§ 7 Registration of company
(1) An application to enter the company in the Commercial Register must be filed with that court in whose district the company has its registered office.
(2) The application for registration may be made only after one quarter of the nominal value of each share has been deposited, unless contributions in kind have been agreed. In total, at least as much of the share capital must have been deposited so that the total amount of the contributions in cash paid in, plus the total nominal capital of the shares for which contributions in kind are to be paid, equals half of the minimum share capital as per section 5 (1).
(3) The contributions in kind are to be effected to the company, before the application for entry in the Commercial Register is filed, in such a manner that they are finally at the free disposal of the directors.
Information for non-professionals
Relevance for legal relations
1The incorporation of a limited liability company (GmbH - German Limited Liabilty Company) or an entrepreneurial company (limited liability) (UG (haftungsbeschränkt)) takes place in various steps. First, the incorporation of the company is notarised by the notary: The shareholders establish the company by concluding notarised articles of association. The company's directors are also appointed in the formation protocol. Alternatively, under certain conditions, incorporation can be effected by notarisation of a model protocol. Incorporation by means of a model protocol is often considered when establishing an UG (haftungsbeschränkt). The advantages and disadvantages of a model protocol must be weighed up carefully - as a rule, incorporation using a model protocol is not advisable. GmbH and UG (haftungsbeschränkt) differ in the amount of share capital: While the GmbH requires a share capital of at least EUR 25,000.00 (section 5 (1) Limited Liability Companies Act (GmbHG)), the UG (haftungsbeschränkt) can have a lower share capital. For the UG (haftungsbeschränkt) the special regulations and requirements of section 5a GmbHG must be considered apart from the general regulations of the GmbHG.
2With the conclusion of the notarised articles of association, a "pre-GmbH" or "pre-company" GmbH is created, which only "strengthens" with the entry in the Commercial Register to become a GmbH or UG (haftungsbeschränkt) and is then a legal entity with the desired limitation of liability. The limited liability company does not exist before the entry in the Commercial Register of the company's registered office (section 11 (1) GmbHG). If the directors act in the name of the company before the registration, then they are personally and jointly liable for this (section 11 (2) GmbHG). In addition comes the liability of the shareholders for any under-balance at the time of the entry of the company in the Commercial Register, as developed by jurisdiction. This liability implies that the shareholders are liable for the losses incurred in the share capital up to the time of registration. The aim is to ensure that the company can dispose of the full amount of the paid-up share capital at the time of its entry in the Commercial Register. If the company is not registered, the shareholders who have consented to the commencement of business are liable in accordance with the rules on liability to cover losses for those liabilities which are not covered by the company assets.
The registration of the GmbH or UG (haftungsbeschränkt) in the Commercial Register is therefore crucial for the successful completion of the company's incorporation. For the registration of the company, a notarised application for registration is required, which must be signed personally by all directors. As a rule, the application for registration is signed immediately after the notarisation of the incorporation of the company. If one or more of the directors are not present at the notarisation meeting, they can also have the notarised signing of the application for registration done in a separate notarisation meeting, which can also take place at another notary - also at a notary abroad, taking into account the necessary instruction requirements. The application for registration signed by all directors is submitted to the competent registration court together with the other incorporation documents by the notary who has notarised the incorporation of the company.
4Competent for the registration of the company is the local court as registration court in whose district the company has its registered office. The registered office is specified in the notarised articles of association. The registered office must be located in Germany and may differ from the actual administrative headquarters, which may also be located abroad. The domestic business address of the company to be stated with the application for registration may also differ from the registered office. It is therefore possible to set up a company with its registered office in Stuttgart and its domestic business address in Munich. The local court (registration court) of Stuttgart would then be competent for registering the company in the Commercial Register.
