Adverse Balance Liability of Shareholders of a GmbH (Limited Liability Company)

When the GmbH’s operations should be restarted in spite of the change of the company’s purpose, it constitutes an establishment of a new company. The buyer of shares can then be subject to the adverse balance liability, when such an establishment was not disclosed to the court of registration.


North Rhine-Westphalia, Germany -- (SBWire) -- 12/17/2012 --GRP Rainer lawyers and tax advisors in Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: It should be considered as an economic establishment of a limited liability company, when a legal person incorporated in a company (GmbH) exists as a non-company legal person and in this capacity is represented by a company. This is also true in case of a repeated use of a nominal company not performing any real activities. Hence, in the opinion of the Federal Court dated 06.03.2012 (Case No.: II ZR 56/10), the inclusion of transactions of a limited liability company with a changed objective constitutes an economic foundation of the GmbH, which requires registration by the Registry Court. In such a case the shareholders of the company should be liable for the replenishment of the company's assets up to the amount of the registered capital indicated in the Articles of Association (the adverse balance liability) if there is no disclosure with the Registry Court.

A Limited Liability Company (GmbH) is a so-called legal entity with its own rights and obligations. To be able to act, a GmbH appoints a CEO (Director General). The latter may be one of the partners, or even an outsider - in contrast to many other types of companies.

The legal form of a GmbH is preferred by many entrepreneurs and chosen when it comes to finding the right legal status for your own company.

On the one hand, this results from multiple possibilities of maneuvering offered by a limited liability company to its members. On the other hand - and this is likely to be the key feature for many entrepreneurs - a personal liability of the partners for the company's liabilities is excluded.

If difficulties arise one day within an existing company, you will need a lawyer who will help you review possible ways out of the situation. It is especially important to take actions as soon as possible to protect yourself and your company.

About GRP Rainer LLP
GRPRainer LLP is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, and Stuttgart, Germany and London UK.

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