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Corporate law in Germany
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Legal Information
Partnerships in Germany
German partnerships can be established between natural persons and legal entities.
Distinction between partnerships and corporations
An important distinction between partnerships and corporations is the liability of the partner for the company’s obligations. Generally, the partner of a partnership is liable with all his property (including his private property). In corporations, external liability is generally limited to the capital of the company.The partner’s assets outside the corporation are protected.
The general partnership (OHG) and the limited partnership (KG) are the two types of partnership defined by the German Commercial Code (HGB) for the operation of a commercial enterprise.
The German general partnership (OHG)
The general partnership (OHG) is characterised by the fact that it is formed for the purpose of carrying on a commercial business and that the liability of the partners vis-à-vis the company’s creditors is not limited. The company is entered in the German commercial register. A domestic German business address must be registered. The partners regulate their legal relationship with each other in a partnership agreement. The partners themselves are entitled and obliged to manage the company. However, the articles of association may assign the management of the company to an individual partner. Individual partners may also be excluded from management by a corresponding provision in the partnership agreement.
The German limited partnership
The purpose of the German limited partnership is also the operation of a commercial enterprise. In contrast to the general partnership, the liability of one or more partners towards the company’s creditors is limited to the amount of a certain asset contribution. The partners who benefit from the limitation of liability are called limited partners. At least one partner in the German limited partnership has unlimited liability. The limited partnership is entered in the commercial register. The limited partners are published in the commercial register with the amount of their contribution. The partners regulate their rights in a partnership agreement. It is mandatory under the German Commercial Code that the limited partners are excluded from managing the business of the partnership. In the same way, the limited partner in the German limited partnership is not authorised to represent the partnership.
You want to know more about the liability, rights and obligations of the shareholders and managing directors of a German partnership? Get in touch with us! Our specialist lawyers for commercial and corporate law will advise you on all questions concerning the German partnerships and their management.
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