Limited & Co. KG

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The Limited & Co. KG is a special form of the limited partnership (KG) under German law and thus a partnership . In contrast to a typical limited partnership, the personally liable partner ( general partner ) is not a natural person , but usually a British private company limited by shares (Ltd.), more rarely a public limited company (PLC). The aim of this corporate law structure is to exclude or limit liability risks for the people behind the company. In addition, this legal form can circumvent employee representation on the company's supervisory board, which is otherwise stipulated by Section 1 of the MitbestG . The ECJ has confirmed this legal view in a preliminary ruling procedure as conforming to European law. The Limited & Co. KG is a mixed form analogous to the GmbH & Co. KG or AG & Co. KG .

history

After several rulings by the European Court of Justice and the Federal Court of Justice (in particular the ruling in the Überseering case) on the freedom of establishment of foreign corporations in Germany, the British limited company has , above all because of the quick establishment opportunity vis-à-vis the limited liability company (GmbH) and the possible low capitalization, found to some popularity.

The use of the Limited as a general partner of a German limited partnership had not been clarified. The district court of Bielefeld in 2005, the registration of a Limited & Co. KG into the commercial register accepted and the appeal court of the district court lifted Bad Oeynhausen its decision. According to this judgment, anyone who can also be a partner in an OHG can be a general partner of a KG . Any natural or legal person and thus also a limited company can be a partner in an OHG .

The United Kingdom applied to leave the European Union on March 29, 2017 . The legal effects of a possible exit from the Union on the legal form of Limited & Co. KG cannot yet be foreseen.

Form and foundation

Expression

see also: Chapter Characteristics in the article GmbH & Co. KG

All expressions are possible as with every Name & Co. KG . Since the Limited only requires a very low nominal capital, it is often used as a one-man Ltd in small businesses . & Co. KG used its shareholders of the limited company and the only limited partner of Ltd. & Co. KG is.

founding

The establishment of the Ltd. & Co. KG takes place in two steps. First, the incorporation process of the Limited in the United Kingdom takes place by entry in the companies register (Cardiff, Edinburgh, Belfast) and by the issuing of the deed of incorporation by the registry authority (so-called certificate of incorporation). With the delivery of the certificate of incorporation, the Limited acquires its legal capacity. In the second step, the German branch is established with the simultaneous establishment of the KG serving as a "shell". For this, the registration of the German branch of the Limited (§§ 13d ff. HGB) with the commercial register takes place in German (§ 184 GVG) and in a notarized form (§ 12 HGB) with simultaneous registration of the KG in the commercial register. The limited company must first be listed as a general partner in the partnership agreement. Finally, the legal registration of the Ltd. & Co. KG at the local trade office. The entry of the limited partnership under the company Ltd. & Co. KG is only declaratory for the creation of the legal entity; However, if the KG does not operate a trade , it is a prerequisite for the application of the specific KG regulations of the Commercial Code (HGB). One variant is PLC & Co. KG, in which a public limited company provides the general partner.

The activity of the Limited as a general partner alone, according to a decision of the Higher Regional Court of Frankfurt am Main in 2008, does not require entry in the commercial register. The Limited is a general partner in Germany i. d. Usually also assessed for tax purposes if it is not economically active in Germany beyond the general partner position. Limiteds are also increasingly being set up in Cyprus because tax advantages are obtained there. It benefits from numerous double taxation agreements (DTA) between Cyprus and other countries.

