As a result of the Deregulation Act of 2017, changes were introduced in various federal laws to relieve companies and increase administrative efficiency. One result of this "deregulation" is a new and easier way to establish a limited liability company (GmbH), although its expediency is doubtful.
As of 1 January 2018, there is a "simplified" way to found single-person GmbHs, which is intended to save time and cut costs. In fact, the founder of a GmbH can skip the visit to a notary public. Instead, the founder can submit the declaration of incorporation and application for the company register online via the company service portal (USP) and transmit them to the commercial court. A citizen card is required for the identification.
With the simplified founding, the "proper" identity check is no longer performed by the notary public but rather by the bank where the capital contribution is paid. After the founder – who must become the sole managing director – has provided the specimen signature, the bank sends the documents to the company register electronically.
The applicability of the new provisions is tied to several conditions. In particular, only certain provisions can be entered in the declaration of incorporation aside from the legal minimum content (company name, address, business purpose and share capital), which results in a restriction of development options.
For that reason, it is doubtful that using the simplified founding actually makes everything easier: it is not possible for more than one person to hold stakes nor can a future-oriented direction of incorporation be declared. For example, it is not even possible to provide for a divisibility of the shares, which will lead to additional effort if other shareholders join at a later time.
The time savings are also doubtful, because new GmbHs are entered into the company register within five days on average even now, unless the court issues an order for improvement. This is often the case if the selected company name is not permitted. Since it is often difficult to select a company name that is suitable for entry without legal help, delays can already be expected.
Furthermore, the strict formal requirements for establishing a GmbH protect the company founders against hasty decisions and safeguard the interests of future creditors. The establishment of a corporation should be well considered. The founder should at least be familiar with the obligations accompanying the establishment and operation of a GmbH. Shareholders and managing directors must be aware of their strict obligations regarding capital requirements and capital maintenance. These define an obligation for a full payment of the capital contribution as well as a separation of the spheres of company and shareholder. For example, if someone withdraws assets from the company in violation of the prohibited return of capital contribution, this can result in major liability risks for the co-shareholders and other company managers. A professional consultation is therefore in the interest of the GmbH founders as well as the future creditors of the company.
Lastly, the desired cost reduction is also doubtful, since it already doesn't cost very much to found a standard GmbH and the banks involved in the future will presumably charge their clients for these additional services. Regardless, any potential cost savings are hardly proportionate to the disadvantages mentioned. Those who lack even enough capital for a proper legal consultation should not be founding a corporation in future either.
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