Company law in germany II

1. COMPANY LAW II: COMPANIES
WITH UNLIMITED LIABILITIES
Wahidullah Abedi

2. SUMMARY
Definition
Different types of
companies
Characteristics

3. DEFINITION
• Each partner is personally and individually liable for all partnership liabilities.
• Creditors’ claims attach first to partnership assets
• if insufficient assets
• claims then attach to the personal resources of any partner, irrespective of that partner’s
capital equity in the company

4. TYPES OF COMPANIES
Companies Conditions Members
The Limited
Partnership KG
- no need of capital
- Be registered with the
Trade Register
At least 2
- the general partner
(Komplementär)
- the limited partner
(Kommanditist)
The General
Partnership OHG
- be registered with the
Trade Register
- no need of capital
At least 2 indivduals
The civil Law
Partnership GBR
- be registered with the
trade office
- Annual profit < 25000€
Two partners
The Sole Trade
- to register as a sole
trader with HMRC
Only one members

5. KOMMANDITGESELLSCHAFT (KG)
• This is basically a partnership but provides a limitation of liability
some of the partners
• 1) the general partner (Komplementär), who has an unlimited
liability extending to personal assets
• 2) the limited partner (Kommanditist) whose liability extends
only nominal holdings in the company.

6. OFFENE HANDELSGESELLSCHAFT
(OHG)
• The partners in an OHG have unlimited liability
• Every partner is legally obliged to participate actively in
operating the business
• The OHG can sue or can be sued in a court of law.
• For internal matters decisions should be made unanimously, but
usually allow decisions by a majority of votes.

7. GESELLSCHAFT BÜRGERLICHEN RECHTS
(GBR)
• It is only formed for a particular time
• it cannot be considered as a company in the time because the
registration at the trade authorities is not compulsory
• The GbR is a group of at least two individuals or companies and has
no legal personality
• The GbR is a common company form for cooperation between
freelancers or small companies
• Larger companies make only use of it for temporary cooperation
and joint ventures.

8. DIFFERENCES TO GBR,OHG,KG
• The main difference between a GbR and the OHG is the scale of
its business
• while a GbR is automatically formedwhenever several people
join to fulfil a common purpose,
• the OHG's purpose has to be a business on a commercial scale.
• A KG is a OHG with two sorts of partners: the general partners
and the limited partners.

9. THE SOLE TRADE
• A sole trader is personally liable, without limit, for the debts, losses and liabilities of the business.
• This can be a significant factor depending on what debts/losses/liabilities the business has or
expects to take on.
• Limited Work Area.
• Sole Right on Capital.
• Sole Management.
• No Legal Fornialities.
• Free to Select his/her Business.
• Willful Commencement and Closure.

10. USING (GMBH & CO. KG)GERMANY
BUSINESS
• The GmbH & Co. KG is a construction between GmbH and KG
and is a company form that only exists in Germany.
• It is applied in order to reduce the liability risk of a KG.
• This happens by appointing a GmbH as an executive of the KG
instead of an individual.
• The liability of the shareholders is reduced consequently
because the GmbH which has a limited liability bears the
unlimited liability.

11. REFERENCES
• https://www.justlanded.com/english/Germany/Articles/Business/German
-company-types
• https://ecovis-beijing.com/ohg-gbr-gmbh-ag-legal-company-forms-in-
germany/
• https://www.pwc.de/de/internationale-maerkte/doing-business-in-
germany-guide-2018.pdf
• https://en.wikipedia.org/wiki/German_company_law#Kommanditgesellsc
haft*
• https://en.wikipedia.org/wiki/Kommanditgesellschaft
• https://www.investopedia.com/terms/u/unlimited-liability.asp

12. THANK YOU FOR YOUR ATTENTION