What is an Unternehmergesellschaft (UG haftungsbeschränkt) in a legal sense?
The Unternehmergesellschaft (UG) has been in existence since 1 November 2008 and is not an independent legal form, but a special form of the GmbH. It is therefore also known colloquially as the “Mini-GmbH”. As a GmbH form, the UG is also a legal entity (“corporation”) and thus has its own legal personality. It has its own name (“company”) and is represented by its managing director(s). As an independent legal entity, it is to be considered separate from its shareholders. The assets of the UG must also be strictly separated from the assets of the shareholders.
What distinguishes a GmbH from a UG?
A UG is characterised in particular by the fact that less than € 25,000 of share capital is sufficient for its formation. The amount must be in full euros. Theoretically, this means that it is possible to set up a company with only €1 of share capital. The amount to be chosen must be carefully examined in each individual case and should be based on the expected financial requirements of the company. An undercapitalised company is threatened with insolvency from the outset.
Another important feature of the UG is that although it is legally a GmbH, it may not call itself a GmbH in business dealings. Instead, it must use the addition
“Unternehmergesellschaft (haftungsbeschränkt)”
or
“UG (limited liability)”
wear. An abbreviation of the bracket suffix is not permitted. This rule is intended to protect possible business partners. It should be outwardly recognizable that it concerns a GmbH, which was created with less than 25,000 € share capital.
The UG is designed as an entry variant into the GmbH. According to the legislator’s ideas, the UG should become a “normal” GmbH over time through successful business activities. There is therefore the obligation to “save up” capital. The UG may not distribute the entire annual profit to its shareholders, but must put one quarter of the annual profit into a reserve. The reserve may only be used to offset losses of previous years or for capital increases. Even if the reserve reaches 25,000 euros, the UG may not automatically call itself a “GmbH”. It may only do so if its share capital is increased to an amount of at least € 25,000. The reserve can be used for the capital increase (so-called capital increase from company funds). It requires the involvement of a notary. He applies for the increase to be entered in the commercial register. Only after the capital increase has been registered may the addition “UG” be replaced by the addition “GmbH”.
A contribution in kind (e.g. machines, receivables, business operations) is excluded with the UG. Only when the share capital agreed in the articles of association has been fully paid up can the UG be registered in the commercial register.
Who is liable for obligations of the UG?
In principle, only the company assets are available to the creditors as a liability mass for obligations of the UG. As a rule, the creditors do not have the possibility to access the private assets of the shareholders to satisfy their claims. This applies even in the case of insolvency of the UG. In the event of insolvency, the shareholders only have to fear the economic loss of their investment. If the shareholders have not yet fully paid their contribution, their liability is limited to the outstanding amount.
However, the limitation of personal liability only applies to the shareholders at the moment of the registration of the UG in the commercial register. This is because the UG is only created as an independent legal entity upon registration. If liabilities have been established in the name of the UG before the registration (e.g. the future business premises in the name of the UG “in formation” are already rented), the respective acting parties as well as the partners can be personally liable.
How is a UG founded?
Like the GmbH, the UG can be founded by one person (“one-person UG”) or several persons. Both natural persons and companies can act as founders. A memorandum of association is required for the foundation. The articles of association must be certified by a notary public in order to be effective. The registration of the UG at the competent local court is then also carried out by the notarising notary.
One can negotiate the articles of association individually or fall back on a so-called “sample protocol” available as an attachment to the GmbH law. A prerequisite for the use of the model protocol is that the UG has a maximum of three shareholders and only one managing director. The use of the model protocol when founding a UG leads to savings in notary costs. The amount of the notary fees depends on the amount of the chosen share capital. The disadvantage of the articles of association using the model protocol is that no provisions deviating from the law can be made therein. Especially in the case of several partners, the use of the model protocol is not recommended. With an individually tailored memorandum of association, the needs of the partners can be taken into account (e.g. regulations on holding partners’ meetings, termination/retirement of a partner, transfer of shares, restrictions on management).
Which share capital is legally required for a UG?
The share capital of a UG can, in contrast to a conventional GmbH, be less than 25,000 € (see above). It can also amount to 1 EUR; this is of course generally not recommended. The amount must be specified in the articles of association. The same applies to the number of shares taken over and their nominal amount. The shares must be denominated in full euros. A contribution must be made for a share. The contributions must be made in cash at the UG. In the application, the managing directors have to assure that the cash deposits are fully paid up and are finally at the free disposal of the company. If the insurance is incorrect, there is a risk of criminal prosecution.
What can serve as the object of the company with a UG?
In the articles of association or the model protocol, the object of the company of the UG must be described in such a way that the participants in the business transactions have a concrete idea of the field of activity of the company (e.g. retail trade with furniture, production of lighting fixtures). When registering, a domestic business address must be provided so that the company can always be reached.