Entrepreneurial Company with Limited Liability (UG) as Special Type of GmbH

12-Aug-2012 | News-Press Release

Cologne, Nordrhein-Westfalen ( prsafe ) August 10, 2012 - http://www.grprainer.com/en/Company-Law.html The UG, Entrepreneurial Company with limited liability is a special type of GmbH. It is also called a mini-GmbH and is a fairly recent addition to German company law. It was only introduced along with the new MoMiG, the German Act to Modernise the Law on Private Limited Companies and Combat Abuses at the end of 2008.

GRP Rainer Lawyers Tax Advisors, Cologne, Berlin, Bonn, Dusseldorf, Hamburg, Munich, Stuttgart, Frankfurt www.grprainer.com elaborate: Like the GmbH it is entered in the commercial register and is a legal entity. As such it can sue or be sued. The UG acts through its primary agents, in particular one or more managing directors. The articles of association require notarisation.

However, in contrast to the GmbH, the shareholders establishing a UG do not need to raise legal capital to the value of € 25,000. The minimum investment is just €1. In this respect, the UG represents an alternative to the English Limited, which likewise requires a very small investment. Liability for debts of the UG is limited to the company assets. The shareholders themselves are not responsible for the company liabilities.

The shareholder contribution of a UG cannot - in contrast to a GmbH - be made in the form of a contribution in kind, but must be in the form of a cash investment. It should be noted that the UG is obligated, on account of their low initial share capital, to accumulate reserves of 25% of the annual profit each year until an initial capital contribution of € 25,000 is reached. The UG can then be converted into a GmbH. However, there is no obligation to do this.

As compelling as the formation of a company with a low capital may seem, it is nevertheless important to obtain comprehensive advice from a lawyer prior to setting up a UG. The lawyers and tax advisors who specialise in company law at our firm will be happy to take over this task for you.

It is necessary to have the assistance of a lawyer to be able to truly comprehend all the advantages offered by an UG but at the same time the risks that it also entails and to be able to negotiate your way through the process.



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