Corporate Law Firm in Berlin

As one of Europe’s largest and most robust economies, Germany offers a dynamic business environment, but it also presents a unique set of legal challenges and regulatory requirements to which companies must adhere.

Corporate law in Germany, known as “Gesellschaftsrecht,” encompasses a wide range of legal disciplines, including the formation, operation, and dissolution of companies, mergers and acquisitions, corporate governance, compliance, and dispute resolution. Understanding this legal framework is critical to ensuring smooth business operations and mitigating risk.

Business Lawyer Berlin

If you want to set up a business in Germany, contact our business lawyers in Berlin and start figuring out how to go about this exciting adventure today.

Business and company law affects everyone who runs a business and covers every aspect from start-up to formation, operation and management through to takeover, closure or declaration of bankruptcy.

Our lawyers and attorneys can help you choose the best entity for your business and advise you on the various tax classifications available in Germany.

We regularly advise our clients on best practices to comply with the law, limit liability exposure and avoid litigation.

Contact us to find out more and how we can help you with the formation of your German company.

We provide tailored legal solutions that address the specific needs and strategic objectives of start-ups seeking guidance in forming a legal entity, growing companies exploring merger opportunities, and established businesses requiring ongoing compliance support.

Secure Your Business Future with Expert Legal Support.

Call the Office (M-F: 9am-6pm)
+49 (0)30 88702382

Contact us via email
[email protected]

Expert Legal Guidance for Your Corporate Needs

Partnering with us gives you access to deep legal expertise and a commitment to your business success. Our services include advising on the most appropriate corporate structures, assisting in the drafting and negotiation of contracts, ensuring compliance with regulatory obligations and representing your interests in disputes. We stay abreast of the latest legal developments to provide you with timely and relevant advice, ensuring that your business remains compliant and competitive.

Company Formation

Starting a business in Germany involves navigating complex legal requirements. We can assist with all aspects of company formation, including choosing the appropriate legal structure (e.g. GmbH, AG, KG), drafting and filing articles of association and registration with the commercial register. Our aim is to ensure the smooth and legally compliant establishment of your business.

Contract Drafting and Review

Contracts form the backbone of any business. We specialise in drafting, reviewing and negotiating a wide range of corporate agreements, including shareholder agreements, joint venture agreements, supply agreements and more. Our attention to detail protects your interests and minimises risk.

Shareholder relations and disputes

Managing shareholder relations and resolving disputes can be challenging. We provide expert advice on shareholder rights, general meetings and dispute resolution. Our aim is to promote a harmonious business environment while protecting your legal interests.

Corporate Governance and Compliance

Effective corporate governance is critical to the integrity and success of your business. We provide comprehensive advice on the implementation of governance frameworks, compliance with German company law and the establishment of internal policies and procedures. Our services ensure that your business operates in a transparent and ethical manner.

Mergers and Acquisitions (M&A)

Navigating mergers and acquisitions requires expert legal advice. We assist clients in all phases of M&A transactions, including due diligence, negotiations, drafting agreements and obtaining regulatory approvals. Our expertise ensures that your transactions are seamless and beneficial to all parties involved.

Corporate Restructuring

Corporate restructuring can help improve efficiency and profitability. We guide companies through the restructuring process, whether it involves mergers, disposals or the reorganisation of business units. Our strategic approach ensures that restructuring efforts are aligned with your business objectives.

Employment and labour law

A solid understanding of employment and labour law is critical to managing your workforce. We advise on drafting employment contracts, employee handbooks and policies, handling employment disputes and complying with employment regulations. Our services will help you create a productive and compliant workplace.

Cross-border transactions

In an increasingly globalised marketplace, cross-border transactions are commonplace. We provide expert advice on international business activities, including compliance with international trade laws, tax implications, and cross-border mergers and acquisitions. Our services ensure that your global operations are legally sound.

Dispute resolution and litigation

In the event of a dispute, effective resolution is key to minimising the impact on your business. We represent clients in negotiation, mediation, arbitration and litigation. Our goal is to resolve disputes efficiently and favourably, protecting your business interests.

German Corporate Law: FAQs

What are the main types of company structures available in Germany?

