On November 1, 2008, the new law to reform the existing GmbH Law (MoMiG) came into effect. The reform represents the biggest change of the act since it was original enacted in 1892. According to the German Department of Justice the reforms goals are flexibility and deregulation on the one hand, and better protection against violations on the other hand. Although the GmbH is Germany’s most common form of a limited liability company, the biggest handicap of the GmbH Law was always the difficult and expensive founding process. That lead to a wave of German entrepreneurs who founded a British “Limited” (“private company limited by shares”) instead. To strengthen the GmbH against other European corporate forms, German lawmakers reduced the costs and administrative work that is required to establish a GmbH. The required minimum founding capital has been reduced from €25,000 to €10,000. Additionally, investors are now able to form a new category of GmbH that is called “Mini-GmbH” (officially: “limited liability entrepreneurial company” - “haftungsbeschränkte Unternehmensgesellschaft, UG”). This new GmbH form can be started with a start capital of €1. However, the “Mini-GmbH” must put aside one quarter of it’s annual profits to allow the share capital to grow. When the capital is at Gmbh level, the “Mini-GmbH” can change it’s form and name into a GmbH.
Germany reforms GmbH Law
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