It has long been known that the development of private entrepreneurship is an arduous process that requires perseverance, financial investment, professional knowledge and technical skills. One of the main constraints that create difficulties for the entrepreneur is the bureaucratic process. This is a rather complicated, but necessary and important work that must be done with the high level of understanding and responsibility.
IQ Decision UK lawyers are committed to helping you find the right way to open your business in any jurisdiction throughout the world. Our experienced lawyers will assist you with:
- Choosing the optimal organizational and legal forms for your business, taking into account all the specifics of the enterprise;
- Choosing the name of the company;
- Determining the purpose and nature of the company activities;
- Determining the number of founders and the size of the share capital;
- Drawing up a regulation for the distribution of profits between the participants of the enterprise;
- Developing rules for the reorganization of the enterprise, as well as its liquidation;
- Identifying the governing bodies of the enterprise.
IQ Decision UK top class action lawyers with many years of practical experience in registering companies around the world will provide you with full legal support at each step of establishing your business, namely:
- Seed & Development
- Launching & Startup
- Establishment & Growth
- Expansion & Acquisition
- Maturity & Merger
- Termination & Exit
Contact us now to ensure prompt registration of any type of enterprise in your chosen jurisdiction and our lawyers will assist you in promoting your business in order to achieve the optimal results in the shortest period of time.
Company Formation in Germany
Any person or legal entity can open a Limited liability company - GmbH (Gesellschaft mit beschränkter Haftung) or Joint-stock company – AG (AktienGesellschaft) in Germany. Both German citizens and foreigners equally can become the founders.
One of the options is the opening of a joint stock company. The authorized capital is 50,000 euros with a minimum share of participation in the amount of 1 euro. A joint-stock company can be established by one or several individuals and legal entities that do not bear personal responsibility. Responsibility is limited after the company is entered into the commercial register with the company’s property.
The contributions of individual shareholders to the share capital may be different in their size, but must be at least 100 euros. The amount of the contribution in this case should be divided by 50, since for 50 euros there is one vote at the meeting of the founders. The costs of establishing a joint-stock company are EUR 7,000.
This is not a special legal form. It is just that for the small JSC, the procedure of establishment of the company, the convening and holding of general meetings, the use of business results, etc. are greatly simplified.
In the process of the liberalization of joint stock company law in Germany, a small JSC appeared.
The image of the joint stock company (AG) in Germany is more prestigious than that of GmbH. In addition to the more upscale reputation, a significant advantage is the anonymity that its shareholders enjoy, since the constituent documents contain only the first owner of the shares, but then they are alienated without formalities. However, in most cases, more preferred legal form is a limited liability company – GmbH.
A significant advantage of GmbH is that the company’s responsibility is limited to the company’s capital, and creditors in their actions can only go after the company’s assets, and not shareholders. The authorized capital of GmbH is at least 25,000 euros. In the process of establishing a company with more than one person, you need to pay 12,500 euros and pay the balance over the following year. This capital is intended for doing business and will not be blocked, but before registering the company in the commercial register (approximately 4-6 weeks) it should be “frozen”.
The German law on GmbH in general is similar to the laws of other European countries on LLC.
Our lawyers are quite savvy with all legal aspects of registering a company in Germany for various purposes. IQ Decision UK attorneys have been successfully registering the following types of entities in the Federal Republic of Germany for over 12 years:
- Limited Liability Company (GmbH)
- Limited Liability Entrepreneurial Company (mini GmbH)
- Joint-Stock Corporation (AG)
- Partnership Limited by Shares (KGaA)
A GmbH may be established by one or several persons. Foreign companies may also act as shareholders of the new company. However, it is necessary to have all the constituent documents of the main company (with certified translations) and the permission of the Ministry of Economics of Germany. Given the exceptional complexity of this process and some additional costs, it seems preferable to establish a company by private individuals.
The most favorable legal form for foreign entrepreneurs is GmbH. Therefore, it is most often used by foreign investors for opening representative offices in Germany.
To establish a GmbH, you should plan a two-day stay in Germany, including the day of arrival and the day of departure. You can immediately hold a meeting with a notary, set up negotiations at your chosen bank and have a conversation with a tax consultant. It will also be possible to conduct additional negotiations with potential partners during the stay, not limiting yourself only to formal meetings.
