Guidelines for the Formation of a German Limited Liability Company (GmbH)
Required Documents and Appointment of its First Managing Director
The minimum share capital for a GmbH is 25,000 Euros. The formation of a German “Gesellschaft mit beschränkter Haftung” (GmbH) requires the establishment of Articles of Association before a German notary. The notarisation and the appointment of the first director (Geschäftsführer) are recorded in a Memorandum of Incorporation (MoI), to which the Articles of Association (AoA) are attached. Then, an application for registration of the company in the Commercial Register (Handelsregister) must be made to the Local Court (Amtsgericht), where the company’s registered office is located. The company becomes effective only once it has been registered, which usually takes about one to three weeks. In the period between notarial formation and registration in the Commercial Register, business activities may already be undertaken in the name of the company. However, during this phase (after formation but before registration) the individuals acting in the name of the company are personally liable. …
In case the founder does not wish to appear before a German notary in person, a German legal counsel may act under power of attorney on the (future) shareholders behalf. Such power of attorney must be signed for and on behalf of the grantor (the person or company wishing to establish the German GmbH) before a notary public. The signature and the signatory’s authority to sign on behalf of the grantor must then be certified by a notary public. The notary public’s signature must then be authenticated by Apostille in order to evidence the legalisation of the notary’s signature for use of the notarised document abroad. This procedure is based on the convention abolishing the requirement of legalisation for foreign public documents signed in The Hague on 05 October 1961. The three documents (Power of Attorney, Certificate of Notary Public and Apostille) should be inseparably bound together by e.g. ribbon and seal of the notary.
Furthermore, a Secretary’s Certificate must be completed and signed by the Company Secretary of the founding company in order to evidence the existence of the founding company (also a copy of the company’s certificate of incorporation should be attached), that it is entitled to subscribe to shares in a German GmbH and that the signatory of the Power of Attorney is entitled to sign the Power of Attorney on behalf of the founding company. The Secretary’s Certificate must also be sworn to and subscribed before a notary public, whose signature must be authenticated by Apostille. Again, these documents (Secretary’s Certificate, Notary’s Certification and Apostille) must be inseparably bound together.
The Memorandum of Incorporation (the formation document) is then signed by the German legal counsel on behalf of the founding person or company under the Power of Attorney. Articles of Association (Satzung) of the GmbH must be attached to the MoI. A basic version (in German and English language) is published here for easy reference.
Furthermore, the founding process requires a notarial instruction letter from a German notary to be addressed to the GmbH’s first director (who is appointed in the Memorandum of Incorporation). German law requires that the (first) director is advised in notarial form of certain legal provisions pursuant to which persons who have been convicted of certain bankruptcy crimes or who have been forbidden by administrative action to exercise certain trades are barred from acting as director of a German GmbH.
Finally, the newly founded GmbH must apply to the Commercial Register for registration of the incorporation of the GmbH, the appointment of its first director and a list of shareholders of the GmbH. The application includes a section in which the newly appointed director must give a specimen of his/her signature for deposit with the Commercial Register. This document must be signed by the newly appointed director personally in the presence of a notary public. It may not be signed by anyone else under power of attorney because it contains certain assurances to be given by the director personally regarding his/her eligibility to be a director of a German GmbH. The notary public should then attach a separate sheet on which he certifies that the director’s signature has been made in his presence.
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For further information and assistance please contact Graf & Partners LLP, Munich, Germany, www.grafpartner.com, attention of Mr. Bernhard Schmeilzl, Master of Laws (Leicester), mail@grafpartner.com
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Additional material on German law and the German legal system is available here
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