Israeli Law Firm: corporate, banking in Israel

The German Bundestag decided on GmbH reform (26.6.2008)

After a long discussion the German Bundestag finally decided on the GmbH reform which shall become effective after October/November 2008.

Here are the most important changes:

• Standard formation of a GmbH: A model contract will be provided as an attachment to the GmbH law. Nevertheless it has to be signed in front of a notary.

• Minimum capital: It will not be lowered from 25,000 EUR to 10,000 EUR.

• Capital invested: Each share shall be denominated in only one Euro as a division of the shares will be more flexible.

• „Mini-GmbH“: The „Mini-GmbH“ will not create a new legal form of a company, but will function as an entrepreneur with limited liability. It can be incorporated without any minimum capital, but only 3/4 of the profits - as there are any - may be distributed as dividends. The remaining 1/4 will have to be saved up to an amount of 25,000 EUR (minimum capital of a regular GmbH). When it has reached this amount it is entitled to incorporate a GmbH, but is not bound.

• Cash-Pooling: Property can be transferred to a cash-pool if it shall be considered as a „preparatory effort“ of the company and if this transfer is in the “interest of the company”. The definition of “interest of the company” will have to be made more specific in the final version of the law.

• Relocation to other countries: In the future the administrative center of a German GmbH may be abroad as well, and does not have to comply with the seat in the articles of association. Nevertheless a German address has to be registered on the commercial register.

• A shareholder shall only be considered as such when he is registered on the shareholders’ list. Every shareholder is entitled to become registered.

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