A “UG” stands for Unternehmergesellschaft. The correct company name is “UG (haftungsbeschränkt). It is a so-called corporation. That means: With foundation a new “legal” person is created, which takes over the whole liability of the entrepreneur as with the GmbH.
Only the company – i.e. the UG – is liable and no longer the entrepreneur. The regulations of the GmbH law apply to the UG. The UG offers thus like a GmbH substantial liability reliefs. A substantial advantage exists in the area of the insolvency: here always only the society and never the entrepreneur is personally responsible.
The UG combines the advantages of a GmbH with a low-cost incorporation.