The limited liability company, with the abbreviation GmbH, belongs to the group of corporations just like the stock corporation. This legal form enjoys a high reputation on the capital market. But this reputation is not for nothing: In order to establish a GmbH, a share capital of 25,000 euros is required, which must be raised by the shareholders when a GmbH is established.
The company acts as a legal entity with the GmbH capital stock in the background. The founders of the GmbH are normally not liable for legal disputes with their private assets, but with the paid-up share capital. This special GmbH liability often proves to be an enormous advantage of the legal form.
Compared to the AG, the foundation and management of a GmbH are considerably less complex. It consists of several shareholders. The owners of the shares of a GmbH are called partners or shareholders. If you want to get a big overview of all legal forms in Germany, our overview will help you with any type of company form:
The management of the GmbH is taken over by one or more managing directors, who are also called legal representatives of the GmbH. If a GmbH has no managing director, it is represented by the shareholders. In start-ups and small companies, the GmbH founder himself usually acts as managing director. As a further organ of the GmbH, a supervisory board is established for companies with 500 employees or more. But even before this threshold is reached, a supervisory board can be established voluntarily.
A GmbH must be registered in the commercial register and is obliged to keep double-entry books and prepare balance sheets. The preparation of the annual financial statement of the GmbH is required by the German Commercial Code according to §§ 242 ff. HGB. It consists of the balance sheet, a profit and loss account (GuV) and the notes to the financial statements. Medium-sized and large GmbHs must also add a management report to their annual financial statements in accordance with § 289 HGB. The aim is to present the course and results of business and the situation of the GmbH in a comprehensible manner.
The annual financial statement is usually prepared from the current accounting at the end of a fiscal year and forms the basis for the tax treatment of the GmbH. The annual financial statements must be approved by the shareholders at the shareholders' meeting and published in the electronic Federal Gazette.
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