With a robust economy and a thriving start-up scene, Germany is an appealing destination for entrepreneurs looking to establish a public company. A German public limited company, or Aktiengesellschaft (AG), offers many benefits such as easy transfer of shares and listing on the exchange. In this guide, we’ll explore the steps to start an AG in Germany, covering key aspects like share capital requirements, registration with a German notary, and more.
Understanding the AG in Germany
The Aktiengesellschaft (AG) is a type of corporation in Germany where the company’s share capital is divided into shares. These shares can be freely traded on the public stock market, making it an attractive option for large companies. However, starting an AG in Germany also entails high organizational requirements, both at the company’s foundation and in all subsequent stages.
Key Features of an AG
Starting an AG in Germany involves several core characteristics:
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Establishment: At least one shareholder is required to start an AG. The company also needs at least three natural persons on the supervisory board and an article of association. The company must be entered into the commercial register.
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Capital: The minimum share capital required to start an AG is 50,000 euros, divided into shares. A minimum of 12,500 euros needs to be in a bank account at the time of registration.
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Governance: An AG has a two-tiered board structure consisting of a management board, a supervisory board, and an Annual General Meeting.
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Liability: The liability of shareholders is limited to the company’s assets.
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Taxation: An AG is liable for various taxes, such as corporation tax, solidarity surcharge, trade tax, capital gains tax, VAT, and income taxes.
How to Start an AG in Germany
Starting an AG in Germany involves a series of steps:
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Preparation of Articles of Association: The Articles of Association, which must be certified by a notary, is the first step in starting an AG.
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Deposit of Share Capital: At least 12,500 euros of the share capital should be lodged in a bank account at the time of registration.
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Registration in the Commercial Register: The company must be registered in the commercial register in the district where the company is located.
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Tax Registration: After entry into the commercial register, the company must be registered with the jurisdictional German tax office.
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Local Business Registration: Lastly, the company must be registered at the jurisdictional local business office.
AG Liability
One of the significant advantages of the AG business structure is that the shareholders’ liability is limited. Shareholders participate through the purchase of shares; if the corporation goes bankrupt, shareholders only risk the loss of their shares.
Tax Liability of an AG in Germany
All AGs are subject to several business taxes such as corporation tax, solidarity surcharge, trade tax, VAT, and capital gains tax. If the company has employees, they also are required to pay payroll tax.
Managing an AG in Germany
An AG in Germany has a two-tiered board structure, which consists of a management board, which controls the company’s day-to-day operation, and a supervisory board. The supervisory board also has the power to remove members of the management board. Every AG must also hold an Annual General Meeting, with all shareholders, the management board, and the supervisory board.
German Accounting for AGs
Like a GmbH, the AG is subject to the accounting rules set out by the German Commercial Code (HGB). This means that AGs are required to carry out double-entry bookkeeping, prepare annual balance sheets, and make public disclosures as to profits and losses.
How the German House of Companies Can Help
The German House of Companies provides a self-governance portal that allows you to start a Public Company in Germany without the need to visit, at a fixed yearly fee. This service can significantly simplify and expedite the process of starting an AG in Germany.
Wrapping Up
Starting an AG in Germany is a significant undertaking, but the benefits can be significant. With the potential for easy share transfers and listing on the exchange, an AG can provide a solid foundation for a thriving business in Germany’s robust economy. Ensure you understand the requirements and obligations involved, and consider seeking professional advice to assist with the process. The German House of Companies can be an invaluable resource for entrepreneurs looking to start an AG in Germany.