Glossary · Legal forms

UG (haftungsbeschränkt)

Also: Unternehmergesellschaft (haftungsbeschränkt), entrepreneurial company with limited liability, Mini-GmbH, 1-Euro-GmbH

Dr. Georg Schröder, LL.M.Lawyer

In short

The UG (haftungsbeschränkt) is not a separate legal form, but a GmbH with less than €25,000 share capital, mathematically from €1, which must be paid in full in cash before the application. In return, it must put a quarter of its annual net profit into a reserve every year.

UG (haftungsbeschränkt) explained

The entire GmbH Act applies to the UG, with five deviations under Sec. 5a GmbHG: the name suffix, full payment, no contributions in kind, the reserve requirement and the obligation to convene the shareholders' meeting without delay if insolvency is imminent. Liability, bodies, notary, balance sheet and taxes are the same as for the GmbH. There is no turnover or profit limit. In practice, €1 is not enough, because otherwise the formation costs exceed the capital; Recht 24/7 recommends at least €500, better €1,000 to €2,500. Formation at the notary is cheaper with the model protocol. If the UG increases its share capital to €25,000, the special rules no longer apply.

Legal basisSec. 5a GmbHG

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

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Form a UG

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

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Related terms

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.Model protocol (Musterprotokoll)The model protocol is a statutory form for the simplified formation of a GmbH or UG with no more than three shareholders and one managing director. It combines the articles of association, appointment of the managing director and list of shareholders and reduces notary costs.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.Shareholders' meeting (Gesellschafterversammlung)The shareholders' meeting is the body in which the shareholders of a GmbH or UG pass their resolutions. Among other things, it adopts the annual financial statements, decides on the use of profits and appoints the managing directors.Asset management GmbH (vermögensverwaltende GmbH)An asset management GmbH manages its own assets, such as real estate, securities or shareholdings, instead of running an operating business. It is often used as a holding company or to invest accumulated profits.Corporation (Kapitalgesellschaft)In a corporation, the capital contributed is what matters, not the person of the shareholders; examples are the GmbH, UG and AG. It is a legal entity and in principle is only liable with the company's assets.

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