Special forms on the setting up of enterprises

The legal form of a partnership company can only be chosen by freelancers, e.g. doctors or lawyers. Alongside the partnership’s assets, the partners are also personally liable to the creditors for the partnership’s liabilities. However, they can limit their liability for claims to damages on account of defective exercising of the professions (also making use of general terms and conditions of business) to the partner who is to render the professional service within the partnership or to manage and monitor it under his responsibility.

The law of partnership companies has only been regulated very concisely in the Partnership Companies Act. As a result of the possibility of forming a GmbH for some freelancers, interest in this legal form has dropped. Partnership companies are to be entered into the Register of Partnerships at the Local Court.

Silent partnerships

Silent partnerships are business partnerships in which someone obtains a holding in someone else’s trade business with an asset contribution which is assigned to the other person against a share in the profits, §§ 230 et seq., German Commercial Code. Silent partnerships are not recognisable to the outside, the silent partner does not make any business registration.

Only the proprietor and not the silent partner is entitled and obligated from the trade transactions concluded with third parties. Limited control rights accrue to the silent partner, as a matter of principle he can merely demand written notification of the annual financial statements and have insight into books and papers in order to examine their correctness.

The silent partner participates in the profits and losses. Unlike participation in the profits, which is compulsory, participation in the losses can be ruled out. After dissolution of the company, the silent partner shall have a claim to disbursement of his credit. A passive balance does not obligate to subsequent payment as a matter of principle, but becomes irrelevant. If there is deviation from the statutory (typical) regulation, it is a question of an atypical silent partnership, for example if the silent partner is granted more control rights or participates in the management or similar. 

European Economic Interest Grouping (EEIG)

The EEIG is a joint corporate form of European law. It is to facilitate cross-border cooperation and support the domestic market. The EEIG must be composed of no less than two participants and at least two of its members must have their headquarters or their registered offices in differing member states.

The EEIG itself may not pursue any economic purposes and achieve profits for itself. It is limited to supporting the economic purposes of its members, which often makes this legal form uninteresting.

The formation agreed is valid without formalities. But as it is to be deposited at the Register of Commerce and has to contain certain information according to the EEIG Directive, written form is factually necessary. A further prerequisite for formation in Germany is entry of the EEIG in the Register of Commerce.

The members of an EEIG are liable for their liabilities without limitation and jointly and severally. Unlike an oHG, however, the members’ liability is subsidiary. Creditors can only make claims against the members when they have requested payment from the company and this has not been performed within a suitable period.