In Germany, companies can choose from a number of company structures, each suited to different business needs and sizes:

  • Gesellschaft mit beschränkter Haftung (GmbH): This is the most common form of limited company in Germany. It requires a minimum share capital of €25,000. The GmbH offers flexibility in management and is suitable for small to medium-sized businesses.
  • Aktiengesellschaft (AG): This is a public limited company, ideal for larger businesses that may wish to raise capital through public shares. It requires a minimum share capital of €50,000 and has stricter regulatory and reporting requirements.
  • Limited partnership (KG): This is a limited partnership in which at least one partner has unlimited liability (general partner) and others have limited liability (limited partners). It’s often used for family businesses and SMEs.
  • Offene Handelsgesellschaft (OHG): This is a general partnership where all partners have unlimited liability. It’s suitable for businesses where the partners are actively involved in management.
  • Gesellschaft bürgerlichen Rechts (GbR): This is a civil law partnership used for small, non-commercial businesses and collaborations. The partners are jointly and severally liable.

What is the process for incorporating a company in Germany?

Incorporating a company in Germany involves a number of key steps:

  • Choosing a company name: The name must be unique and comply with naming regulations. It should reflect the business and not be misleading.
  • Drafting the Articles of Association: This legal document outlines the company’s structure, purpose and operating procedures. It must be notarised by a German notary.
  • Deposit of share capital: The minimum required share capital must be deposited in a company bank account. This is €25,000 for a GmbH and €50,000 for an AG.
  • Registration in the Commercial Register: The company must be registered with the local trade register at the district court. This process makes the company a legal entity.
  • Obtaining trade licences and tax registration: The company must register with the local trade office and obtain the necessary trade licences. It must also register for tax purposes with the local tax office.

What are the legal requirements for corporate governance in Germany?

Corporate governance in Germany is governed by the German Corporate Governance Code, which sets standards for responsible management and control:

The board of directors is responsible for managing the company’s business and implementing strategic decisions. They must act in the best interests of the company and ensure compliance with laws and internal policies.

The supervisory board oversees the management board and ensures that it operates efficiently and ethically. Board members are usually elected by shareholders and, in larger companies, include employee representatives.

Companies must maintain transparency by providing accurate and timely financial reports and disclosures. Regular reporting to shareholders and regulators is mandatory.

Effective risk management systems must be in place to identify, assess and mitigate risks. This includes financial, operational and compliance risks.

Protecting shareholders’ rights, including the right to participate in general meetings and to vote on important corporate matters, is essential.

How can a company ensure compliance with German corporate laws?

Ensuring compliance with German corporate law requires several proactive measures.

First, it is important to keep abreast of changes in the law. Regular monitoring of changes in corporate laws and regulations is essential, and subscribing to legal updates and working with legal advisors can help keep the company informed.

Regular legal audits help identify compliance gaps and areas for improvement. This proactive approach helps to mitigate risks before they escalate into significant issues.

Keeping detailed and accurate records of business activities, decisions and transactions is critical to demonstrating compliance and responding to legal inquiries.

Regular compliance training for employees and management ensures that everyone understands their responsibilities and the importance of complying with the law.

What are the main employment laws affecting businesses in Germany?

Employment laws in Germany are designed to protect employees’ rights and ensure fair treatment. Key laws include:

  • Bundesurlaubsgesetz (Federal Vacation Act): This law mandates a minimum of 24 working days of paid vacation per year for full-time employees. Employers must ensure compliance with this entitlement.
  • Arbeitszeitgesetz (Working Time Act): This regulates working hours, including maximum working hours, rest periods, and night work. Generally, the maximum working time is 8 hours per day, which can be extended to 10 hours if the average working time over six months does not exceed 8 hours per day.
  • Kündigungsschutzgesetz (Dismissal Protection Act): This provides protection against unfair dismissal for employees, particularly in companies with more than ten employees. It requires valid reasons for termination and adherence to notice periods.
  • Allgemeines Gleichbehandlungsgesetz (General Equal Treatment Act): This law prohibits discrimination based on race, gender, religion, disability, age, or sexual orientation. Employers must ensure equal treatment in hiring, promotion, and workplace policies.

