Superior Court of Justice (Berlin) on the admissibility of assuming the formation costs (GmbH)

Formation of a GmbH: Decision of the Superior Court of Justice of Berlin (Kammergericht ) on the admissibility of assuming the formation costs of more than 10% of the share capital according to the articles of association of a GmbH 

The founders of a GmbH (a limited liability company under German law) can stipulate in the articles of association that the formation costs are to be borne by the GmbH. According to the widely held opinion in case law, the GmbH may only bear the formation costs to a "reasonable" amount. Usually the registration (Registergerichte) courts accept without further proof such regulations in the articles of association of a GmbH, according to which the company bears the formation costs in the amount of up to 10% of the share capital (Stammkapital). Now, however, in a decision dated October 26, 2021 (Ref.: 22 W 44/21), the Superior Court of Justice of Berlin (Kammergericht) has ruled that the formation costs to be borne by a GmbH according to its articles of association are in any case not limited to an amount equal to 10% of the share capital if the GmbH has free capital available in the amount of a multiple of the share capital.

In the case to be decided by the Superior Court of Justice of Berlin, a GmbH & Co. KG (a special form of limited partnership) was converted into a GmbH. The articles of association of the new GmbH provided for a share capital of € 40,000.00 and the assumption of the formation expenses by the GmbH in the amount of € 10,000.00 (and thus of 25% of the share capital).

The Superior Court of Justice of Berlin first states that there is no (rigid) restriction on the amount of the assumable formation expenses to up to 10% of the share capital. Rather, the permissible amount of the assumable formation expenses is based on Sec. 26 (2) German Stock Corporation Act (Aktiengesetz, AktG) in appropriate application and the resulting protection of creditors, i.e. the interest of the creditors of the GmbH that the company - at least at the time of registration - has the highest possible company assets. The permissible amount is therefore (in the opinion of the Superior Court of Justice of Berlin) to be assessed not only on the basis of the share capital figure but also on the basis of the free assets of the company. If the GmbH has sufficient free capital after deduction of liabilities (in the specific case: almost two million euros), there is no underfinancing to the detriment of creditors.

We will be happy to advise you with our many years of expertise on all questions relating to the formation of a limited liability company (GmbH) as well as all other matters in commercial and corporate law.

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