Fighting back LLCs

Author: | Published: 1 Jul 2007

Germany's Limited Liability Companies Act (Gesetz betreffend der Gesellschaft mit beschränkter Haftung) will be fundamentally renewed by the adoption of the draft Bill of the Federal Government dated May 23 2007. The changes will have enormous influence on the landscape of Germany's company law and on international company law. Shareholders, directors, potential investors and all those who do business with German companies should be aware of the changes, which will be transformed into law – the new Limited Liability Companies Act – most likely in early 2008.

The main reason for the reform of Germany's Limited Liability Companies Act (GmbHG) is to increase the competitiveness of the GmbH – Germany's private limited liability company. This has become a concern because of the increased competition from limited liability companies from other jurisdictions (especially the UK) and their full recognition in Germany after numerous landmark decisions, (Centros, Überseering and, in particular, Inspire Art).

These decisions...