Limited Commercial Partnership KGaA-Recht

A partnership limited by shares is a legal entity which (like a GmbH or AG) can be an independent bearer of rights and obligations. The KGaA is a hybrid of a limited partnership and a stock corporation, with the emphasis on stock corporation law.

Which shareholders does a KGaA have?

There are two types of KGaA shareholders: general partners and limited liability shareholders. Both natural persons and legal entities can be general partners. This means that a GmbH KGaA is also suitable, where the only general partner is a GmbH. In principle, the general partner has full, unlimited and unrestricted liability just like the general partner of a limited partnership. In contrast, the limited shareholders are only liable in the amount of the shares they have subscribed to.

How is the representation/management of the KGaA regulated?
Unlike the AG, the partnership limited by shares does not have a management board, but is represented by the general partner. In principle, the KGaA has sole power of representation for each general partner, unless the partnership agreement contains provisions to the contrary.

If a GmbH is the general partner, the KGaA is represented by its managing director.

What executive bodies does a KGaA have?

Every KGaA requires a supervisory board, which is elected by the general meeting of the limited liability shareholders. The provisions regarding the supervisory board at the stock corporation apply accordingly. However, in contrast to a stock corporation, the supervisory board of a KGaA does not have the right to appoint and dismiss the management, as the general partners are appointed by law to manage the business. A general partner cannot be on the supervisory board at the same time.

A resolution of the General Meeting of the limited liability shareholders always requires the consent of the general partners when it comes to amendments to the Articles of Association and other fundamental resolutions. The articles of association can expand the circle of transactions requiring approval or introduce a majority principle for individual points.

What are the requirements for the formation of a KGaA?

According to § 82 AktienG, five founding members are required to form a KGaA. The articles of association of a KGaA must be notarized, as is the case with a stock corporation. The capital stock of the KGaA amounts to € 50,000, – as with the AG.

What is the significance of the KGaA?

The partnership limited by shares is not yet very widespread, although it combines the advantages of different corporate forms. On the one hand, the capital base can be slightly broadened by the issue of new shares, but on the other hand, unlike a stock corporation, there is further room for maneuver with regard to the management structure. In particular, a partnership limited by shares also has the option of a stock exchange listing. In contrast to a GmbH, the shares are therefore easier to trade and no notarial recording of the assignment is required for the transfer. Despite the limited distribution of the KGaA, there are still some well-known companies that are organized in this legal form, such as the pharmaceutical company Merck, some companies of the Rewe Group, the well-known company Henkel and also Bankhaus Metzler.