Kleine Aktiengesellschaft, small corporation? What is this all about?
Medium-sized companies in Germany operate predominantly in the legal form of GmbH or GmbH & Co. KG.
According to German law, a “kleine AG” or “small public limited company” is a GmbH that has only a small circle of shareholders. It benefits from a couple of simplifications, e.g. with regard to the composition of the supervisory board and disclosure obligations under commercial law, and is not listed on the stock exchange.
Apart from the high reputation of an AG, the structuring of a company system on an equal scale with the GmbH due to numerous special features and also offers many advantages due to the theoretically unlimited possibility of raising equity capital through the stock exchange.
This form of capital procurement opens up to all advantages of a corporation to medium-size enterprises and avoids the problem fields of the credit or loan agreements, which are granted besides frequently only against a security.
The special rules on these kinds of companies that came into force with the 1994 amendment to the German Stock Corporation Act (AktG) have not created a new form of company, but have made joint-stock companies attractive as a form of company for small and medium-sized enterprises as well.