5Section 7 (2) GmbHG regulates at what point in time the application for registration of the company may be submitted to the Commercial Register. Until then, the notarised application for registration is kept in safe custody by the certifying notary. Before submission, the notary must check whether the registration requirements are met. The decisive factor here is the payment of the share capital or the provision of the agreed contributions in kind: Pursuant to section 7 (2) GmbHG, the application for registration of the GmbH may only be submitted to the Commercial Register if, in the case of cash contributions, one quarter of the nominal amount has been paid in for each share. In total, at least half of the minimum share capital of EUR 25,000.00 must have been paid up on the share capital, i.e. EUR 12,500.00. Agreed contributions in kind must be taken into account. The contributions in kind shall be effected to the company before the application for entry in the Commercial Register is filed, in such a manner that they are finally at the free disposal of the directors (section 7 (3) GmbHG).
6Deviating from this, the share capital of a UG (haftungsbeschränkt) must be paid up in full before the application for registration is filed with the Commercial Register; contributions in kind are excluded (section 5a (2) GmbHG). In practice, therefore, provided that the minimum contribution in the amount of EUR 12,500.00 can be raised immediately, the incorporation of a GmbH is generally preferable to the formation of a UG (haftungsbeschränkt). This is because the registration of a GmbH may already be effected when an amount of EUR 12,500.00 has been paid in or contributed to the share capital. The decision for the incorporation of a GmbH instead of a UG (haftungsbeschränkt) also has the advantage that neither the special regulations of section 5a GmbHG have to be observed, nor is a subsequent capital increase necessary for the purpose of "conversion" into a GmbH, which triggers further costs (advantages GmbH vs. UG).
7The application for registration must include the assurance of the directors that the payments against the shares referred to in section 7 (2) and (3) GmbHG have been effected and that the object of the payments is finally at the free disposal of the directors (section 8 (2) GmbHG). This assurance by the directors only becomes legally effective at the time when the notary submits the application for registration to the Commercial Register. If false statements are made here and the directors' assurance is therefore not correct, the directors are threatened with a prison sentence of up to three years or a fine in accordance with section 82 (1) GmbHG. The notary must therefore, also in the interest of the directors, have evidence presented to him that the cash contributions and the contributions in kind were made in accordance with the agreement and in conformity with the law before he can submit the application for registration of the company to the Commercial Register.
8Proof of the cash payments made is usually provided either by a confirmation from the bank holding the account that the share capital has been paid into the newly opened company account. Alternatively, a deposit slip or an account statement of the newly opened company account can be presented, from which the payment of the share capital can be deduced. For the opening of the company account, the certifying notary will provide either a scan of the company's incorporation documents or - if requested by the account-holding bank in individual cases - certified copies thereof. With these documents, the directors of the pre-GmbH/pre-company can open a company account into which the share capital is paid in. It should also be noted that account management fees must not be immediately debited from the company account, because then the directors would no longer have the full amount of the payments on the share capital at their free disposal. Any debits by the bank would have to be settled in advance by the shareholders.
9As proof of the agreed effecting of contributions in kind to the company, their transfer is often notarised at the same time as the company is incorporated. In the event of agreed contributions in kind, the other requirements of the GmbHG must also be observed. Especially, a report on company formation on the basis of contributions in kind is to be made and proof must be provided that the value of the contributions in kind is equal to the nominal value of the shares acquired in return.
10Compared to the formation in kind, a cash formation with a premium/agio in kind offers an often easier alternative. In this case, the payments on the share capital are paid in cash and the object of the contribution in kind is brought into the newly founded company as a premium/agio in kind. By structuring a cash foundation with a premium/agio in kind, for example, company shares can be brought into the newly founded company in a tax-neutral manner in order to create a holding structure. It is also possible to contribute partnership under civil law (GbR) shares for the purpose of accrual to the newly founded company so that the assets of the GbR are transferred to the GmbH. The contribution of a sole proprietorship as a contribution in kind to the newly founded GmbH is also conceivable, provided that no universal succession is required, particularly in the contracts of the sole proprietorship. Otherwise, the transfer of the sole proprietorship would have to be structured via a spin-off in accordance with the Transformation Act (UmwG).
NEW: Online formation as of 1 August 2022
From 1 August 2022, it will be possible for the first time to form a GmbH online, in that section 2 (3) sentence 1 GmbHG n.F. expressly declares notarisation by means of video communication to be permissible.
