Shares of a GmbH or UG

This page is all about the distribution of company shares and shareholders' loans to the company.

You mentioned that the German limited has become cheap and competitive to the British Limited. How much money do I need to fund the company so it will be registered?

Cheap is not exactly the right word! Think of it as affordable. In any case, the minimum capital of the GmbH is € 25,000 and UG is € 1.

How about distributing shares? If and how has this possible?

The company’s shareholders are able to determine individually the amount of their shares and so line up the company more in accordance with their wants and needs. The minimum share is € 1. There is no statutory limitation on owning shares. You, as a foreigner, may hold as many shares as you wish. This is considered as "free entrepreneurship". N.B. Just having shares will not make you eligible for a residence permit.

Can I as a foreigner obtain shares in any German corporation? Are there any restrictions?

There are no foreigner related restrictions in holding shares of a company! Just holding shares does not make you eligible for any kind of residence permit. You can hold shares and be a director even if you live abroad. That is no problem. If you come to Germany either on your visa waiver or with a business visa, it will be legal for you to perform the duties of a director.

I’ve heard something strange about the registry keeping a list of shareholders? What’s that all about?

Take it literally. The court will be keeping such a list because only those persons who are on the list will be legally considered as a shareholder. By the way, such a list is nothing new. This list enables purchasers and sellers to know easily if a person belongs to the company or not. As pointed out in the article TBATBATBA, these details are retrievable online. A side effect will also be a motivation for the shareholders to keep this list continuously up to date. The purchaser of shares has the right to demand inclusion in the shareholders list. The government hopes to curb misuse such as money laundering when shareholders are clearly and easily seen. This is to enhance the trust in this kind of legal entity.

Is it possible to fund the company with a shareholder's loan? The thing is that I don't have that much money to "only" be lying around in the company's bank.

It is not possible that the shareholder gives his company a loan to fund the company when founding. It is also not permitted to fund the company and return the funds back to the shareholder. §30 GmbHG determines that funds needed to run the company may not be returned to the shareholders. This gives grounds for the bankruptcy manager to have the assets returned. When company assets are to be liquidated, shareholder's loans come last. Returning the statutory funds to the shareholder(s) and without risking personal liability is something you ought to discuss with your lawyer! (§39 I no. 5 InsO).

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