Founding in Germany – the most important facts in brief
What is a UG limited liability company
The UG is the “Ltd.” for Germany. It is the most known and used form of incorporation in Germany. UG is the abbreviation for Unternehmergesellschaft. It is often also referred to as a 1-Euro GmbH. In contrast to a partnership, the UG (limited liability) is a corporation. This means that the company is always liable with its “capital” (therefore also capital company) and not the partner behind it personally. As with a GmbH, the liability of the company is therefore limited to the paid-up share capital.
Advantages of a UG (limited liability company)
The advantages of founding a company in the legal form of an entrepreneurial company (haftungsbeschränkt) can be summarized as follows:
- liability minimization: liability is limited to the share capital
- in contrast to the GmbH, no high share capital is required
- the formation costs are low
You can start a foundation with Recht 24/7 today.
What share capital is required?
There are no legal requirements for the share capital required for an entrepreneurial company (haftungsbeschränkt). Theoretically, you can also found a company with one euro, which is why this legal form is often referred to as a 1-euro GmbH. In practice, however, the vast majority of notaries only certify a share capital of 300.00 euros or more, and we therefore advise at least this amount.
The reason for this is that – in the opinion of these notaries – with a share capital of 1 Euro, an insolvency situation already exists with the formation. After all, the company has various financial obligations after the foundation. If there is then only 1 euro in the account, one cannot pay the open demands right at the beginning and would have to file for insolvency. Of course, this is not the case with companies that have regular income and there is no legal basis for this practice.
Organs – who does what in a UG (haftungsbeschränkt)?
A UG (haftungsbeschränkt) consists of the shareholders and the managing directors. It is also possible to establish a UG (limited liability) on one’s own without any problems. Then one speaks of a one-man company or a one-man UG. The founder is then both shareholder and managing director. In the case of several participants, the entrepreneur is free to choose who is to be a shareholder and who is to be the managing director.
The positions can best be compared to a car: The partners sit in the back and they own the car. The managing director sits at the wheel and steers. If the shareholders say he has to drive to the airport, then the managing director has to do it as the driver. Because as owners, they set the pace.
Articles of association and standard protocol – what is the difference?
A UG (limited liability) can be founded either with a partnership agreement or a model protocol. The main difference is the notary fees for these two variants: The notary fees are about 500,00 Euro more expensive with a partnership agreement. Many notaries therefore also advise a partnership agreement. However, this is only worthwhile if you want to deviate from the model protocol and this is actually advisable. Examples of this are:
- Formations with more than three partners
- individual regulations on rights of first refusal
- Foundations with more than one managing director
In any case, we prepare the formation documents in such a way that the lowest notary costs are incurred and coordinate everything directly with a notary’s office at your location.
How does the incorporation process work?
The formation process is as simple as possible: In a first step you send us all information online. We then prepare all the necessary incorporation documents individually through a lawyer. So you don’t get any forms or bureaucracy to fill out yourself, but we take care of everything from one source. After you have gone through everything, we arrange a notary appointment at your place for notarization according to your wishes. During the entire incorporation process, our attorneys are available to answer all your questions regarding the incorporation and all legal issues. The entry in the commercial register and company register is also prepared by us.
fixed price 695,00 EURO net