Glossary · Capital

Limited liability (Haftungsbeschränkung)

Also: Haftungsbeschränkung, beschränkte Haftung, haftungsbeschränkt

In short

Limited liability means that only the company's assets are liable for the business's debts, not the shareholders' private assets. For a GmbH and UG, it only applies in full from entry in the commercial register.

Limited liability (Haftungsbeschränkung) explained

The suffix "(haftungsbeschränkt)" in the UG's name indicates exactly this. The company is liable with everything it owns, not just with its share capital; as a shareholder, you mainly risk your contribution. Before registration, those acting on its behalf are personally liable (Sec. 11 (2) GmbHG). Even afterwards, liability can become personal: as managing director for breaches of duty or a late insolvency filing, for unpaid taxes, or if you give a guarantee for the company. In a KG, the limited partner's liability is limited to their liability amount (Sec. 171 HGB). In a GbR and OHG, by contrast, the partners are liable without limit.

Legal basisSec. 13 (2), Sec. 11 (2) GmbHG; Sec. 171 HGB

More in our guideWhat is a UG? The UG (haftungsbeschränkt) legal form explainedThe UG (haftungsbeschränkt), in full Unternehmergesellschaft (haftungsbeschränkt), is not a separate legal form but a variant of the GmbH under Sec. 5a GmbHG. It is formed with less than €25,000 share capital, arithmetically from €1, which must be paid in fully in cash before registration. In return, it must allocate a quarter of its annual net profit to a statutory reserve every year until the share capital has been increased to at least €25,000.Read the guide

Matching service

Form a UG

€259net plus VAT, notary and court fees, IHK and trade registration costs

View service

Related terms

Share capital (Stammkapital)The share capital is the capital of a GmbH or UG specified in the articles of association; for a GmbH it is at least €25,000, for a UG less, mathematically from €1. For a GmbH, at least €12,500 must be paid in for the application; for a UG, the full amount.GbR (civil law partnership)A GbR comes into existence as soon as at least two persons contractually undertake to pursue a common purpose, without a notary, register or minimum capital. All partners are personally liable for its debts, without limit and jointly and severally.GmbH (limited liability company)The GmbH is a corporation and legal entity formed by one or more persons with at least €25,000 share capital. As soon as it is entered in the commercial register, in principle only the company's assets are liable for its debts.KG (limited partnership)The KG is a commercial partnership with at least one partner with unlimited liability (general partner) and at least one limited partner whose liability is limited to a liability amount. It is entered in division A of the commercial register.Limited partner (Kommanditist)The limited partner is the partner with limited liability in a KG; they are only liable to creditors up to their liability amount entered in the commercial register. Once they have paid their contribution, their liability is excluded.Managing director (Geschäftsführer)The managing director runs the GmbH or UG and represents it in and out of court. They must be a natural person with full legal capacity and are appointed by the shareholders.

Your case starts here.

Get started

Personal advice
Directly from a lawyer

Transparent fixed prices
with no surprises.

Response within
24 hours

Securely insured
up to €2.5 million

No legal jargon, just clear answers.

The Recht 24/7 newsletter: deadlines, rulings and tips for founders and clients. Once a month.