Germany is one of the few countries with a booming business culture ranging from small and medium sized businesses to large conglomerates. The German government supports the establishment of businesses of all types and sizes by both local citizens and foreign investors. Hence it is not really surprising that a large number of budding entrepreneurs find the prospect of forming a company in Germany, especially a GmbH type company, quite appealing.
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A Brief Overview Of GmbH
GmbH is the acronym for Gesellschaft mit beschränkter Haftung (GmbH) and is comparable to a limited liability company in other parts of the world. It offers the combined benefits of high flexibility and relatively few obligations making it a preferred choice for establishing small and medium businesses. Setting up this type of company does not make the shareholders personally responsible for the any debts of the company. A GmbH is can be set up by a single individual with a minimum capital of €25,000 and it can start to exist legally only when it has been entered into the Commercial Register or the Handelsregister.
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Legal Aspects Of Setting Up A GmbH
The Company Law of Germany has provisions for a suitable legal structure for setting every type of business within the country, including GmbH. There are five key legal steps involved in the process of forming a GmbH in Germany, which are discussed in brief as follows.
Drafting of Articles of Association
The Articles of Association is a critical document as it helps in shaping the identity and constitution of the GmbH. It must necessarily include the name of the business, company object, registered office, share capital, shareholders and respective shares held by each. Given the large scope of the contractual design, the GmbH can be established as an extremely flexible corporation.
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Notarizing Articles of Association
Once the drafting of Articles Of Association has been completed, the next step is to get it notarized. In general, both these steps are performed in a single session by a German notary. The task of adopting the Articles Of Association and appointing one or more managing directors in the notarial deed is also performed at the same time by the founding shareholders of the GmbH company. It s also important to get the Articles Of Association signed by all the founding shareholders and get it notarized.
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Paying The Share Capital
The next step after the notarization of Articles Of Association is the opening of the company account and depositing the share capital. The founding shareholders need to pay just € 12,500.00 in total for registration of the GmbH, while its commercial registration can be completed with a a minimal amount of € 25,000.00.
Registration In The Commercial Register
It is important for the new GmbH companies to get registered in the Public Commercial Register after the required share capital has been verifiably deposited in the GmbH account. The electronically filed application needs to be first personally signed by all managing directors of the GmbH. Documentation verifying the existence of any parent company and the power of representation for persons acting on behalf of it also needs to be attached. Once all the information has been checked and verified, the GmbH is registered and can start operating as an independent legal entity.
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Trade Office Registration
The GmbH also needs to be registered with the Trade Office also known as "Gewerbeamt", before it can start any commercial activities. The government offers the flexibility of submitting the application for registration latest on commencement of business. Moreover, most such businesses do not require a business license or permit for registration. The process can be completed simply by providing specific documents from the commercial register or equivalent in case of foreign organizations in the requisite form.
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