The German laws provides a number of legal drivers for carrying out the entrepreneurial business in Germany. One such legal vehicle is German Limited Liability Company (GmbH) which is one of the common commercial company option that has a separate legal personality.
While setting up a GmbH in Germany, the shareholders participate through ownership of the shares held by them. This confers their rights of ownership and participation in the company's affairs.
Ownership rights
The most ownership right is in terms of entitlement to the share of the profits which is distributed in proportion to the number of shares held by the shareholder. However, certain GmbH opts for a different profit sharing mechanism when forming a GmbH in Germany by stipulating the same in the Articles of Association.
Right to participation
The shareholders are provided a fairly reasonable right in the decision making of the company. Even a minority of the shareholders can request for convening a shareholder's meet. Each and every shareholder of a GmbH has a right to information and inspection with regard to the business accounts of the GmbH firm. However, such information can be refused in case of doubt of hampering the secrecy of the sensitive company information.
Right of disposition
The shareholders are free to dispose off their shares, if otherwise not stipulated in the Articles of Association; otherwise a prior company approval may be required for transferring the shares to others or a co-shareholder. The right of disposition of the shareholder includes the right to encumber the shares or transfer them to other. For making the disposition of shares a valid transaction, there stands a requirement for a notarised contract. The cost of the notarised contract varies in accordance with the value of shares in consideration.
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