Thu, May. 24, 2007

Limited Liability Company Bill

J.G - Washington.   The German Department of Justice plans to amend the statute on the limited liability company, GmbH. The cabinet approved a bill on May 23, 2007. This would be the most extensive reform since the GmbH-Gesetz came into effect in 1898.

The bill would expedite significantly the forming of a company. The minimum capital would decrease to EUR 10,000. Even a start up without any capital would be possible. In that scenario, the company would retain profits until sufficient capital is accumulated. Until then, shareholders would not receive any distribution of dividends.

Simple setups will not require the often expensive involvement of a Notar. The corporate register may charter the company before other necessary licenses and approvals have been obtained, unlike the current system.

Also, headquarters need no longer remain in Germany or at the registered location. The draft adds transparency, permits acquisition in good faith of company shares, authorizes cash-pooling and revises the grounds for the disqualification of managers.

Attorney General Zypries expressed her belief that the MoMiG draft, which is supposed to become effective in 2008, will enhance protection for creditors, make German limited liability companies more attractive and guarantee their place in the international arena.

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