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German business law
for the Mittelstand
HomePracticesCorporate, M&A & Succession
Practice 01

Corporate, M&A & succession — German law for inbound investors.

Acquiring or founding a company in Germany follows formal rules that differ from common-law practice: notarial deeds, register entries, codified shareholder rights. We act as German counsel for foreign investors and groups — from the first structuring memo to closing and post-merger governance, with one responsible partner throughout.

§ I — Context

Why German corporate law rewards preparation

Foreign investors entering Germany meet a formal system. A GmbH requires a notarial deed and a minimum share capital of EUR 25,000; the UG (haftungsbeschränkt) is available as a EUR 1 variant for staged entries. The company exists as a limited-liability entity only upon entry in the Handelsregister (commercial register, HRB), and beneficial owners must be notified to the Transparenzregister. Signing before these steps are sequenced correctly creates personal-liability exposure for the people acting.

Inbound acquisitions add a regulatory layer. Under the AWG/AWV (German foreign trade act and ordinance), acquisitions by non-EU investors can trigger FDI screening by the Federal Ministry for Economic Affairs (BMWK), with sector-dependent voting-right thresholds of 10, 20 or 25 percent. A transaction signed without assessing a filing obligation can be unwound or suspended — a consequence that is far more expensive than the analysis itself.

We structure the entry, run or respond to due diligence, draft and negotiate the SPA or articles, manage notary and register filings, and handle FDI analysis and BMWK contact. On succession mandates we combine corporate instruments — articles, pooling and shareholder agreements, advisory boards — with the family-owned reality of the German Mittelstand. The practical first step in almost every case: a structuring memo before any term sheet is signed.

§ II — Services & scenarios

What we handle — and in which situations.

Services

  • Market entry — formation of a GmbH or UG (haftungsbeschränkt), or registration of a branch (Zweigniederlassung), including notary coordination and Handelsregister filing.
  • FDI screening — analysis of filing obligations under AWG/AWV, preparation of BMWK submissions and clearance management in the deal timetable.
  • Inbound M&A — share and asset deals on German targets: due diligence, SPA drafting and negotiation, signing and closing management.
  • Shareholder agreements — articles of association, pooling agreements, drag/tag provisions, exit mechanics under the GmbHG.
  • Managing-director matters — appointment, service agreements and liability questions under sec. 43 GmbHG for foreign-appointed directors.
  • Shareholder disputes — resolutions, challenges to resolutions and compulsory redemption of shares (sec. 34 GmbHG).
  • Succession — transfer of family-owned companies: structure, governance, advisory boards, coordination with tax advisers.
  • Register and transparency compliance — Handelsregister and Transparenzregister filings, corporate housekeeping for German subsidiaries.

Typical scenarios

  • A US industrial group acquires a Bavarian Mittelstand supplier; the deal requires FDI analysis under AWG/AWV and a two-step closing.
  • An Asian technology company forms a German GmbH as its EU distribution hub and needs articles, a managing-director service agreement and register filings within a fixed timetable.
  • A foreign investor holds 40 percent of a German GmbH and faces a shareholder resolution it considers invalid.
  • A family shareholder group prepares the handover of a EUR 60 million revenue company to the next generation while a foreign minority investor comes on board.
  • A European buyer needs red-flag due diligence on a German target within three weeks, with findings translated into SPA protections.
  • A non-EU parent restructures its German subsidiaries into a holding structure and needs the corporate steps sequenced with notary and register practice.
§ III — Statutes & forums

The legal framework.

GmbHG
The Limited Liability Companies Act — Germany's central statute for the GmbH. It governs formation, shareholder resolutions, managing-director liability (sec. 43) and the redemption of shares (sec. 34).
AWG / AWV
The Foreign Trade Act and Ordinance. They provide the legal basis for FDI screening of acquisitions by non-EU investors, with sector-dependent voting-right thresholds of 10, 20 or 25 percent and review by the BMWK.
HGB
The Commercial Code. It governs merchants, commercial transactions and the framework of the Handelsregister, the court-maintained commercial register in which a GmbH must be entered (HRB).
AktG
The Stock Corporation Act — relevant where the target or acquisition vehicle is an AG, and for group-law questions in German subsidiary structures.
Handelsregister
The German commercial register, kept by the courts. Entry is constitutive for the GmbH: limited liability begins with registration, not with signing the deed.
Transparenzregister
The German beneficial-ownership register. Companies must notify their ultimate beneficial owners; foreign parent structures frequently trigger update obligations after closing.
§ IV — How we start

How an engagement begins.

