Gesellschaft mit beschränkter Haftung
|European Union / EEA|
|UK / Ireland / Commonwealth|
Gesellschaft mit beschränkter Haftung (abbreviated GmbH, in Austria also GesmbH or Ges.m.b.H.), German for "company with limited liability", is a type of legal entity very common in Germany, Austria, Switzerland, and other Central European countries. The name of the GmbH form emphasizes the fact that the owners (Gesellschafter, also known as members) of the entity are not personally liable for the company's debts. GmbHs are considered legal persons under German and Austrian law. Other variations include mbH (used when the term Gesellschaft is part of the company name itself), and gGmbH (gemeinnützige GmbH) for non-profit companies.
The GmbH has become the most common corporation form in Germany, since the AG (Aktiengesellschaft), the other major company form corresponding to a stock corporation, was until recently much more complicated to form and operate.
The laws governing this type of legal entity were adopted in Germany in 1892, and in Austria in 1906. The concept of limited liability created by these laws inspired the legal establishment of the limited liability company form in other countries, although the concept of a limited liability company already existed in the United Kingdom.
Requirements of formation 
It is widely accepted that a GmbH is formed in three stages: the founding association, which is regarded as a private partnership with full liability of the founding partners/members; the founded company (often styled as "GmbH i.G.", with "i.G." standing for in Gründung – literally "in the founding stages", with the meaning of "registration pending"); and finally the fully registered GmbH. Only the registration of the company in the Commercial Register (Handelsregister) provides the GmbH with its full legal status.
The founding act and the articles of association have to be notarized. The GmbH law outlines the minimum content of the articles of association, but it is quite common to have a wide range of additional rules in the articles.
Under German law, the GmbH must have a minimum founding capital of €25,000 (§ 5 I GmbHG), from which €12,500 have to be raised before registering in the commercial register (§ 7 II GmbHG). A supervisory board (Aufsichtsrat) is required if the company has more than 500 employees, otherwise the company is run only by the managing directors (Geschäftsführer) who have unrestricted proxy for the company. The members acting collectively may restrict the powers of the managing directors by giving them binding orders. In most cases, the articles of association list the business activities for which the directors must obtain prior consent from the members. Under German law, a violation of these duties by a managing director will not affect the validity of a contract with a third party, but the GmbH may hold the managing director in question liable for damages.
As of 2008, a derivate form called Unternehmergesellschaft (haftungsbeschränkt) (English: entrepreneurial company (limited liability)) or short UG (haftungsbeschränkt) was introduced. It does not require a minimum founding capital, and was introduced to assist company founders in setting up a new company. Also, the UG must accumulate 25% of its yearly earnings as legal reserve until it reaches €25,000. The owners may then decide to increase capital and rebrand to GmbH, or may omit the suffix haftungsbeschränkt.
Because a legal entity with liability limited to the contributed capital was regarded in the 19th century as something dangerous, German law has many restrictions unknown to common law systems. A number of business transactions have to be notarized, such as transfer of shares, issuing of stock, and amendments to the articles of association. Many of those measures have to be filed with the company registry where they are checked by special judges or other judicial officers. This can be a tiresome and time-consuming process as in most cases the desired measures are only legally valid when entered into the registry. Because there is no central company registry in Germany but rather several hundred connected to regional courts, the administration of the law can be rather different between German states. Since 2007 there has been an internet-based central company register for the whole of Germany, called "Unternehmensregister".
Differences between GmbH in Germany, Austria, Switzerland and Liechtenstein 
|Minimum share capital||€25,000.00||€35,000.00||CHF20,000.00||CHF30,000.00|
|Mandatory supervisory board||500 employees||300 employees|
See also 
- Aktiengesellschaft (AG)
- Business organizations
- Limited liability company
- Kommanditgesellschaft auf Aktien (KGaA)
- Sabiedrība ar ierobežotu atbildību (SIA) (Latvia)
- Società a responsabilità limitata (SRL) (Italy)
- Société à responsabilité limitée (sarl) (France)
- Besloten Vennootschap (bv) (Netherlands)
- Besloten Vennootschap met Beperkte Aansprakelijkheid (bvba) (Belgium)
- Korlátolt felelősségű társaság (Kft.) (Hungary)
- Spółka z ograniczoną odpowiedzialnością (Sp. z o.o.) (Poland)
- Društvo s ograničenom odgovornošću (d.o.o.) or (doo) or (D.O.O.) or (DOO) (Bosnia and Herzegovina, Croatia, Serbia)
- Družba z omejeno odgovornostjo (d.o.o.) (Slovenia)
- Товариство з обмеженою відповідальністю (ТОВ) (Ukraine)
- Дружество с ограничена отговорност (ООД) (Bulgaria)
- ru:Общество с ограниченной ответственностью (ООО) (Russia)
- Sociedad de Responsabilidad Limitada (S.R.L.) (Mexico, Argentina)
- Εταιρεία Περιορισμένης Ευθύνης (Ε.Π.Ε.) (Greece)
- Друштво со ограничена одговорност (ДОО) (Republic of Macedonia)
- Společnost s ručením omezeným (s.r.o.) (Czech Republic)
- Müller, Klaus J. The GmbH: a guide to the German limited liability company Beck, 2006 ISBN 978-90-411-2444-9
- Rutow, Lange Doing Business in Germany 2008
- Limited Liability Company Reporter. "Historical Background of the Limited Liability Company". Retrieved 2008-08-18.
- Sociedad de Responsabilidad Limitada, (Venezuela)
- Anpartsselskab (Denmark)
Further reading 
- Fohlin, Caroline (November 2005). "Chapter 4: The History of Corporate Ownership and Control in Germany". In Morck, Randall K. A History of Corporate Governance around the World: Family Business Groups to Professional Managers. University of Chicago Press. pp. 223–282. ISBN 0-226-53680-7.
- Franks, Julian; Colin Mayer (2001). "Ownership and Control of German Corporations". The Review of Financial Studies (Oxford University Press) 14 (4): 943–977.
- Tiede/Ryczewski, "Introduction to the Serbian Law on Limited Liability Companies" in WiRO 2012 (German Law Journal), vol. 5, pp. 140-144