The online formation of a GmbH is only permissible in the case of a pure cash formation without contributions in kind. The founding shareholders of a GmbH formed online can be both natural persons and legal entities in Germany and abroad. There is no limit to the number of persons participating in the formation. The online formation can be carried out using a model protocol.
The online formation of a GmbH takes place exclusively using a video communication system, which is operated centrally by the Federal Chamber of Notaries and is intended to ensure the technical requirements for online notarisation. The parties involved in an online notarisation must identify themselves by means of an identity document that is eID-capable with a high security level.
For the online formation of a GmbH, the notary cannot be chosen completely freely. Rather, the notary is only competent for the notarisation of the online formation if the registered office of the GmbH or the (residential) registered office of a shareholder lies within the area of the notary’s office.
Information for legal professionals
11With the application for registration of the company at the competent registration court, as provided for in section 7 (1) GmbHG, an application is made for registration of the company in the Commercial Register. The application is thus a necessary prerequisite for the company's entry in the Commercial Register, section 10 GmbHG. The entry of the company in the Commercial Register brings the company into existence as such, section 11 (1) GmbHG.
12To secure the raising of capital, section 7 (2) GmbHG determines the minimum deposits on the share capital prior to the application and section 7 (3) GmbHG regulates the contributions in kind at the formation stage. These provisions are intended to ensure that the company is formed with a minimum amount of freely available funds.
a) Paragraph 1: Application for registration
aa) Competent court
14The local court (Amtsgericht) is the exclusive registration court, see section 8 of the German Commercial Code (HGB) in conjunction with sections 23a ff., 374 ff. of the Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction (FamFG).
15The registraton court in whose district the company's registered office is located has exclusive local jurisdiction; if the management of the commercial register for several court districts is transferred to one local court, the latter is responsible (sections 374, 376 FamFG).
16The locally competent registration court can be determined via the location and court directory of the Federal and State Justice Portal.https://www.justizadressen.nrw.de/de/justiz/suche
17The application for registration must be made by all directors effectively appointed at the time of application, section 78 GmbHG. Managing directors dismissed or ineffectively appointed before the application as well as managing directors appointed after the application shall not be taken into account.
18All managing directors must sign the application for registration in person; it is not possible to grant a power of attorney (even with a certified power of attorney in accordance with section 12 (1) sentence 2 HGB).h.M., BayObLG, Beschluss vom 12.06.1986 - BReg. 3 Z 29/86 Representation is not permitted in the case of insurances of the directors pursuant to section 8 (2) and (3) GmbHG as they are punishable (sentence 82 (1) No. 1 and No. 5 GmbHG) and therefore must be given in person.
19The application for registration must be made in German or the application must be accompanied by a certified translation into German.OLG Frankfurt a. M., Beschl. v. 8.8.2017 – 20 W 229/14
21The application for registration must be submitted in electronic form via the electronic court and post office box EGVP to the competent register court (sections 12 (1), 8a (2) HGB). According to section 378 (2) FamFG, the notary who has certified the director's signature or who has notarised the incorporation of the company is deemed authorised to submit the application for registration to the commercial register.
b) Paragraph 2: Minimum deposit of cash
aa) Minimum amount
23In addition, the total amount of the paid-in cash contributions, together with the total of the contributions in kind, must be at least half the minimum share capital in accordance with section 5 (1) GmbHG, i.e. EUR 12,500, § 7 (2) sentence 2 GmbHG.
24The minimum obligation to make cash contributions is intended to ensure that only those companies can make use of the legal form of a GmbH that have a minimum asset base of EUR 12,500.00 from the beginning and can prove a minimum level of financial capacity to the creditors.Begr. RegE BT-Drs. 8/1347, 32
25Notwithstanding paragraph 2, the articles of association may stipulate that a higher or full payment on the nominal amount of the shares is due immediately.
26In addition, payments in excess of the nominal value of the shares may be made in the form of a contractual or corporate premium or agio, including in the form of a premium/agio in kind, to which the provisions of paragraphs 2 and 3 do not apply.
27The cash deposits are to be made either in cash in euros or by means of a deposit credited to a bank account of the pre-company.
