GERMANY LAW AND PRACTICE Contributed by: Wolfram H Krüger, Barbara Rybka, Markus Wollenhaupt and Alexander Zitzl, Linklaters
5.5 Applicable Governance Requirements
sonally liable without limitation, and one or more limited partner(s) only liable to the extent of their liable contribution ( Hafteinlage ) registered in the commercial register. Additional contributions can be agreed. Management is vested with the general partner. There is no mandatory minimum contribution. Company and business registration fees as foun - dation costs amount to approximately EUR550. 5.3 REITs Although German law recognises REITs, they are hardly relevant (see 5.1 Types of Entities Avail- able to Investors to Hold Real Estate Assets ). German REITs are listed stock companies and cannot be structured in another form. They are tax-exempt on entity level. Distributions are taxed on shareholder level. In addition to the Commercial Code ( Han- delsgesetzbuch ) and the Stock Exchange Act ( Aktiengesetz ), the REIT Act ( REIT-Gesetz ) applies to them. In addition to being listed at the stock exchange, REITs must fulfill certain other criteria, such as a minimum distribution of 90% of annual profit, focus on real property investment (at least 75%), minimum diversifica - tion (no shareholder must maintain more than 10%, minimum free flotation of 15%), exclusion of real property trade and a minimum equity ratio of 45%. 5.4 Minimum Capital Requirement The minimum share capital for a GmbH is EUR25,000. Capital contribution in kind is pos - sible but is subject to further restrictions. No minimum capital requirements apply for a KG.
No specific governance requirements apply to real estate investments as such. However, regulatory requirements apply if the investment vehicle qualifies as an investment fund under the German Investment Code (KAGB) – ie, any col - lective investment undertaking that raises capi - tal from a number of investors, with a view to investing it in accordance with a defined invest - ment policy for the benefit of those investors, and that is not an operative business outside the financial sector. The German Federal Financial Supervisory Authority ( Bundesanstalt für Finanz- dienstleistungsaufsicht ) supervises German fund managers and investment funds offered by such companies under the provisions of the KAGB. 5.6 Annual Entity Maintenance and Accounting Compliance The annual entity maintenance and accounting compliance costs depend on the individual cir - cumstances of the entity and the property itself. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time German law differentiates between Pacht, enti - tling the tenant to use the property and benefit from it, and Miete, which only entitles the tenant to use the property. For example, the leasing of a hotel, including all fixtures and equipment, and the right to operate the hotel is regarded as a Pacht contract. 6.2 Types of Commercial Leases There are no different types of commercial leas - es, apart from the general differentiation previ - ously explained.
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