Stock Corporation

Executive Summary

German Name: Aktiengesellschaft (AG)

General Information: continues to be chosen mostly by businesses that require larger capital amounts

Incorporation: conclusion of articles of incorporation; suscription to shares by the founders, entry into Commercial Register

Minimum Capital: 50,000 €

Board Structure: represented by board of directors in and out of court, mandatory establishment of supervisory board

General Information

The stock corporation is a legal body of its own. The company will be liable to creditors with the corporate assets only.

The number of stock corporations in Germany is relatively small but shows an upward trend.

With a view to making this corporate structure more attractive to medium-sized businesses, the formation of a stock corporation by only one person is also possible since 1994,.

It continues to be chosen as a corporate structure mostly by businesses that require larger capital amounts.

The implementation of EU directives causes the stock corporation to be more difficult and more expensive to handle.


In most cases, the stock corporation will emerge from an existing company’s change of structure.

The regulations concerning incorporation are laid down in the German Stock Corporations Act (Aktiengesetz - AktG -). A stock corporation is founded by one or more legal entities or individuals.

The incorporation process involves three steps:

a) Conclusion of the articles of incorporation before a Notary Public.

b) Subscription to shares by the founders (i.e., by thse shareholders who have concluded the shareholder’s agreement)

c) Appointment of the board of directors, the first supervisory board and the auditor

d) Establishment of foundation report which has to be verified by the board of directors and the supervisory board

e) Contribution of share capital

f) Application for entry into the Commercial Register by all members of the supervisory board and the board of directors.

The articles of incorporation have to be submitted with the application. These must contain the amount of capital stock, the corporate name, the corporation’s domicile and purpose as well as the number of directors.

The articles of incorporation may only contain supplementary provisions to the extent that the statutory regulations are not final.

The articles of incorporation are subject to court review as regards their validity and, consequently, incorporation in due form.

Upon positive result of the review, the stock corporation will be entered into the Commercial Register and thus achieves legal capacity.

Before registration, the stock corporation only exists as a so-called Vor-AG (preliminary stock corporation). Those acting on behalf of the stock corporation at that time engage their personal liability.

As soon as the stock corporation has been registered, it is a subject of rights and duties itself. Thus only its assets can be exposed to liability.

Capitalisation and Financing

A stock corporation’s share capital must amount to a minimum of 50,000 €. Before the application for registration is filed, not the entire amount must have been paid up. However, it is required that a quarter of the minimum issued amount and, if shares are issued for a higher amount, also the respective excess amount are paid up, and that the amounts paid up are at the free and final disposal of the board of directors.

Moreover, contributions in kind are possible.

Shareholders not making their capital contribution may be declared devoid of their shares.

Board Structure

The board of directors represents the stock corporation in and out of court and manages its business as a responsibility of its own and independently of third parties' instructions. However, certain types of business may only be conducted by consent of the supervisory board.

The exact extent of the management competences of the board of directors is defined by the articles of incorporation.

The board of directors has the power of joint presentation only, which means that the directors can only represent the company jointly. If there are several directors, decisions have to be made by majority, it, however, being possible to award a power of veto to respective members of the board.

The members of the board of directors are being appointed, with their consent, by the supervisory board.

This is elected by the shareholders' assembly and has to consist of at least three members or of a number of members that can be divided by three.

The shareholders' assembly is the assembly of all shareholders and must be held at least once a year. It decides on the exoneration of the board of directors and the supervisory board exoneration as well as on the assignment of profits.

Annual Costs

Annual Costs will arise in the form of legal, information and control costs especially as regards accountancy, auditing and publicity. Other possible items are legal and tax consultancy as well as costs for various supervisory and managing individuals.

The amount of these costs varies and depends on size, structure and equity requirements of the company. Costs tend to be lower for partnership structures than for corporations.

The annual costs for filings and publications amount to about 70 €.

Corporate Taxation and Financial Reporting

The income of the limited liability company is subject to corporation tax, which in Germany amounts to 25%. A "solidarity surcharge" of 5.5% of the amount of corporation tax will be added. Accountancy is governed by secs. 283 to 335 of the German Commercial Code (Handelsgesetzbuch- HGB).

Employee Participation in Corporate Bodies

If the workforce exceeds 500 employees, the supervisory board must consist of shareholders and employees in equal shares.