GmbH Formation Checklist

GmbH formation at a glance

GmbH formation in Germany follows a fixed sequence: the shareholders agree on articles of association, a German notary certifies them, the share capital is paid in, the managing directors apply for registration in the commercial register, and the company comes into existence on registration.

Afterwards, the company must report its beneficial owners, register for tax and trade purposes, open its bank account in its own name and set up payroll if it employs staff. This checklist takes founders and foreign investors through each step of setting up a limited liability company (Gesellschaft mit beschränkter Haftung, GmbH) or its low-capital variant, the entrepreneurial company (Unternehmergesellschaft (haftungsbeschränkt), UG), with the statutory source for every requirement.

The notary plays a central role in GmbH formation. German notaries are independent public office holders who certify the articles, advise all parties impartially on the legal effect of the deed and file the application with the register electronically; TRW & Co does not provide notarial services, but we prepare the documents and coordinate with the notary of your choice. For an overview of legal forms and market entry, see our international clients guide. This page provides general information, not legal advice.

Step 1: GmbH or UG and the share capital

The GmbH requires share capital (Stammkapital) of at least EUR 25,000, and the nominal amount of each share must be stated in full euros; a shareholder can take over several shares, and the sum of the nominal amounts must equal the share capital (§ 5 GmbHG).

If capital is contributed in kind, for example by contributing a business, machinery or IP, the contribution and the share it relates to must be set out in the articles, and the shareholders must prepare a report on the contribution in kind explaining its value (§ 5(4) GmbHG). The register court checks whether the value of contributions in kind reaches the nominal amount of the shares.

The UG (haftungsbeschränkt) is a GmbH with share capital below EUR 25,000, in theory from one euro. It must use the designation "Unternehmergesellschaft (haftungsbeschränkt)" or "UG (haftungsbeschränkt)", its capital must be paid in full in cash before registration, contributions in kind are excluded, and one quarter of its annual net profit (reduced by loss carried forward) must be allocated to a statutory reserve (§ 5a GmbHG). Once the capital is increased to at least EUR 25,000, the UG can become a regular GmbH. For foreign groups, a UG is rarely appropriate, because customers, landlords and banks may see low capital as a risk signal.

Checklist for Step 1

• Decide on GmbH or UG and the amount of share capital.
• Decide on the number and nominal amounts of shares per shareholder.
• Decide whether any contributions will be in kind and, if so, prepare valuation evidence and the report on contributions in kind.

Step 2: The articles of association and the company name

The articles of association (Gesellschaftsvertrag or Satzung) must contain at least the company's name and registered seat, its object, the amount of the share capital and the number and nominal amounts of the shares each shareholder takes over (§ 3(1) GmbHG). The registered seat must be in Germany, but the company's administration can be elsewhere.

The object should be described specifically enough for the register court and third parties to understand the company's business. The company name must contain the designation "Gesellschaft mit beschränkter Haftung" or a generally understood abbreviation such as "GmbH" (§ 4 GmbHG), must be distinctive and must not mislead; the chamber of industry and commerce can be consulted on the name before filing.

Beyond the statutory minimum, articles typically regulate the managing directors' powers of representation, matters requiring shareholder consent, shareholder resolutions and majorities, transfer restrictions such as consent requirements and pre-emption rights, withdrawal and exclusion of shareholders and their compensation, the financial year and the allocation of profits. For subsidiaries of foreign groups, articles are usually short, and governance is managed through shareholder instructions and internal rules of procedure for the managing directors. Joint ventures need more detailed articles and a separate shareholders' agreement, which itself requires notarial form if it contains obligations to transfer shares.

Simplified formation with the model protocol

A GmbH with at most three shareholders and one managing director can be formed in a simplified procedure using the statutory model protocol (Musterprotokoll), which serves as articles, appointment of the managing director and list of shareholders, and from which no deviations are allowed (§ 2(1a) GmbHG). Notarial fees are lower, but the model protocol offers no flexibility, so it suits only simple start-ups.

Step 3: Notarial certification of the articles

The articles must be certified by a German notary and signed by all shareholders (§ 2(1) GmbHG). Shareholders can be represented by attorneys only on the basis of a notarially executed or certified power of attorney (§ 2(2) GmbHG); powers of attorney signed abroad usually require an apostille or legalisation and, if not in German, a translation.

Online formation by video conference with a German notary is possible (§ 2(3) GmbHG), with the participating shareholders signing by qualified electronic signature, which is useful for foreign founders who cannot travel. Notarial deeds are generally in German; the notary can draw up a deed in another language if proficient in it, otherwise an interpreter is needed.

