UG vs. GmbH
Differences UG vs. GmbH / Unterschiede UG vs. GmbH
December 14, 2022
What is the difference between the UG and the GmbH?
The limited liability entrepreneurial company (UG) is often also referred to as a Mini-GmbH (limited liability company). The differences should be known to every founder of an entrepreneurial company.
Anyone who is faced with the decision between a UG and a GmbH will already know one difference: while the share capital of a GmbH must be at least 25,000.00 euros in accordance with section 5 limited liability Companies Act (GmbHG), the UG can be founded with a share capital of 1 euro per shareholder in accordance with section 5a GmbHG. If there is one founder, the minimum share capital is 1 euro, with two founders it is 2 euros, and so on.
Full capital contribution // No formation in kind
In contrast to the GmbH, the share capital of the UG must be paid in full. Contributions in kind are not possible for the UG, see section 5a (2) GmbHG. This also applies to capital increases insofar as the share capital remains below 25,000.00 euros.
Accumulation obligation // Capital recovery
With the introduction of the UG, the legislator did not intend to deviate from the principle of the GmbH, but merely to open up the possibility of founding a corporation also for companies/entrepreneurs with weaker capital cover. In order to ensure that profitable entrepreneurial companies grow to a minimum share capital of 25,000 euros, there are special retention obligations of the UG:
One quarter of the annual net profit less the loss carried forward from the previous year is to be entered in the balance sheet as a reserve pursuant to section 266 (3) German Commercial Code (HGB).
Extraordinary general meeting in case of loss of share capital
According to section 49 (3) GmbHG, an extraordinary shareholders' meeting must be convened in the event of the loss of half of the share capital. This provision does not apply to the UG. According to section 5a (4), such an extraordinary shareholders' meeting must only be convened in the case of imminent insolvency.