Object of a Company

Here, we would like to give you a few hints on how to describe the line of your business to the commercial registry in a compliant manner.

How to describe the line of business for your company perfectly

What is the purpose of specifying a "business object" when registering my company? Am I not basically allowed to pursue any activity - unless of course I need a permit?

Yes, of course, you may in principle pursue any activity. The freedom of trade (§1 GewO) applies. By stating the subject matter of the business, the focus of your company's business activities should be made recognizable to the outside world for the business circles involved. This has particular relevance for two important circumstances:

  1. whether your company requires an operating license,
  2. in which areas the employed managing director or proxy director may represent your company (see §37 I GmbHG).

The corporate purpose of a company designates the area and type of activity of your company. The existence of the trade license is in principle not a prerequisite for registration in the commercial registry.

I want to trade in goods. How do I cleverly paraphrase this?

The object of the company is often described too sweepingly as "trading in goods of all kinds". By adding groups of goods or listing the specific goods offered, the subject matter is described in a meaningful way. For example, the subject matter could be worded as follows: "The trade in clothing textiles and jewelry."

But you would like to have more flexibility regarding the groups of goods? Then we advise you to designate at least one focal product group. For example, the subject matter could be formulated as follows: "Import, export and trade in goods of various kinds, especially foodstuffs".

What about me? I want to provide services. What needs to be considered for this?

A too sweeping description would be "provision of services of all kinds." By listing the specific services offered, the subject matter is described in a meaningful way. This would be good, for example: "Planning and development of energy systems, creation of energy concept solutions".

My handicrafts business is expanding so much that it is getting too expensive for me as a sole proprietor. On top of that, I'm getting riskier orders. Is it enough if I state "performing hammered services"?

For craft activities being subject to licensing, registration in the registry of crafts is required. Activities that are not subject to licensing and activities similar to crafts are entered in the registry of crafts at the Chamber of Crafts. When formulating the object of the company, care must therefore be taken to ensure that designations which indicate a craft activity may only be used if the relevant requirements under craft law are met. Otherwise, nothing special applies to you.

My bank has now given me notice. I now want to provide consulting services as a senior consultant. What applies to my firm?

You are wrong to be too vague if you specify only "consulting" or "advisory". For consulting services, you should always specify the subject area to which the consulting relates (e.g. management consulting, software consulting, marketing consulting, human resources consulting).

The specification, particularly in your case, is also necessary in order to determine whether you require a permit for your services in accordance with the Trade Code (GewO), the German Banking Act (KWG), the Investment Code (KAGB), the Securities Trading Act (WpHG), the Legal Services Act (RDG) or the Tax Consulting Act (StBerG). Management consulting in general does not require a license. The subject matter could be formulated for this purpose, for example, as follows: "The provision of management consulting services."

Services of "chambered" professions such as lawyers, tax consultants, auditors and architects

For the exercise of services of "freelancing" professions organized in a chamber under public law, such as those of lawyers, tax consultants, public auditors, and architects, a professional license by the relevant professional chamber is required. The commercial registry will only make an entry if the professional license is submitted with the application to register enter the company into the commercial registry.

I want to work in the field of finance with my company. What should I pay attention to in this regard?

When you want to provide financial services, this sometimes requires the written permission of the Federal Financial Supervisory Authority (BaFin) according to § 32 KWG. The business activities in the field of investment and finance, which do not require permission, is narrow, so it is advisable to seek advice in advance. If no banking or financial services business requiring a permit is conducted, the object of the company must be named in such a way that the impression of an activity requiring a permit in accordance with the KWG is excluded.

We just want to have a holding. How do we describe that?

Whoever wishes to manage third-party assets will typically require a written permission from the German Federal Financial Supervisory Authority (BaFin) pursuant to §32 KWG. If only the company's own assets are to be managed as is the case when shelf companies or holdings are set up, this must be expressly stated as the object. The object could, for example, be formulated as follows: "The management of own assets".

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