Documents to prepare for the notary

• Draft articles of association or decision to use the model protocol.
• For individual shareholders: passport or identity card and address.
• For corporate shareholders: current register extract with apostille and translation, evidence of the signatories' authority, and information on the ownership structure.
• Powers of attorney in the required form, if shareholders will be represented.
• Details of the managing directors, including date of birth and address.

Step 4: Managing directors and payment of capital

A GmbH must have one or more managing directors (Geschäftsführer), who must be natural persons with full legal capacity (§ 6 GmbHG). Persons who have been convicted of certain offences, such as insolvency offences, fraud or breaches of capital market law, within the statutory period, or who are subject to an occupational ban in the relevant field, are disqualified.

Managing directors need not be German nationals or live in Germany, but they must be able to fulfil their duties, and they must give an assurance to the register court that no disqualification applies, after being instructed about their duty to provide true information. Managing directors are usually appointed in the formation deed or by separate shareholder resolution.

Before the application for registration, at least one quarter of the nominal amount of each cash share must be paid in, and the total of cash payments plus contributions in kind must reach at least half of the minimum share capital, that is EUR 12,500 (§ 7(2) GmbHG); contributions in kind must be made in full before the application.

For a UG, the entire capital must be paid in cash. Because the company does not yet exist as a GmbH, the capital is usually paid into an account opened for the company in formation, which in practice is one of the steps that most often delays the process for foreign shareholders.

Step 5: Application for registration and existence of the GmbH

All managing directors apply for registration of the company in the commercial register at the local court (Amtsgericht) in whose district the company has its registered seat (§ 7(1) GmbHG); the notary certifies the signatures and files the application electronically. The application must be accompanied by the articles, any powers of attorney, the evidence of the managing directors' appointment, a list of shareholders and, for contributions in kind, the underlying contracts, the report and valuation evidence (§ 8 GmbHG). The managing directors must give an assurance that the contributions have been made and are at their free disposal, and the assurance that no disqualification applies.

Before registration, the GmbH as such does not exist; persons who act in its name before registration are personally and jointly liable (§ 11 GmbHG). The company in formation (Vor-GmbH) can, however, already enter into transactions, and the shareholders may be liable for losses incurred before registration. Founders should therefore limit business activities before registration or obtain registration quickly.

Registration typically takes from a few days to several weeks, depending on the court and the completeness of the documents. After registration, the company appears in the online commercial register, and its name must be used with the legal form designation on business letters and websites, together with the information required by law.

List of shareholders

The list of shareholders filed with the register shows the shareholders' names, dates of birth and places of residence, or company details for corporate shareholders, and the nominal amounts and numbers of their shares. Managing directors must file an updated list without undue delay after any change in the shareholders or their stakes, and in transactions the notary usually files it (§ 40 GmbHG). Only those entered in the list are treated as shareholders by the company.

Step 6: After registration: transparency register, tax and operations

After GmbH formation, several registrations are required before the company can operate normally:

• Transparency register: The company must obtain, keep up to date and report information on its beneficial owners to the transparency register without delay (§ 20 GwG). For foreign ownership chains, this requires analysis of who ultimately owns or controls more than 25%.
• Trade notification: A company starting a trade must notify the competent municipal authority (§ 14 GewO); the authority informs the tax office and other bodies.
• Tax registration: The opening of a business must be notified for tax purposes (§ 138 AO), and the company must complete the tax registration questionnaire to obtain a tax number and, where needed, a VAT identification number. Corporate income tax, trade tax and VAT apply from the start.
• Employer registrations: If the company employs staff, it needs an employer number for social security, registration with the statutory accident insurance institution and payroll tax registration.
• Chamber membership: GmbHs are generally members of the local chamber of industry and commerce by law.
• Accounting and disclosure: The company must keep books, prepare annual financial statements and file them with the company register for publication (§ 325 HGB), with scope depending on size.

Further steps depend on the business: licences for regulated activities, registrations for packaging and electrical equipment, data protection documentation and, from 50 employees, an internal whistleblowing channel. See our thresholds at a glance and the German legal glossary, and our insight on setting up a GmbH as a foreign investor.

How TRW & Co helps with GmbH formation

We support founders and foreign investors through every step of GmbH formation: choosing the right legal form and capital structure, drafting articles of association, shareholders' agreements and rules of procedure, preparing powers of attorney and corporate documents for the notary, coordinating with the notary and the register court, and handling transparency register entries. We advise managing directors on their duties and liability, prepare employment contracts and service agreements, and coordinate with tax advisers on registrations and structuring. For foreign groups, we also advise on investment screening, immigration of staff and the governance of the new subsidiary. To start your GmbH formation, please contact us.