01

First contact

Write to us with an outline of the transaction or entry plan. We reply within one business day and offer a free 30-minute orientation call, in English.

02

Legal assessment

Where useful, we prepare a written assessment — for example an FDI filing analysis or a formation roadmap — at a fixed fee from EUR 1,500 plus VAT.

03

Mandate

For the transaction itself we agree the model in advance: hourly rates, a fixed fee, or a fee agreement under sec. 3a RVG. One partner is responsible throughout.

04

Ongoing support

After closing we support the German entity on governance, register filings and shareholder matters — on call-off or as ongoing counsel.

From practice
A German acquisition rarely fails on price. It fails on sequence — notary, register, screening — when these are treated as formalities instead of deal steps.
Dr. Konstantin Brandt · Managing Partner
§ VI — Fees

Clear before the engagement begins.

Fees follow the structure of the transaction, not the other way around. We state the model and the corridor before the mandate begins — in writing.

  • Orientation call — 30 minutes, free of charge: facts, options and a realistic view of timeline and effort.
  • Legal assessment — a written analysis of a defined question (FDI filing duty, formation roadmap, SPA risk review) at a fixed fee from EUR 1,500 plus VAT.
  • Mandate — hourly rates, a fixed fee for defined work packages, or a fee agreement under sec. 3a RVG for transaction mandates.
  • Court proceedings — where a corporate dispute reaches court, the statutory fees under the RVG form the floor; we do not undercut them.
§ VII — FAQ

What clients ask first.

How long does it take to set up a GmbH in Germany?

The legal steps are compact: notarial deed, payment of share capital, Handelsregister filing and entry. With complete documents — including notarised and apostilled powers of attorney for foreign shareholders — the process typically runs a few weeks; the register entry itself depends on the competent court. The critical path is usually not the notary but the bank account for paying in the EUR 25,000 share capital and the KYC checks behind it. We sequence these steps in a written roadmap at the start so that the entity is ready when your commercial timetable needs it.

Do we need FDI clearance to buy a German company?

It depends on your investor jurisdiction, the target's sector and the voting rights acquired. Under the AWG/AWV, acquisitions by non-EU investors can require notification to the BMWK, with thresholds of 10, 20 or 25 percent of voting rights depending on the sector. Some sectors carry a genuine filing obligation; in others a voluntary application for a clearance certificate can create deal certainty. We analyse the filing question early, because closing a notifiable transaction without clearance puts the acquisition's validity at risk.

Can a foreign national be managing director of a German GmbH?

Yes. German law does not require the managing director to be a German citizen or resident, although practical questions — register filings, ability to attend notary appointments, tax presence — should be planned. What matters more is the liability framework: under sec. 43 GmbHG the managing director owes the diligence of a prudent businessperson and is personally liable to the company for breaches. We draft service agreements and internal rules of procedure so that responsibilities, reserved matters and reporting lines between the German entity and the foreign parent are clear from day one.

Is the UG a serious alternative to the GmbH?

The UG (haftungsbeschränkt) is a statutory variant of the GmbH that can be formed with a share capital from EUR 1, with an obligation to build reserves toward the full GmbH capital. It works for staged market entry and holding purposes. In practice, counterparties — banks, landlords, large customers — read the legal form as a signal, and many inbound investors choose the GmbH with its EUR 25,000 share capital for credibility. We assess both against your entry plan and convert a UG to a full GmbH when the time is right.

Do you work with our home-country counsel?

Yes, and we prefer it. Our role is the German side: corporate law, notary and register practice, FDI screening, German-law transaction documents. Your home counsel keeps the parent-level view — financing, group approvals, home-jurisdiction filings. For matters in third countries we coordinate, where needed, in cooperation with independent local partner firms; we are German-qualified lawyers and do not advise on foreign law ourselves. You get one responsible partner at BRANDT & FALK as the single German point of contact.
§ VIII — Insights

Articles on this practice area.

Articles on GmbH formation, FDI screening and inbound M&A practice appear in our knowledge base.

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BRANDT & FALK Rechtsanwälte is a German business-law firm with offices in Munich and Berlin. The content of this website is general information about our fields of work and does not constitute legal advice. An attorney–client relationship is established only by a separate engagement agreement. Unless stated otherwise, all fees are quoted plus statutory VAT. Our lawyers are admitted to the bar in Germany; advice on foreign law is provided by independent local partner firms.