Meanings of Company Forms

Meanings of Company Forms

Company founders have to decide on a type of company. Depending on the size and type of business, you can set up a partnership with people at the center, but you can also set up a corporation with capital at the center. All types of company can have their advantages, but also disadvantages.

Different types of companies

In Germany, different types of company can be chosen. As partnerships,

  • one-man business
  • silent Society
  • OHG (open trading company)
  • KG (limited partnership)
  • GbR (Society of Civil Law)

be chosen to stand as a corporation

  • GmbH
  • GmbH & Co. KG
  • Corporation
  • KGaA (partnership limited by shares)
  • eG (registered cooperative)

to select.

The sole proprietorship

According to, the sole proprietorship is the simplest form of company formation and the most common legal form in Germany. The founder does not have to comply with any formalities; The entry in the commercial register is only required from a certain minimum turnover and a certain number of employees. Share capital is not required. In a sole proprietorship there is only one owner; the owner is liable for liabilities and debts with all of his private assets. If the sole trader is a businessman within the meaning of the Commercial Code, he is obliged to keep accounts.

The silent society

The silent society is a special form of an association and is not a trading company. The silent society can be founded without further agreement and has the character of a debt relationship. A silent partner makes a capital contribution or contribution in kind, but is not involved in the business itself. The silent partner receives a share of the profits.

The open trading company (OHG)

The OHG exercises a full commercial trade and is a joint company. At least two people are required to set up the company. In contrast to the GbR, the OHG can only be founded by merchants, but not by small businesses. No minimum capital is required for the OHG, the employees are liable with their entire assets.

The limited partnership

The KG consists of two shareholder groups with different liability, the general partners and the limited partners. The limited partners can participate financially in the company. The general partner alone conducts the business and has the sole right of decision. He is liable with his private assets, while the limited partners are only liable with their contribution.

The GbR

The GbR is an association of two or more natural or legal persons and is subject to the rules of the German Civil Code. In the GbR, all partners have equal rights, resolutions must be taken individually. A partnership agreement should be concluded for the establishment, it does not have to be notarized. Minimum capital is not required, all shareholders are liable with their private assets.

The GmbH

A minimum share capital of 25,000 euros is required to set up a GmbH. A partnership agreement must be concluded and notarized. Directors must be appointed, a list of shareholders must be drawn up. The GmbH must be entered in the commercial register. As a rule, the partners are only liable with their contributions; only in exceptional cases do they have to be liable with their private assets. A special form of the GmbH is the UG as an entrepreneurial company, for which only a minimum share capital of one euro is required. The UG is obliged to set up reserves until a minimum share capital of 25,000 euros has been saved.

The GmbH & Co.KG

The GmbH & Co.KG offers more room for maneuver than the GmbH. The GmbH is a personally liable general partner, the partners mostly act as limited partners. The liability risk is lower with a KG than with a GmbH. The decision-making powers and the distribution of profit and loss depend on the capital contribution of the GmbH and the limited partners.

The stockcompany

A partnership agreement, which must be certified by the notary, is required to set up a stock corporation. The AG must be entered in the commercial register. At the time of formation, share capital of at least 50,000 euros must be available, which is divided into shares and contributed by the shareholders. The partners are only liable with their contributions and only in exceptional cases with their private assets. The organs of the stock corporation are the executive board, the supervisory board and the general meeting.

The partnership limited by shares

The KGaA combines elements of the stock corporation and the limited partnership. It is a stock corporation that has personally liable partners as general partners. The KGaA is a merchant within the meaning of the German Commercial Code.

The registered cooperative

The registered cooperative is an association of natural or legal persons and can be founded as a consumer, banking, construction, service, sales or production cooperative. The number of members is open, the members acquire shares in the cooperative.

Company Forms