in English: private limited company
The most widely used and well-known form of German company with share capital is the GmbH. Prerequisite is original capital of at least EUR 25,000. Liability is limited to the share capital. For these reasons, this form is primarily suitable for entrepreneurs wanting to limit their risk of liability.
in English: partnership
The difference between the Personengesellschaft, also known as “Teilhaberschaft”, and companies with share capital is that the respective partners bear the personal and unlimited responsibility for the liabilities instead of the company. The Gesellschaft bürgerliches Rechts (GbR; in English: civil law partnership), the offene Handelsgesellschaft (oHG; in English: general partnership) and the Kommanditgesellschaft (KG; in English: limited partnership) also number among the partnerships. All of them other than the GbR need to be entered in the commercial register.
in English: independent subsidiary/branch
A branch is not a separate legal entity to the main contractor. It is subordinate to the main subsidiary. In the event of branches established by foreign companies, their internal constitution is based on the company by-laws and the competent foreign law.
Typical characteristics of a branch:
- The location of the two subsidiaries needs to be clearly separate from each other.
- This does not mean that the branch can be located in the same municipality or the same commercial register district.
- The setting up of the branch needs to comprise a specific timeframe
- The implementation of the corporate goals of the main subsidiary is the main task of the branch, although it may in turn be larger and more important
- The business activities are not factually distinct from the main subsidiary and may thus not be limited to ancillary or executory activities
The branch needs to be both factually and personally independent. Factually in this case means that even in the event of a cessation of the main subsidiary the branch is still able to exist and be run (usually disposal of operating resources, separate bookkeeping, own bank account).
In the case of the personal perspective this means that it needs to have a manager with a commercial power of attorney or procuration who can independently conclude transactions associated with the branch.
in English: dependent subsidiary/operating facility
A dependent subsidiary may involve several business premises (branches, subsidiaries). However, the branch, also known as operating facilities, is dependent on the main office in every respect. All business processes are conducted via the main subsidiary. Operating facilities are not entered in the commercial register, but do need to be registered with the competent Gewerbeamt (German Trade Office).
in English: representative office
In principle, the term "Repräsentanz" does not exist in Germany, which is why German trade or commercial law does not recognise it. Consequently, a distinction is made between two possibilities. The first possibility is that the legal issue concerned is a dependent subsidiary/operating facility, with the office of the company in Germany being itself commercially active as a component of the proprietary organisation and needing to be commercially registered. The second possibility is that an office is opened and managed by an externally commissioned independent trader, although no commercial activity of the foreign company ensues in Germany.