What are the steps involved in resolving shareholder disputes in Germany?

Resolving shareholder disputes in Germany involves several steps to ensure a fair and legal outcome:

  • Mediation and negotiation: First, attempts should be made to resolve disputes through mediation and negotiation. This helps to preserve business relationships and can lead to amicable solutions without litigation.
  • Shareholder agreements: Reviewing and enforcing shareholder agreements can provide clarity on the rights and obligations of each party. These agreements often include dispute resolution mechanisms.
  • Legal action: If disputes cannot be resolved amicably, legal action may be necessary. This may include filing a lawsuit in a local court, where the court will review the case and make a binding decision.
  • Arbitration: As an alternative to litigation, arbitration can be used if the parties agree. This involves an arbitrator or arbitration panel making a decision, which is usually binding.
  • Expert determination: Seeking advice from legal experts who specialise in corporate law ensures that disputes are handled professionally and in accordance with German law.

What are the tax implications of different corporate structures in Germany?

The tax implications of corporate structures in Germany vary considerably.

GmbH and AG are both subject to corporate income tax (Körperschaftsteuer) at a rate of 15%, plus a solidarity surcharge (Solidaritätszuschlag) of 5.5% on the corporate tax. They also pay trade tax (Gewerbesteuer), which varies by municipality but averages around 14%-17%.

KGs and OHGs are usually taxed as partnerships, i.e. profits are taxed at the income tax rates of the individual partners. They also pay trade tax on their business income.

Similar to other partnerships, GbR profits are taxed at the individual partners’ income tax rates. Trade tax may be payable depending on the nature of the business.

All business structures must comply with VAT regulations, charge VAT on goods and services and be able to reclaim input VAT on business expenses.

Corporate Law in Germany: An Overview

Corporate law in Germany is a complex and well-regulated area that governs the formation, management and dissolution of companies. If you are doing business in the country, you are also dealing with company law.

While our legal team is here to advise and guide you through the intricacies of company law, it is essential to have some insight into the legal framework that shapes the business landscape in Germany.

Types of Corporate Entities

Germany offers several types of companies, each suited to different business needs and sizes. The most common types are

  • GmbH (Gesellschaft mit beschränkter Haftung)
  • UG (Unternehmergesellschaft or “Mini-GmbH”)
  • AG (Aktiengesellschaft)
  • KG (Kommanditgesellschaft)
  • GmbH & Co. KG.

The GmbH, equivalent to a limited liability company, is favoured by small and medium-sized enterprises due to its flexible structure and limited liability for shareholders.

The UG (haftungsbeschränkt), introduced in 2008, is a simplified form of the GmbH, designed for entrepreneurs who want to start a business with minimal initial capital. The minimum share capital for a UG is just €1, making it an attractive option for start-ups and small businesses.

The AG, similar to a public limited company, is suitable for larger businesses and can be listed on the stock exchange.

KG and GmbH & Co. KG combine elements of partnerships and corporations, offering unique advantages in terms of liability and management.

Forming a company in Germany

Setting up a company in Germany is a multi-step process involving legal, financial and administrative procedures.

For a GmbH, the formation process begins with the drafting of the company’s articles of association. These articles must include the company’s name, registered office, business purpose and details of the shareholders and their respective contributions. The minimum share capital required for a GmbH is €25,000, which must be fully subscribed and at least 50% paid in before the company is registered.

The articles of association must be notarised by a German notary. This notarisation process includes verifying the identity of the shareholders and the legality of the contents of the document. Once notarised, the capital contributions are paid into a company bank account.

The next step is to register the company in the commercial register maintained by the local court. This registration requires the submission of the notarised articles of association, proof of the capital contribution and details of the directors. Registration ensures that the company is legally recognised and authorised to carry on business.

The formation process for a UG is similar to that of a GmbH. The articles of association must be notarised and the company must be registered with the commercial register. Despite its lower capital requirements, a UG is subject to the same legal obligations and protections as a GmbH.

In addition to registration, companies have to meet other requirements, such as registering with the local trade office to obtain a trade licence. They must also register with the Inland Revenue to obtain a tax number and, if applicable, register for VAT.

