GmbH

GmbH, short for Gesellschaft mit beschränkter Haftung, is a private limited liability company widely used in German-speaking countries, especially Germany, Austria, and parts of Switzerland. It is a separate legal entity in which the liability of shareholders is limited to their registered capital. As a private company, its shares are not publicly traded and ownership is typically held by a defined group of investors.

Formation and capital: A GmbH is formed by one or more shareholders through a notarized deed and articles of association, followed by registration in the commercial register. In Germany, the minimum share capital is €25,000, of which at least €12,500 must be paid in before registration. The remaining capital can be contributed later. The company’s capital is divided into shares representing ownership interests.

Governance and ownership: Management is usually carried out by one or more managing directors appointed by the shareholders. The general meeting of shareholders governs major corporate actions. A supervisory board is not required for small GmbHs, but can be established by the articles of association or by law for larger entities.

Liability and operations: Liability of the owners is limited to their contributions; personal assets are typically protected from company debts. A GmbH must maintain accounting records and prepare annual financial statements. It is subject to corporate taxation, trade tax, and value-added tax, with rates varying by jurisdiction and activity. Distributions to shareholders may be subject to withholding taxes.

Variants and regional differences: In Germany, a closely related form is the Unternehmergesellschaft (haftungsbeschränkt), or UG, which can be formed with very low initial capital and must convert to a GmbH once reserves allow. In Austria, the GmbH requires a minimum capital of €35,000, with at least €17,500 paid in before registration.