LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name. The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct. Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity. Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

Company Registration in Germany |

An overview of company registration in Germany

The largest economic powerhouse in the European Union is thought to be Germany. There have been significant changes on the German mainland as a result of government support and initiatives for Small and Medium Enterprises (SMEs). SMEs are also referred to as “Mittlestands” in other contexts. The government provides these businesses with a variety of perks and incentives to ensure proper operation.

Overview

In Germany, the government is helpful and offers training for all enterprises to do all types of activities. SMEs are regarded as the foundation of the German economy. Entrepreneurs and investors can register a company in Germany because of the country's business-friendly environment. One of the most reliable passports in the world is the German one. Investors should thus think about the German company registration process.

Advantages of German Company Registration

The advantages of registering a company in Germany are as follows:

Transparency- When it comes to conducting business, Germany is among the most transparent nations in the world. The procedure for incorporating a business is rather simple for investors who choose to register a company in Germany. Additionally, the German government offers a lot of support to many businesses.

Infrastructure- Germany offers top-notch infrastructure facilities. In Germany, there is a cutting-edge communications network. Additionally, Germany has high-speed infrastructure in the form of railroads and other types of infrastructure.

Lower Corruptness- One of the nations with the least corruption in the world is Germany. Germany is among the twenty least corrupt countries in the world, according to the Transparency Index of 2018.

Foreign investment is not subject to exchange controls- For international investment opportunities, there are no exchange controls of any kind. As a result, international businesses and organizations are permitted to invest in Germany.

Different Business Structures for German Company Registration

It is essential to take into account the sort of business structure that will be used for company registration when forming a corporation in Germany. The types of business structures that exist in Germany are as follows:

Limited Liability Company (GmbH)- The minimum share capital required to establish this type of organization is EUR 25,000. It should be emphasized that the German GmbH's shares cannot be sold to the general public or registered on the stock exchange. All daily decisions are made by the director, who is chosen by the shareholders' general meeting.

German Joint Stock Company, or AG- Large firms are best suited for this type of company. A minimum share capital of 50,000 EUR is necessary. A court or notary's certification of the Articles of Association is required to establish an AG. Only after it is registered in the commercial register does it acquire legal status. It only acquires legal status after being recorded in the Commercial Register.

German Limited Partnership- With two categories of partners—the general partner, who has unlimited liability that extends to their personal assets, and the limited partner, whose liability is restricted to their nominal ownership interests in the company—this type of partnership allows for the limiting of liability.

Sole trader- This type of entity is simple to create because it only needs one person.

Branch Office- One of the most common ways for foreign investors to access the German market is through branch offices. The head office, which is also in charge of central administration, is the only source of information for a branch office in every way.

Documents Needed for German Company Registration

The following paperwork is necessary for German company registration:

A notarized copy of the articles of association (AOA)

A registration application

A document outlining the composition of the management board

A certificate attesting to the deposit of the share capital;

Directors' visas if they are foreign residents;

Address of the company's registered office

Information about the directors and shareholders; and

Any additional details the notary may require.

Germany's Company Registration Process

When registering a corporation in Germany, the following process must be taken into account:

Selecting a business structure- Germany has a variety of company structures, as was previously mentioned. The applicant must first decide on the best business structure. A candidate for the GmbH entity would typically need to have EUR 25,000. Other business models exist in Germany, though, and they call for less funding. Decide on the business structure in accordance with the anticipated business activity.

Company Name- The applicant will then need to select a suitable name for the business. If the company name is available, it must be verified in the Handelsregister (commercial register). The name must be original and may not conflict with the name of an organization that has already been registered.

Execute the company's deed- The company formation deed is drafted and signed in front of a notary as the next step. The founders will have to submit AOAs, IDs, and sample signatures.

Business Bank Account- In Germany, there are various types of notary jurisdictions. Some notaries have very specific requirements for the bank. Finding a bank that appears on the list of approved banks is crucial.

Put money in the bank account as a deposit (Stammkapital)- The capital needed for the company formation process is placed when the bank account is opened. The Stammkapital number may be provided by the applicant as a reference. Once this is finished, the applicant for German company registration will make sure to give the notary the deposit receipt.

Paying the notary public- The notary must then be paid after that. Additionally, the Handelsregister invoice must be paid in full. However, if the notary already completed the procedure, this one is not necessary.

Once the firm is registered, the Notary will let the applicant know- The notary will notify you once the firm has been registered. The business will be registered in the business registry.

Get a license or permit- Your company could need specific licenses or permits from the German authority depending on the sort of economic activity to be conducted. Without it, one cannot function properly.

Compliances needed for German Company Registration

The process of starting a business extends beyond merely forming a corporation. The organization is required to adhere ssssssssto a variety of ongoing compliances. For the registration of a corporation in Germany, the following requirements must be met:

Annual Accounts: Shareholder meetings must be held at least once a year to vote on the company's annual financial statements. The business would have to submit annual accounts to the German Federal Gazette in accordance with German Commercial Law (Bundesanzeiger).

Board meetings: This would depend on whether it was indicated in the company's articles of organization.

Open a bank account: After registering your company, one of the most important procedures you must complete is opening a bank account in Germany. One of the best international financial infrastructures in the world is found in Germany.

Tax returns: It must be filed with the appropriate tax authorities at least once every year.

Corporate Income Tax: The local municipalities in Germany impose corporate tax (Körperschaftsteuer) and trade tax (Gewerbesteuer) on all businesses. The rate of corporate taxation is 15.825%.

FAQs

Concept of LLP

LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.

Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

Structure of LLP

LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession.

Advantages of LLP

LLP form is a form of business model which:

(i) is organized and operates on the basis of an agreement.

(ii) provides flexibility without imposing detailed legal and procedural requirements

(iii) enables professional/technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner

Other Countries where this form is available

The LLP structure is available in countries like United Kingdom, United States of America, various Gulf countries, Australia and Singapore. On the advice of experts who have studied LLP legislations in various countries, the LLP Act is broadly based on UK LLP Act 2000 and Singapore LLP Act 2005. Both these Acts allow creation of LLPs in a body corporate form i.e. as a separate legal entity, separate from its partners/members.

Difference between LLP & ‘Traditional Partnership’

Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
Under LLP structure, liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct

Difference between LLP & Company

A basic difference between an LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.
The management-ownership divide inherent in a company is not there in a limited liability partnership.
LLP will have more flexibility as compared to a company.
LLP will have lesser compliance requirements as compared to a company.