Details: Parent Category: Legal Forms; Created on Sunday, 16 November 2014 18:26; Last Updated on Sunday, 16 November 2014 18:26

Image of UG in Daily Business Life

The UG was introduced to German law on November 1, 2008. Germans typically do not embrace new concepts instantly. They first need to draft a compelete business plan and have another expert critize this (first) plan and both plans need to be discussed until they finally come up with the "final (= ready for implementation)" plan. The concept of the mini-GmbH stems from the strong competition coming from the UK Ltd only needing one Pound Sterling to exempt private liability. However, very many Germans wanted to have limited liability but could not afford to put down the "serious amount" 25 k€. Though absolutely legal, a Limited in Germany gave lawyers and judges tremendous headaches determining [PPD_PAYTOREADMORE]which law would be when applicable and for what. The Ltd is a UK company constructed under UK law and its branch works in a foreign jurisdiction. The worries are about debtor protection and prestige of GmbH. The GmbH symbolizes economic potency, tradition, and seriousness. Presumably, you can imagine what a contribution of one Euro in comparison resembles. Eventually, business participants decide.

Persons not in business are not very familiar with this company form. Not until you say "mini-GmbH", they will have an idea. Acceptance otherwise depends on your line of business and the risk involved. If your business is corporate, and will be making a six digit profit per anumn, go straight for a GmbH when deciding if or not a UG. Otherwise you will only lose your face! Conservative Germans will frown on you: "They are so broke that they cannot come up with a serious contribution (of 25 k)." or "Wanting to make six digit profits but only putting down € 1; this cannot be serious business." If your business strongly depends on suppliers it might be best to have a GmbH. If you are freelancer and want to appear bigger, then the UG is perfect and your business can grow up to become corporate.

So on the bottom line, what do you have with a UG? You have a legal construction suitable for smallest to smaller medium businesses. Do make sure to refer to your company on your letterhead correctly! It is important to add the legal suffix "(limited liability)".