British limited legal form expands within Germany

According to the ddp/Dow Jones business agency the British „Limited” (⇒ Wikipedia) legal form continues to be highly appealing to small and medium-sized German companies, in spite of an announced reform of the German private limited company.

Three years after this legal form was fully approved in Germany there are, according to expert estimates, approximately 35.000 companies modelled on the British „limited”. It is estimated that one quarter of newly founded joint stock companies are set up in the form of a British „limited” instead of a German private limited company (GmbH), and this trend is bound to continue.

According to ddp/djn this legal form is particularly popular in the economically strong federal states of Nordrhein-Westfalen, Bayern, Hessen und Baden-Württemberg (more than 60 percent), whereas only 5 percent of all limiteds can be found in the economically weak regions of Bremen, Mecklenburg-Vorpommern, Saarland and Thüringen.

The advantages of the „limited” legal form are evident: a single deposit of only 1 British Pound instead of 25.000 Euro (GmbH), no need for a notary, fast liquidation and identical limitation of liability to that of a GmbH. But there are disadvantages too: Potential creditors have markedly less confidence in limiteds, banks and suppliers only hesitatingly grant loans, and in order to maintain the limited-status there is the need for a permanent agency in Britain. Therefore the Deutsche Industrie- und Handelskammertag (DIHK) cautions against too biased a look on this legal form (also see “Limiteds are only a limited alternative to GmbHs”). GERMAN