Partnerships

A partnership is always formed when at least two legal entities join together to realize a common purpose. These legal entities can be either natural persons or legal entities. Once they have joined together, they are referred to as partners.

The best-known forms of partnerships are the:

• Civil law partnership (GbR)
• Limited partnership (KG)
• General partnership (OHG)

In a GbR, at least two people join together to realize a common purpose, and no partnership agreement is required. Both partners jointly manage the company and share the profits equally.

The OHG is similar to the GbR, but with the significant difference that the OHG is a commercial business that must be entered in the commercial register. The management of the company is usually also undertaken jointly.

In terms of liability, both companies have unlimited liability. The respective partners are jointly and severally liable with both their company assets and their private assets.

This is different for the third known form of partnership, the so-called KG. Here, only the general partner has full and unlimited liability, including with their private assets. The liability of the limited partner is limited to the amount of liability entered in the commercial register.

In general, in contrast to corporations, unlimited liability applies to partnerships, with the exception of limited partners in a KG.

However, it should also be noted that no share capital is required to form a partnership. The amount of the starting capital is made up of the contributions made by the partners, but there is no statutory minimum limit.

In addition, in contrast to corporations, there is always a personal relationship. The shareholders contribute the capital to the company and are also managing directors and make decisions jointly, unless otherwise stipulated in the articles of association.

The situation is different in the case of corporations, where the shareholders also contribute capital, but are not necessarily involved in the management or cooperation in the company and are only liable to a limited extent with their share capital contribution, not with their private assets.