Similarities and differences from Ltd. & Co. KG and GmbH & Co. KG

  • In the case of a GmbH & Co. KG, the GmbH assumes the liability limitation function, in the case of the Ltd. & Co. KG this task is taken over by the Limited Company.
  • In contrast to the GmbH or GmbH & Co. KG, the capital is freely selectable. There is no need to hold share capital of at least 25,000 euros in cash. The founder should bear in mind, however, that he should not contribute his shares in the limited company as his own limited partner contribution, as this is deemed not to have been paid to third parties according to Section 172 (6) HGB .
  • For the establishment or purchase of the Ltd. & Co. KG does not require a visit to the UK. For the establishment or purchase of a GmbH & Co. KG, however, a notary must be consulted.
  • The Ltd. & Co. KG is taxable in Germany, taxation is the same as for the GmbH & Co. KG. The German tax advisor does not need any knowledge of UK tax law. If you waive a complementary remuneration, it is possible to create a so-called zero balance ( dormant accounts ) for the Ltd. to be submitted, but only on condition that the Limited has no worldwide sales.
  • In the case of a GmbH, changes must be certified by a notary, changes in the limited company can be made without a notary, but often for a fee by management consultants and intermediaries.
  • The English limited company, as a "non trading company", only has the function of the personally liable partner and thus simplified reporting obligations. Compared to a general partner GmbH, the annual follow-up costs of the limited company can be kept lower under certain conditions.
  • In any partnership, losses from the start-up phase can be offset against other positive income of the partner annually, which can lead to tax refunds. The offsetting of losses is limited to the amount of the contribution, § 15a EStG.
  • No minimum amount is prescribed for the liability contribution to be made by the limited partner (s) and does not have to be paid in immediately. However, if it has not yet been paid in in full, claims can be made against the limited partner in accordance with Section 171 (1) of the German Commercial Code (HGB) in the amount of the contribution amount.
  • "Limited" is the most widespread legal form worldwide, as it is de facto used in all Commonwealth countries such as Australia, New Zealand, etc. In these countries it represents the English-speaking counterpart to the German GmbH.
  • The Ltd. needs an administrator in the UK. During the establishment process, a foreign company (the Ltd.) must be established or bought.
  • Since the Ltd. & Co. KG can practically be established with negligible liability capital, banks and business partners can expect less trust in the company's liquidity if no other collateral is provided.
  • It is reported that banks and authorities are sometimes skeptical, and (as with the Ltd., which is active in Germany), increased skepticism and control by the tax authorities may be expected. Occasionally banks refuse a Ltd. a business account in their name.
  • At the Ltd. & Co. KG, in contrast to GmbH & Co. KG, there is no employee representation on the supervisory board through Section 1 of the MitbestG . The case law sees the application of § 1 MitbestG for companies with foreign personal status, such as the Ltd. & Co. KG, not opened. The ECJ has confirmed this legal view in a preliminary ruling procedure as conforming to European law. Thus, in companies that usually employ more than 2000 people and which are in the legal form of Ltd. & Co. KG, there is no representation of the workforce on the supervisory board according to the MitbestG.
  • For the British Ltd. German company law does not apply, but the company law of the United Kingdom of Great Britain and Northern Ireland. However, one should be aware that there is no single British legal system. Only England and Wales (“the laws of England and Wales”) form a common legal system. In Scotland as well as Northern Ireland partly different law applies. The following statements therefore only refer to England and Wales:
  • The UK lawyers' fees for corporate law are consistently higher than those in Germany. Communication problems can lead to higher costs for the owner. Since the United Kingdom is a full member of the European Union, the provisions of the EuInsVO apply to a private limited company. According to Art. 3 Para. 1 EuInsVO, the courts of the member state are responsible for the opening of insolvency proceedings, on whose territory the debtor (the Ltd.) has the center of main interests. If the actual administrative seat is in Germany, the insolvency application according to § 3 InsO must be submitted to a German court. The Limited is free to stipulate the place of jurisdiction in its statutes and can thus also influence whether German or British law applies. In principle, the German insolvency courts have international jurisdiction for insolvency proceedings via limited companies with a focus on Germany.
  • If the reporting obligation for the British authorities is not correctly complied with, the company is threatened with deletion faster than a German GmbH, but reactivation is possible. It is important to ensure that the annual accounts are sent to Companies House on time. If this is not the case, a staggered fine must be paid. A delayed “annual return”, however, is not punishable by penalties.

Well-known companies

literature

  • Clemens Just: The English Limited in practice. Including Limited & Co. KG. 2nd edition Beck, Munich 2006, ISBN 978-3-406-55536-7 .

Individual evidence

  1. ↑ a b ECJ, judgment of July 18, 2017 , Az. C 566/16, full text.
  2. ↑ ECJ, judgment of November 5, 2002 (PDF) , Az. C 208/00, full text
  3. ↑ Legal capacity of the Limited, see BGH, judgment of March 13, 2003 , Az. VII ZR 370/98, full text.
  4. ^ LG Bielefeld, decision of August 11, 2005 , Az. 24 T 19/05, full text.
  5. ↑ OLG Frankfurt, decision of April 24, 2008 , Az. 20 W 425/07, full text.
  6. ↑ Service provider for establishment in Cyprus.
  7. ^ Bayer: The erosion of German co-determination . In: NJW 2016 . S. 1930 .