[ESTABLISHING A BUSINESS ENTITY IN GERMANY]
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the AG. This report has to be scrutinized by the boards. The AG is managed by its management board. Neither supervisory board nor shareholders can exercise direct influence on the management board. dd. Registration The AG comes into existence upon registration in the commercial register (Handelsregister). The application must be signed by the founding shareholders, the members of the supervisory board and the management board before a notary. In addition, an AG must be registered with the local trade office (Gewerbe- oder Ordnungsamt). c) Partnership Limited by Shares (KGaA) ee. Characteristics The partnership limited by shares (Kommanditgesellschaft auf Aktien, KGaA) combines the structures of a stock corporation (AG) and a limited partnership (Kommanditgesellschaft). It connects the entrepreneurial commitment and personal standing of the individually liable shareholders (general partners) with the function of the AG as a public company and source of capital. The KGaA can be described as a stock corporation having individually liable shareholders (general partners) instead of a management board. The KGaA is not a frequently used legal form in Germany. It is liable to corporate income tax, solidarity surcharge and trade tax. ff. Liability of Partners The KGaA can have an unlimited number of capital investors (limited shareholders), whose liability is limited
once they have paid their subscribed capital contribution. The minimum share capital of a KGaA is (in total) EUR 50,000. The limited shareholders have more or less the same legal rights as shareholders in an AG. At least one partner of the KGaA, the general partner, has to be liable for debts and liabilities of the KGaA without limitation. gg. Registration The KGaA must be entered into the commercial register and registered with the local trade office. 2. Partnerships The main feature of a partnership is the personal commitment of the partners to their working efforts to the partnership. Any partnership requires at least two partners. There are four major forms of partnerships in Germany. - Civil Law Partnership ( GbR ) - General Commercial Partnership ( oHG ) - Limited Partnership (KG) - GmbH & Co. KG Their main difference lies in the liability of their partners and required registration obligations. A partnership company (Partnerschaftsgesellschaft or PartG) is a form of partnership specifically designed for the joint exercising of professional freelance activities, such as architects. a. Main Characteristics In contrast to corporations, partnerships are not independent legal entities but associations of people. In partnerships, the individual partners responsible for the liabilities of the company (including private assets) act for the company. Limitations of
ILN Corporate Group – Establishing a Business Entity Series
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