QUESTIONS AND ANSWERS ABOUT COMPANY ESTABLISHMENT PROCEDURES AND PROCESSES IN GERMANY
We've prepared this informational note to answer frequently asked questions about company formation and processes in Germany and to provide you with brief information. The frequently asked questions and their answers are as follows:
1. UNTERNEHMENSGESELLSCHAFT (UG) AND LIMITED COMPANY (GMBH): WHICH COMPANY MODEL IS SUITABLE FOR YOU?
In short, a UG company is considered a type of venture company and can be established even with 1 EU capital. This type of company has an extremely weak commercial reputation with third parties. A venture company is perceived as an entry-level company and is far from a reliable type of company. This type of company appears to have weak credibility and commercial reputation with banks, other companies, or public institutions. Therefore, for those wishing to invest in establishing a company, the GmbH company form is highly recommended.
2- NOTARY AND TRADE REGISTRY PROCEDURES WHEN ESTABLISHING A COMPANY IN GERMANY
Company formation procedures begin with the preparation of the company's articles of association and its notarization. The articles of association are prepared based on the company's capital, name, address, partners, areas of activity, and other necessary information, and this agreement is notified by all partners at a notary.
Following the approval of the articles of association, a bank account is opened in the company's name to pay the company's capital. Once the capital is deposited into the bank account, the company is registered with the trade registry. This process can typically take between 1.5 and 2 months. Once the company's trade registry registration is completed, the necessary official authorities are notified of the company's opening, and the company formation process is completed.
3- IS A RESIDENCE REQUIRED FOR COMPANY ESTABLISHMENT IN GERMANY?
Basically, a residence permit is not required for GmbH company formation. A Schengen visa holder can participate in notarization and other incorporation procedures, or company formation procedures can be carried out through a power of attorney.
Shareholders are not required to reside in Germany for company formation. However, in order for the company's capital to be paid and the incorporation procedures to be completed, the company director responsible for the bank account to be opened in the company's name must have a German residence permit or be a German citizen. In this case, banks will not open bank accounts in the company's name, and because the company's capital cannot be paid, the incorporation procedures cannot be completed.
4- WHAT SHOULD FOREIGN INVESTORS CONSIDER WHEN ESTABLISHING A COMPANY IN GERMANY?
When establishing a company, the first thing to consider is the preparation of the company's articles of association. The company's areas of activity should be carefully selected, and then, special training and certifications must be obtained before the company can commence operations. Otherwise, it should be remembered that the company and its representatives will face severe penalties.
Furthermore, the company's name should be carefully chosen. It is crucial that the company avoids confusion with companies with similar titles and avoids copyright infringement.
Furthermore, attention should be paid to matters such as the company's partnership structure, decision-making and meeting processes, and the company's address.
After incorporating the company, it is also important to ensure that tax filings are completed on time, a business license is immediately applied for, and any special permits related to the business are obtained from the municipality or relevant authorities.
5- BANK ACCOUNT OPENING FOR A GMBH
As explained above, a residence permit is not generally required for the establishment of a GmbH. However, when applying for a bank account to be opened in the company's name to pay the capital fee, banks require the company director to have a German residence permit or be a German citizen. Otherwise, the bank account opening process cannot be completed, and the incorporation process cannot be finalized because the capital fee is not paid into the bank account.
In this context, a director can be appointed from among the shareholders of the company. The director's authority may be limited, both financially and in terms of authority, based on the agreement between the company and the company. If these matters are ignored, the company formation process unfortunately cannot be completed.
Attorney Dr. Anıl Coşkun, LL.M.
0553 308 80 69
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