Company Formation and Corporate Law in Germany

What company formation advice covers in practice

Corporate law is more than a notary appointment. It begins with the choice of legal form, continues with the articles of association, appointment of managing directors and registration in the commercial register — and accompanies the company over many years: on share transfers, shareholders’ resolutions, changes of management, capital measures and disputes between shareholders. A sound initial structure avoids costly corrections later.

Once the notarised formation documents, capital payment and commercial-register application are complete, registration commonly takes several weeks. The actual timeline depends on the documentation, the bank, the notary and the workload and any queries of the competent registration court. A vague or insufficiently specific object clause may trigger queries from the registration court. An unnecessarily narrow clause may require a later amendment if the business expands, while an overbroad or inconsistent description can create practical difficulties in banking, licensing or immigration procedures.

Topics, legal basis and detail pages at a glance

The table below maps the seven topics to their respective focus areas and typical clients. Each topic is covered in depth on the linked detail pages.

The formation stage — GmbH, UG and choice of legal form

Before any formation, the choice of legal form needs to be settled. In Germany the options range from sole proprietorships through partnerships (GbR, OHG, KG, PartG) to corporate forms such as the GmbH, UG and AG, as well as hybrid structures such as the GmbH & Co. KG. The right form depends on liability exposure, capital requirements, external profile, tax treatment and shareholder structure.

The GmbH remains one of the most widely used corporate forms for business activity in Germany. Under § 5 GmbHG, a minimum share capital of €25,000 is required. On a cash formation, at least one quarter of each share must in principle be paid up before the commercial register application; the aggregate amount paid must be at least €12,500. The UG under § 5a GmbHG allows formation with lower share capital, but must allocate one quarter of its annual surplus — after deduction of any loss carried forward from the prior year — to a statutory reserve. Reaching an economic amount of €25,000 does not automatically turn the UG into a GmbH. The share capital must be formally increased to at least €25,000 before the special rules under § 5a(1)–(4) GmbHG cease to apply. At formation, the UG share capital must be paid in full in cash; contributions in kind are excluded.

The individual options are covered in depth on the detail pages for GmbH formation, UG formation and choice of legal form.

Managing directors, shareholders and ongoing corporate law

After formation, the substantive corporate law begins. Shareholders hold interests and decide on profit distribution, amendments to the articles, capital measures and the appointment of managing directors. Managing directors represent the GmbH externally under § 35 GmbHG and are responsible for managing its affairs. Under § 43 GmbHG, they must exercise the care of a prudent businessperson and may be liable to the company for breaches of duty. Both roles are legally distinct — even where they are held by the same person (shareholder-director).

Typical advisory matters include transfers of GmbH shares and agreements creating an obligation to transfer shares, both of which generally require notarial form under § 15 GmbHG, as well as managing director agreements, pension commitments, non-competition provisions, voting arrangements and fiduciary or nominee arrangements, including their corporate and transparency-register implications. Where shareholder disputes arise, interim injunctions, defective-resolution proceedings and removal or compulsory redemption proceedings may follow — typically under significant time pressure.

The individual topics are addressed on the detail pages for corporate law, managing directors and shareholders, and ongoing corporate counsel.

Foreign shareholders and managing directors

In international mandates, corporate law regularly connects with immigration and commercial law. Since 1 August 2022, GmbH and UG formations can be notarised online — initially for cash formations — where all participants meet the statutory and technical identification requirements. A standard foreign passport alone may not be sufficient. The DiREG extension since 1 August 2023 has also covered formations involving contributions in kind and unanimous amendments to the articles, including capital measures. Limitations remain where the contribution itself involves a transaction that cannot be completed through the online procedure. Transfers of GmbH shares under § 15 GmbHG are generally not covered by the notarial online procedure and normally require an in-person notarisation.

Where a foreign shareholder also intends to live and work in Germany as managing director, the appropriate residence route must be assessed separately. Depending on the shareholding, voting rights, actual entrepreneurial control and contractual position, this may involve § 21 AufenthG or an employment-based route, particularly § 19c AufenthG. The corporate appointment alone does not confer any right of residence or authorisation to work.

The individual aspects are addressed on the detail pages for GmbH formation for foreign shareholders, managing director residence permits, and business immigration.

Recent developments — DiRUG, DiREG, MoPeG and the transparency register

German corporate law has been reformed in several steps since 2022 — with practical relevance for both existing and new mandates.

• DiRUG (in force since 1 August 2022) — online notarial procedure for cash formations of GmbH and UG, and online filings with the commercial register.
• DiREG (in force since 1 August 2023) — expanded the scope of online notarial proceedings to cover in particular formations involving contributions in kind and unanimous amendments to the articles, including capital measures. Limitations remain where the contribution itself involves a transaction that cannot be completed through the online procedure. Transfers of GmbH shares under § 15 GmbHG are generally not covered by the online procedure.
• MoPeG (in force since 1 January 2024) — the BGB now expressly distinguishes between a legally capable GbR that participates in legal transactions in its own name and a non-legally capable internal partnership. Registration in the partnership register is generally voluntary but becomes a practical legal prerequisite where register changes are required, particularly for real-estate transactions and for the acquisition or alteration of certain registered company interests.
• Transparency register — German legal entities and registered partnerships must generally identify, maintain and report current information on their beneficial owners under the Money Laundering Act. Failure to comply may result in administrative fines. Compliance is standard in formation practice.

How we work — one point of contact throughout

Corporate law mandates extend over years and regularly touch adjacent areas: employment law for managing director and staff agreements, contract law for supplier and customer relationships, immigration law in international structures. Kagan Legal provides a consistent point of contact where corporate, commercial, employment and immigration-law questions need to be coordinated.

We are a boutique law firm at Neuer Wall in Hamburg. Alexander Kagan advises founders, shareholders and managing directors throughout — from the choice of legal form to ongoing outside counsel. Advice in German and English.

Advice provided by Rechtsanwalt Alexander Kagan, German Rechtsanwalt and member of the Hanseatic Bar Association Hamburg (Hanseatische Rechtsanwaltskammer Hamburg).

The content of this page is general information only and does not constitute legal advice. The corporate law assessment depends on the circumstances of the individual case.