The difference between GmbH and UG

The company foundation is imminent and you are spoiled for choice in the company forms. We explain the difference between the most widely used forms of the so-called corporation

The limited liability company was first introduced by the Law on Limited Liability Companies on April 20, 1892.

This form of society became so popular in the years that it spread in the same or similar form around the world. First, the Austrians (1906) moved to and then countries like Portugal (1917), Brazil (1919), Slovakia (1920), France (1925) and Belgium (1935).

Features of the GmbH

The GmbH can be founded by one or more persons. Prerequisites for the foundation are the conclusion of a notarized partnership agreement and a share capital in the amount of EUR 25,000. The minimum cash contribution of the company when founded amounts to 12.500, – EUR. However, in the case of a bankruptcy, the shareholder must raise the difference of EUR 25,000 from his private funds, since the share capital was increased to the full amount in the course of business activity. Contributions in kind are also permitted. The incorporation of the company is completed with payment to the commercial register. Shareholder can be any natural or legal person. OHGs and KGs can also become shareholders due to their legal capacity   Only companies under civil law (GbR) and heir communities are excluded from participation as a founding member. If a shareholder dies, a community of heirs can nonetheless become a shareholder. The organs of the GmbH are the management and the shareholders’ meeting. From 500 employees, a supervisory board must be set up as the controlling body. The liability of the GmbH to creditors is limited to the company assets.

The features of the UG

The entrepreneurial company (haftungsbeschränkt) was baptized in 2008 by the law for the modernization of the GmbH right in order to create a counterbalance to the English legal form of the Limited. Since its introduction, the company’s share of German companies has actually fallen sharply. The entrepreneur company behaves purely legally as a GmbH, so that almost all provisions of the GmbH-law apply.

Special features of the UG

The regulations for the UG are not completely identical to the GmbH. The first and most obvious difference is the registered capital. Here is a minimum capital from 1, – EUR possible. The shares of the shareholders must correspond only to natural numbers. A share of 50, – Cent is therefore not possible. In addition, a UG does not necessarily have to be able to show an account at the foundation. The addition of limited liability in brackets must also not be omitted. The biggest difference is the obligation to create reserves. The management of the UG must cover each financial year 25% of the annual surplus until the capital height of a GmbH is reached. Then you can increase the share capital to 12,500, – EUR or convert the company into a GmbH. Here it is to be mentioned separately that the shareholders of the UG are not obliged to reach the 12.500, – EUR limit as in the case of the bankruptcy in case of bankruptcy up to the full share capital of 25.000, – EUR to be held privately. The capital can also not be held as a contribution in kind, but must always be paid. Another difference is not legal but to look in the business world itself, of course the GmbH owns a better reputation than the UG because of the much higher share capital because it is considered to be more stable and secure.

Shelf GmbH

With fully paid up share capital of EUR 25,000, – as bank balance.

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Shelf UG

With fully paid-up share capital of EUR 100, – and a bank account

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Shelf AG

With share capital of EUR 50,000, – and a bank account.

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Shelf Ltd.

Stock Ltd. with registered branch office in Germany and a German bank account

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