GERMANY Law and Practice Contributed by: Wolfram H. Krüger, Barbara Rybka, Markus Wollenhaupt and Alexander Zitzl, Linklaters
5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Limited Liability Company A GmbH as limited liability company is a corpo - ration acting fully independently of its sharehold - ers, subject to rights and obligations. Only the company assets of a GmbH serve to discharge the company’s obligations vis-à-vis creditors, and any personal liability of the shareholders is excluded if the capital contributions have been fully paid. The applicable legal framework is quite flexible, and the company’s articles can be adjusted to specific needs. Its foundation requires a notarial act. The management is vest - ed with one or more managing directors, who are generally bound by the instructions of the shareholders. The company may have a super - visory board ( Aufsichtsrat ). In order to establish a limited liability company, at least half of the man - datory EUR25,000 capital contributions have to be paid. Notarial, company register fees and fees for business registration amount to approxi - mately EUR1,000. Limited Partnership The KG is a limited partnership under German law and must have at least two partners. The partnership agreement does not require notari - sation, unless it contains obligations requiring the observation of specific form requirements (eg, contribution of real estate). It is character - ised by having at least one general partner, per - 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. 5.5 Applicable Governance Requirements 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,
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