Corporate Governance and Shareholders

Corporate governance in Germany is characterised by a two-tier board system, especially for public limited companies (AGs). This includes the management board (Vorstand) and the supervisory board (Aufsichtsrat).

The management board is responsible for the day-to-day running of the company, while the supervisory board oversees the activities of the management board and represents the interests of the shareholders.

In a limited company, the directors run the day-to-day business and the shareholders have a direct say in major decisions. This structure ensures a balance of power and accountability within the company.

Shareholders in German companies have specific rights and duties, which vary depending on the type of company.

In a GmbH, shareholders exercise their rights primarily through the general meeting, where they can vote on important decisions, approve the annual accounts and make changes to the articles of association.

In an AG, shareholders exercise their rights mainly at the annual general meeting, where they can vote on issues such as dividend distributions, board elections and capital increases. Understanding these rights is crucial to effective participation in corporate governance.

Compliance and Reporting

Compliance and reporting are critical aspects of corporate law in Germany.

All companies in Germany, regardless of size, are required to prepare financial statements. These statements typically include a balance sheet, profit and loss account and notes to the accounts. Larger companies, such as public limited companies and larger private limited companies, must also prepare a management report, which provides an overview of the company’s business performance, financial position and future prospects.

The financial statements must be prepared in accordance with the German Commercial Code (HGB). For listed companies, additional requirements may apply under International Financial Reporting Standards (IFRS). The preparation of accurate and timely financial statements is critical as they provide essential information to shareholders, creditors and regulators.

Companies that exceed certain size criteria – such as total assets, turnover and number of employees – must have their financial statements audited by an independent auditor. The audit involves a thorough examination of the company’s financial records, accounting practices and internal controls to ensure the accuracy and reliability of the financial statements.

The auditor’s report is an integral part of the audited financial statements. It expresses an opinion on whether the financial statements give a true and fair view of the financial position of the company and comply with applicable accounting standards. The audit process contributes to the credibility of the financial statements and promotes investor confidence.

Companies in Germany are required to file their annual accounts with the commercial register. The filing must be done electronically and within a specified timeframe – usually within 12 months of the end of the financial year for GmbHs and six months for AGs. The financial statements become publicly available through the Federal Gazette, which promotes transparency and accountability.

In addition to annual financial statements, companies must also report significant changes in their business, such as changes in the company’s name, registered office, directors or shareholders. These changes must be recorded in the commercial register to ensure that the public record accurately reflects the current status of the company.

Employment Law

Labour law in Germany is comprehensive, covering a wide range of issues from employee rights to collective bargaining.

German companies must comply with strict labour laws, including those relating to working hours, health and safety, and termination of employment.

Works councils are a unique feature of German labour law, giving employees a voice in company operations and decisions.

Compliance with labour laws is essential to maintaining a productive and compliant workforce.

Taxation

Corporate taxation in Germany comprises corporation tax, trade tax and value added tax (VAT).

The rate of corporation tax is generally 15%, with a solidarity surcharge of 5.5% on corporation tax, and the rate of trade tax varies by municipality.

VAT is currently set at 19%, with a reduced rate of 7% for certain goods and services.

Companies can also benefit from various tax incentives and deductions to encourage business activity. Understanding tax obligations and benefits is essential for effective financial planning.

* The information on this website is for illustrative purposes only. It does not constitute legal advice and is not a substitute for personal legal advice from a lawyer. Each case is unique, has special circumstances and should be reviewed in detail by a lawyer who is able to review the specific situation.

Tailored Legal Solutions for Your Business

Don’t leave your company’s legal affairs to chance.

Contact our dedicated corporate law specialists for comprehensive German corporate law support.

We provide tailored legal solutions to meet your specific business needs.

Let us be your trusted partner in navigating the complexities of German corporate law.

Call the Office (M-F: 9am-6pm)
+49 (0)30 88702382

Contact us via email
[email protected]

Contact LSI Berlin for comprehensive German corporate law support

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+49 (0)30 88702382

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Schlüterstrasse 37, 10629
Unter den Linden 10, 10117