During the procedure of establishing the company the notary reads the memorandum of association and its annexes in German, and the translator translates them. After the founders express their agreement with the contents of the charter by putting their signatures, the notary will examine it, draw up the necessary application for registration in the register of trading companies and other formal letters and transmit documents on behalf of the GmbH management to the competent court of first instance for verification and registration in the register of trading firms.
When a GmbH is established, one or several founders or a third party officially employed by the GmbH are appointed as a manager. The right of a manager to represent a company is practically unlimited. Therefore, you need to get serious about choosing a qualified manager. After all issues are settled with a notary, GmbH becomes unlimitedly capable and can engage in business. Before registering GmbH in the register of trading companies (approximately 1 month after establishment), it should be named GmbH i.Gr. (GmbH at the formation stage). At this time, the responsibility of the founders is not limited only to the property of the company. This limitation of liability comes into force only from the moment of registration of GmbH in the register of trading companies.
From the point of view of an account maintenance costs (about 20 euros per month), commercial banks hardly differ from each other. This could be “Commerzbank” or “Deutsche Bank” or Dresdner Bank AG, etc. Cooperation with the bank and the use of its services, regardless of whether it is a large or a private bank, is very different from the general European reality, as banks in Germany are only executive entities and are not obliged to check the legitimacy of cash flows. This is followed by a meeting with a tax advisor who in the future will advise the GmbH on tax law issues as a partner and contact tax and financial departments and tax authorities, protecting the interests of your company while taking official responsibility for his actions.
Immediately after the establishment of the GmbH with assistance of a notary on the basis of the memorandum of association, an account is opened in a German commercial bank.
The involvement of a tax adviser in Germany is mandatory. The cost of tax advisory services depends on the company's turnover and initially amounts to about 150 - 250 euros per month. Payroll, for example, costs between 12 and 15 euros per employee.
Having passed all three stages, you become the owner of your own company and can officially do business in Germany, while IQ Decision UK lawyers ensure that the company smoothly passes registration in the court of first instance, receives commercial registration numbers (CRN) in the German Commercial Register (Handelsregister) and in the Ministry of Finance.
Company Formation in the United Kingdom
If you need to register a company in England, our UK-based solicitors will take a professional care of the following:
- Registration of your business in the UK;
- Issuance of a National Insurance (NI) number;
- Obtaining of all required UK licenses and/or permits;
- Registration for self-assessment with HM Revenue and Customs (HMRC);
- Selection of a business name.
The business climate of the UK is considered one of the best in the world, and the country is rightly called the most important international business center, and London – the leading financial center. The UK is among the ten most developed countries, it is ranked sixth in the world and third in Europe in terms of GDP, producing 3.9% of the world total.
Access to the UK market is possible in the following ways:
- Implementation of export-import operations (import of goods and capital (foreign investments) into the UK;
- Ensuring commercial presence in the UK market via the registration of a company or a branch;
- Establishment of a representative office of a foreign company or conclusion of an agency agreement.
In the UK there are no specifically established barriers for foreign participants concerning the movement of capital or the export of profits out of the country. Restrictions may be imposed on the basis of the provisions of the EU directives and regulations and are not an independent decision of the government of the country. British law (in particular, the Companies Act 2006, as amended) also does not contain restrictions on the participation of foreign capital based on nationality. The formation and activity of companies, including those with foreign participation is carried out within the framework of a unified system of state regulation.
The establishment and operation of companies in the UK is governed by the Companies Act 2006 and subsequent amendments and additions. In accordance with the law, it is possible to form companies of the following types:
- Private company limited by shares or private limited company, Ltd. The share capital of the company is divided into shares and shareholders are liable within the unpaid portion of the shares they own. Such companies cannot offer shares for sale to an unlimited circle of persons. Ltd. is the most common legal form of legal entities in the UK.
- Private company limited by guarantee. Shareholder liability is limited to the amount shareholders agree to contribute to the company’s assets in the event of its liquidation.
- Private unlimited company. The company may or may not have share capital, while the responsibility of shareholders is not limited.
- Public limited company, Plc. The authorized capital of the company is divided into shares. These shares can be put up for public sale, and shareholders’ liability is limited to the amount not paid on the shares they own (limited by shares) or the amount they agree to contribute to the company’s assets in the event of its liquidation (limited by guarantee).
The fact that a company is public is reflected in its registration certificate – Certificate of incorporation. For such companies, there is a minimum share capital requirement (at least £50 thousand).