28Cash in euros must be transferred to the pre-company represented by the directors. Presentation of cash to the certifying notary is not sufficient.OLG Oldenburg, Urteil vom 26. 7. 2007 - 1 U 8/07
29The bank account must be held at a domestic bank or in another EU country. The account holder can be the pre-company,The GmbH, which was founded but has not yet come into being, is by law capable of holding an account, BGH, Urteil vom 2. 5. 1966 - II ZR 219/63 (München) but also the directors or third parties, provided the account is not held privately but in trust for the pre-company.HCL/Ulmer/Casper Rn. 36 f.; Baumbach/Hueck/Servatius Rn. 8 With a GmbH & Co. KG it is not possible to make a deposit into the account of the KG.OLG Stuttgart, Urteil vom 24. 1. 1985 - 7 U 261/84 In the case of a one-person company, the deposit to the separate assets of the one-person pre-company must be recognisable to outsiders; the deposit obligation is not fulfilled by paying into an account in the name of the founder-manager.BGH, Urteil vom 29. 1. 2001 - II ZR 183/00 (Celle); OLG Oldenburg, Urteil vom 26. 7. 2007 - 1 U 8/07
30The cash contributions are only to be made after the notarised conclusion of the articles of association, because only then does the pre-company come into existence. Payments to the pre-company prior to notarisation of the articles of association are problematic because the pre-foundation company is not identical to the pre-company after notarisation (and the later registered GmbH). If the account of the pre-foundation company is taken over by the pre-company, the payment of the cash contribution only has a discharging effect if the payment to the pre-foundation company has a clear purpose as a contribution and the credit amount is transferred intact to the pre-company.BGH, Urteil vom 22.06.1992 - II ZR 30/91 (Frankfurt); Henssler/Strohn, Rn. 21; Baumbach/Hueck/Servatius Rn. 8
31The cash contribution can be made by a third party (§ 267 BGB) for the shareholder with a corresponding provision for redemption, and also by the shareholder with the help of funds from a third party.BGH, Urteil vom 22.03. 2004 - II ZR 7/02 (OLG München); OLG Brandenburg, Urteil vom 08.12. 1999 - 7 U 140/99
32In the case of a fictitious payment, where repayment was agreed in advance, the cash contribution owed is not made for the final free disposal of the directors.BGH, Urteil vom 18.02.1991 - II ZR 104/90 (München) However, it is now possible to fulfil the cash contribution obligation by means of back and forth payments under the conditions of section 19 (5) GmbHG.
cc) Free disposal
33The contribution must have been made for the final free disposal of the directors. The free disposal must be given both at the time of the effecting of the cash contributions (fulfilment effect) and at the time of the application for registration due to the assurance (subject to penalty) of the directors according to section 8 (2) GmbHG and the examination by the registration court according to section 9c GmbHG. The time of application for registration is the time at which the notary submits the application to the competent registration court.
34In this respect, it is sufficient that the contributions still exist in terms of value, not necessarily unchanged (principle of equal value cover).BGH, Urteil vom 13.07.1992 - II ZR 263/91, BeckOK GmbHG, Ziemons/Jaeger/Pöschke, Rn. 21; HCL/Ulmer/Casper Rn. 54 f.; different for capital increase: BGH, Versäumnisurteil vom 18.03.2002 - II ZR 363/00 (OLG Naumburg, LG Halle) Subsequent losses in value, especially in the period between application and registration, do not prevent the fulfilment effect. This is where the pre-charge liability of the shareholders developed by jurisdiction comes into play.
35The payment of cash contributions to a bank account with debit balances of the pre-company is sufficient as long as the directors can freely dispose of the amount within a credit line which has not been terminated,BGH, Urteil vom 08.11.2004 - II ZR 362/02 (OLG Schleswig) or the bank provides another credit in the amount of the contribution.BGH, Versäumnisurteil vom 18.03.2002 - II ZR 363/00 (OLG Naumburg, LG Halle)
36The formation expenses stipulated in the articles of association of the company may be paid at the expense of the minimum capital contributions. The assurance of the directors is structured accordingly in accordance with section 8 (2) GmbHG.
c) Paragraph 3: Contributions in kind
38In the case of incorporation of a GmbH, contributions in kind must be made in full before submission of the application for registration to the commercial register.
