GmbH / Limited Liability Company
The Gesellschaft mit beschränkter Haftung (GmbH - limited company), is a so-called legal entity, which is equipped with its own rights and obligations. To be capable of acting, the GmbH must appoint a managing director. This person can be one of the shareholders or also - unlike many other companies - an outsider.
The corporate form of the GmbH is preferred and chosen by many entrepreneurs when it comes to finding a suitable legal form for their own enterprise. This applies in particular to the so-called Ein-Mann (One-man) GmbH or also the family-owned company.
The reasons for this are that there is great deal of room for manoeuvring which a GmbH offers its shareholders. However, and this could be decisive for many entrepreneurs, the personal liability of the shareholders for the liabilities of the company are excluded. The corporate capital of the GmbH must be at least € 25,000 and represents the limit of liability of the GmbH. The liability of members is limited to their shareholder’s deposit by law, § 13 para. 2 GmbHG.
However, something else applies in case of the so-called piercing the corporate veil of a member in the event of an intervention, which destroys the very existence of the company. According to the constant jurisdiction of the Federal Court of Justice, the partners in the case of deliberate immoral injury of society can be obliged to pay damages regardless of their shareholder’s deposit. The managing director of a GmbH can also be liable to pay damages. As a representative body, the statutory duty of care is incumbent on the GmbH in relation to the company, § 43 para. 2 GmbHG. In addition, the managing director has to provide for the proper discharge of public duties and taxes and, in case of bankruptcy, has to ensure timely filing for insolvency. If he fails to comply with these duties he may make himself liable. Therefore special care is necessary in this area.
Moreover, the liability situation in the so-called foundation stage of the GmbH, before the company is entered in the commercial register, is different. During this time, anyone who incurs liabilities for the company usually has unlimited personal liability.
Therefore, there are still some liability risks with the GmbH. The GRP Rainer lawyers and tax advisers will provide you with comprehensive, individual advice about this.
The GmbH nevertheless offers many advantages, which should, however, also be made use of. To do this, you should always consult a lawyer within your confidence before setting up the company. The experienced lawyers of GRP Rainer will be happy to offer you advice and assistance. In our offices we have lawyers specialising in company law who can help you design your GmbH agreement in the best way possible.
In addition, if problems arise within an existing company, you will need a lawyer who can help you acquire the necessary overview. In order that you and your GmbH remain unaffected, if possible, it is important to act promptly in these cases. The lawyers in our company will place their in-depth knowledge at your disposal.
We will help you with setting up a GmbH, preparing the articles of association, change of partners as well as - if necessary - the dissolution of the company.
We advise on GmbH in Germany.