Private limited liability companies (Ltd.) have many similarities with European closed joint-stock companies, for example, they do not have the right to issue shares or other tradable securities. The funds of such companies are formed from the shares of their founders, and they are not subject to public reporting. The company’s affairs are conducted by the director or directors, who act on company’s behalf.
Public companies (Plc.) are similar to open joint-stock companies. In the UK, as a rule, all large companies are created in the form of Plc. They are required to publish their financial statements and their shares are listed on the stock exchange. Until recently, the creation of a public company required at least two signatories to the memorandum of association, but this requirement was abolished by the Companies Act 2006, the provision entered into force on October 1, 2009.
A declarative company formation procedure has been established in the UK. This means that if the applicant complies with the form and content requirements, the state register of companies (Companies House) does not have the right to refuse to register a company. A person who wants to create a company must pay a registration fee and send the following documents to the State Register of Companies (Companies House):
- The main constituent document – articles of association. The articles of association and some types of decisions or agreements of the participants form a set of statutory documents of the company, copies of which are provided to the state register of companies. In the absence of its own charter, the company is entitled to use the model charter. The founders of the company may include in the charter of the company only those provisions that differ from the model.
- Memorandum of association. The constituent agreement is sufficient indication that the founders wish to create a company, becoming its members (in the case of a company with share capital – having received at least one share each). The memorandum of association is a tool for creating a company; therefore, formally, it does not apply to the statutory documents of a company. Until recently, an important function of the memorandum of association was an indication of the objectives of the company. At the present time, they can be specified in the articles of association, but the Companies Act of 2006 unequivocally indicates that the company’s transaction cannot be challenged on the basis of restrictions contained in the company’s statutory documents. Moreover, a transaction with a bona fide third party cannot be contested on the basis of the restrictions on the powers of directors contained in the articles of association.
- Properly completed IN01 form of the state register of companies, which contains data on the name of the company, legal form, first director(s), secretary and expected address of the office. The director and secretary of the company must declare their consent to hold the relevant position. If a company with a share capital is registered, it is necessary to indicate its size. Each appointed official and each founder must sign this form, indicating the date. The information about the secretary for a private company will be entered into the form if this position is provided for by the constituent documents.
The standard registration fee is £20. In this case, the procedure for processing documents by the registrar takes from 8 to 10 working days from the date of submission of documents. It is possible to register a company within one day (Same Day Incorporation service), but in this case the documents must be received by the registrar before 3:00 p.m., and the registration fee will be £50. After state registration, companies are required to compile various reports and notify the state register of companies of changes in the composition of the founders (participants). Legal entities in the UK for business activities (including individual projects) can create partnerships. Partnerships are not legal entities and act, as a rule, on the basis of an agreement concluded between its participants, in which issues concerning the amount of contributions, the procedure for the distribution of profits and losses are settled.
A branch/representative office conducts business on behalf of a legal entity, and unlike a subsidiary company registered under English law, it is not a legal entity.
A representative office/branch is a part of a legal entity that is organized in order to carry out all types of activities (except those that are subject to mandatory licensing) on behalf of the legal entity. In other words, a representative office is a separate subdivision of a legal entity located outside its place of registration, which performs all the functions of a legal entity, including the functions of the company’s representation.
Creating a representative office/branch in the UK allows a foreign legal entity to interact with British counterparties directly in the UK. Within 1 month after the establishment of a representative office/branch in the UK, a foreign legal entity must submit the following documents to the Companies House State Register:
- Duly completed OS IN01 form of the state register of companies;
- Certified copies of the constituent documents of a legal entity together with a duly certified translation into English;
- The balance sheet of the legal entity, drawn up in accordance with national legislation, and signed by the head, together with a duly certified translation into English;
- A registration fee of £20 for registration within 8-10 working days (in case of registration on the day of submission of documents – the registration fee will be £50).
IQ Decision UK attorneys and tax law specialists have been offering their clients professional representation and legal advice in forming, registering and maintaining effective and profitable commercial structures in more than 124 jurisdictions (including, the United States of America, Canada, Japan, Australia, Russia, China, EU members, Caribbean countries, Southeast Asian countries, Middle Eastern states and Latin America) for years while assisting our existing clients with complex commercial transactions, mergers and acquisitions, shareholders agreements, buy-sell agreements, purchase and sale of shares, liquidation procedures and more. Contact us now to make sure your business venture is in expert hands.