39Contributions in kind are effected by carrying out the fulfilment transaction required for the respective object of contribution, with the object of contribution being segregated from the assets of the debtor.
40Movable assets are to be transferred to the pre-company in accordance with sections 929 to 931 BGB, claims and other rights are to be transferred to the pre-company in accordance with sections 398, 413 BGB.
41In particular, if the transfer must be notarised, for example in the case of the assignment of a GmbH share in accordance with section 15 (3) GmbHG or in the case of the conveyance of a property in accordance with section 925 (1) BGB, the transfer is also notarised with the formation minutes.
cc) Free disposal
43For the free availability of the contribution in kind, in addition to the act of transfer in rem, the documents which are practically necessary for exercising the rights to the contribution in kind must also be handed over; in the case of a motor vehicle that has been brought in, the vehicle registration document (registration certificate part 2) must also be handed over to the directors.
dd) Real estate
44For the effective transfer of ownership or rights in rem in a property, section 873 BGB requires notarised agreement (conveyance) in accordance with section 925 BGB as well as the entry of the change in title in the land register. The pre-company can be entered in the land register; after the GmbH has come into existence by registration in the commercial register, the land register is corrected.BGH, Urteil vom 02.05.1966 - II ZR 219/63 (München)
45In order to avoid burdening the parties involved with the uncertain and often long duration of the land register entry, which is necessary for the transfer of ownership pursuant to section 873 (1) BGB, the prevailing opinion is in favour of bringing forward the date of free availability within the meaning of section 7 (3) GmbHG. According to this, the contribution of real estate and real property rights as a prerequisite for registration pursuant to section 7 (3) GmbHG, is already deemed to have been effected if the binding agreement (conveyance) pursuant to sections 873 (2), 925, BGB, the registration approval pursuant to sections 19, 20 of the land register code (GBO) and a priority application pursuant to sections 13, 17 GBO have been executed.Str., so Henssler/Strohn GesR/Schäfer Rn. 23, HCL/Ulmer/Casper Rn. 51; Baumbach/Hueck/Servatius Rn. 14; Lutter/Hommelhoff/Bayer Rn. 17, Roth/Altmeppen Rn. 41; aA Scholz/Veil Rn. 43; Rowedder/Schmidt-Leithoff/C. Schmidt-Leithoff Rn. 31; Michalski/Heyder Rn. 42 Some also require a comprehensive power of attorney to sell and encumber as well as a notarial confirmation that there are no obstacles to the registration application.MüKoGmbHG/Herrler Rn. 127; Rowedder/Schmidt-Leithoff/Schmidt-Leithoff Rn. 31 The registration of a pre-conveyance notice is also possible, but may not be sufficient as a prerequisite for registration alone.Str., so Henssler/Strohn GesR/Schäfer Rn. 23,; Baumbach/Hueck/Servatius Rn. 14, Roth/Altmeppen Rn. 41, aA HCL/Ulmer/Casper Rn. 51, Lutter/Hommelhoff/Bayer Rn. 17
46It is possible and usual to contribute a business as a whole with all its assets and liabilities. In case of doubt, the contribution then also includes intangible assets such as customer base, goodwill, know-how etc. The contribution is executed by means of individual transfer of the components of the company (singular succession); the transfer of contracts requires the consent of the respective contractual partners.
3) Frequently used (chains of) clauses
4) Procedural details
51The application for registration is at the discretion of the shareholders; it cannot be enforced by the registration court by setting a penalty payment according to section 14 HGB, section 79 (2) GmbHG (no public law obligation to register).
53In contentious proceedings, the shareholder bears the burden of proof for the proper fulfilment of the contribution obligation.BGH, Urteil vom 22.06.1992 - II ZR 30/91 (Frankfurt)
NEW: Online formation as of 1 August 2022
When the Act on the Implementation of the Digitalisation Directive (DiRUG) comes into force on 1 August 2022, the online formation of a GmbH will be possible for the first time, as Section 2 (3) sentence 1 GmbHG n.F. declares notarisation by means of video communication to be permissible.
54The online formation of a GmbH, i.e.