GmbH vs. AG

The biggest difference between these two corporations is the share capital. While € 25,000 share capital is sufficient for a GmbH, € 50,000 must be paid in for a stock corporation (AG). A further hurdle when setting up an AG compared to a GmbH is the stricter regulations of the German Stock Corporation Act, which must be adhered to when setting up an AG. This makes the process more costly and time-consuming.

The second major difference lies in the bodies of the two corporations. While a GmbH has a shareholders' meeting and a management board, the AG has a supervisory board, a management board and a general meeting. The shareholders of a GmbH have the opportunity to intervene in the operational business of the company at any time due to their right to issue instructions and their control function over the management.

The situation is different for an AG, where the Supervisory Board controls the Management Board, but the shareholders do not have the opportunity to intervene in the management of the company.

In terms of the transferability of company shares, however, the AG has an advantage over the GmbH. With the AG, the transfer is informal and simple, whereas with the GmbH, every change of shares must be notarized.

In addition, there is a further difference in liability: while the Management Board and members of the Supervisory Board of an AG can be held liable for business decisions, the shareholders of an AG are only liable for the value of the shares they hold. In the case of a GmbH, the liability of the shareholders is generally limited to their share capital contribution, although the managing director may also be liable in special circumstances.