The GmbH (Gesellschaft mit beschränkter Haftung; German private limited company) is the most successful form of company in Germany. Its popularity is unbroken and grows from year to year, with over 1.2 million GmbHs registered in Germany as of 1 January 2017.
Foreign investors, too, regularly use a GmbH as an operating or holding company in Germany. They have the choice between forming a new GmbH and buying a shelf company (Vorratsgesellschaft).
Both, forming a new company and buying a shelf company, have their pros and cons. A notable point in favour of a shelf company is that the GmbH is ready for use very quickly and there is practically no liability risk for a buyer purchasing from DNotV GmbH. One disadvantage of a shelf company is the higher price compared with formation. Also, now that a civil-law notary can make commercial register applications electronically, the „normal“ process of forming a GmbH these days is fairly rapid. There are times, however, when things have to go even faster. Examples include acquisitions – such as of ownership stakes or assets – where a GmbH is needed as a purchase vehicle straight away, or where an important agreement has to be signed very quickly with a customer or supplier. In such cases, a ready-made shelf company is available immediately and can be put to use for the purpose in question.
Buying a shelf company may also be preferable to formation because it may be easier in some cases to verify the power to represent a foreign company, or because certain questions of self-dealing under section 181 of the German Civil Code do not arise. Last but not least, company formation may be held up while the bank makes background checks before opening an account; shelf companies from DNotV GmbH already have a bank account ready for use.
For some years now, the KYC check before opening the share capital bank account has been an additional complicating factor. Especially for buyers from abroad, this process can prove to be the real practical obstacle in setting up a company in Germany. The solution in this respect can also be the acquisition of a company with an already existing and, if desired, transferable share capital account.
Further information can be found in our guide, which we provide as a PDF in english.
