GERMANY Law and Practice Contributed by: Christoph Nolden, Nicolas Ott, Stefan Mendelin and Thomas Glaser, SZA Schilling, Zutt & Anschütz
SZA Schilling, Zutt & Anschütz Taunusanlage 1 60329 Frankfurt Germany Tel: +49 69 9769601 0
Email: info@sza.de Web: www.sza.de
1. Types of Company, Share Classes and Shareholdings 1.1 Types of Company German law provides for private and public compa- nies. A general distinction can be made between: • partnerships ( Personengesellschaften ), such as commercial partnerships ( Offene Handelsgesells - chaft (OHG) and Kommanditgesellschaft (KG) and civil law partnerships ( Gesellschaft bürgerlichen Rechts , or GbR); and • corporations ( Kapitalgesellschaften ), such as stock corporations ( Aktiengesellschaft , or AG), soci- etas europaea (SE) and limited liability companies ( Gesellschaft mit beschränkter Haftung , or GmbH). In between, there are hybrid forms, such as partner- ships limited by shares ( Kommanditgesellschaft auf Aktien , or KGaA), as well as combinations of legal forms, such as: • limited partnerships with a limited liability company as general partner ( Gesellschaft mit beschränkter Haftung und Compagnie Kommanditgesellschaft , or GmbH & Co KG); or • partnerships limited by shares with a societas europaea as general partner (societas europaea und Compagnie Kommanditgesellschaft auf Aktien , or SE & Co KGaA). Generally, stock corporations, SEs and partnerships limited by shares are designed for large numbers of investors and can be listed on stock exchanges, whereas limited liability companies are designed for smaller groups but allow for a more flexible legal
design. The following sections will focus on stock corporations and limited liability companies. In terms of shareholders’ rights, the comments on stock corpo- rations also apply to (primarily dualistically structured) SEs with a registered seat in Germany. 1.2 Types of Company Used by Foreign Investors In general, there are no restrictions on the types of companies that are open to foreign investors. How- ever, foreign investors will often – depending on the purpose of their investment – opt to invest in stock corporations. Stocks can be traded on stock exchanges and are thus accessible without any significant barriers. Therefore, investing in stock corporations is evidently the easiest option for foreign investors. In addition, the investment generally does not have to be disclosed to the public, unless: • reporting thresholds under capital markets law are exceeded; or • information about the ultimate beneficial owner has to be disclosed in the transparency register. Another type of company favoured by foreign inves- tors is the limited liability company. Such companies are usually preferred by foreign companies when establishing German subsidiaries or joint ventures. Generally, they allow for a much more flexible design compared to stock corporations. Partnerships, on the other hand, will usually be less attractive owing to the personal liability of their partners (with the exception of limited partnerships with a limited liability company as general partner).
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