for the transfer of ownership interests?

No form required, except for notarial certified filing of transfer of ownership with the Commercial Register.


Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

Approval by the Partners’ Meeting is usually stipulated in the Limited 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 physical issuance required.


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.

Contributions into the reserves are possible without issuing capital interest.


Any requirements with respect to share cancellation, share repurchase and other capital reductions

Limited partnership cannot own capital interest in itself

Capital reduction possible by amendment of the Limited Partnership Agreement (usually at the same time the registered liability coverage is reduced, which has to be filed by a notarial certified document).


Any requirements with respect to distributions to shareholders?

To the extent that the partners’ registered contributions are paid back, the personal liability of the shareholder comes into effect again (at maximum the registered liability coverage).


Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes.





Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Main costs are the annual financial statements. Costs for filings are negligible.


What are the general corporate tax rates? (Specify if there is a national versus local distinction).

No corporate taxes except local business tax, if applicable. Partners are taxed personally (tax-transparent company). Therefore, profits and losses are effective for the partners.





Summary of any specific matters, e.g. recent or prospective major legal developments

There are no corporate law changes expected in the near future.




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Contact a member firm:
Sven Hoffmann
HEUSSEN Rechtsanwaltsgesellschaft mbH
Germany


Gregor Wedell
Schalast Rechtsanwälte mbB
Germany