The open commercial company (OHG) is a partnership whose purpose is to operate a commercial trade under a joint company and in which – in contrast to the limited partnership (KG) – none of the shareholders has limited liability vis-à-vis the company creditors (§ 105 (1) HGB). At the KG, on the other hand, the limited partner is liable for the liabilities of the KG. In this article, we explain how you set up an OHG, what happens when the shareholder circle changes and how the company ends.

OHG is a partnership whose purpose is to operate a commercial trade under a joint company and in which – unlike the limited partnership – none of the shareholders’ liability towards the company creditors is limited (§ 105 (1) HGB). As a partnership, OHG is not a legal entity. However, according to § 124 (1) HGB, she can acquire rights and enter into liabilities under her company, as well as sue and be sued in court. OHG is therefore a partnership with partial legal capacity. It is also the holder of a company asset to be separated from the private assets of its shareholders. This is subject to the total commitment.

In contrast to the company civil law (GbR), the shareholders cannot pursue any purpose within the meaning of § 705 BGB, but must intend to operate a commercial trade (§ 105 (1) HGB). The operation of a commercial trade therefore fundamentally distinguishes the two legal forms from each other.

At OHG, each shareholder can hold only one share in OHG. The shares of the shareholders are therefore always the same size. This is the expression of the principle of uniformity of membership applicable to all partnerships. In the case of a corporation, on the other hand, the shares can also diverge. In a further contribution, we have explained the advantages and disadvantages of OHG to other legal forms (OHG: Definition – Liability – Advantages – Disadvantages).

When an OHG is established, no formal incorporation procedure is envisaged, as in the case of a corporation. The OHG presupposes, like any other form of company, a contract by which several persons join together for the pursuit of a common purpose (§ 105 (2) HGB, §705 BGB), so-called company contract.

In the internal relationship between the shareholders, the OHG thus arises at the time when the articles of association become fully effective. In external relations with third parties, the validity of the OHG occurs with the registration of the company in the commercial register (§ 123 (1) HGB) or with the inclusion of transactions (§ 123 (2) HGB). In the case of the latter, the company becomes effective in the external relationship only if all shareholders have expressly or implicitly approved the commencement of business. In addition, the company must collect a commercial trade with commercial business operations within the meaning of § 1 (1) HGB, so-called Ist-Kaufmann.

Therefore, the commercial register entry in an OHG, which already actively operates a commercial trade by taking up business, has a declaratory effect. On the other hand, it is constitutive for the effectiveness in the external relationship if no trade is yet operated.

The social contract can be concluded immediately. The general rules of contract law shall apply to the conclusion of the company contract. For its effectiveness in particular the provisions of the General part of the BGB apply. If the company contract suffers from a defect, there is a defective company, which may mean that a reversal of the company is only possible for the future (ex nunc).

The OHG, like any other company, must pursue a common purpose. At OHG, however, this is aimed at the operation of a commercial industry. In this respect, a trade is any independent, planned, externally appearing, permissible, permanently pursued and profit-making activity, excluding the liberal professions. According to § 1 (2) HGB, every trade is at the same time a commercial trade, unless the company does not require a commercial operation established in a commercial manner in terms of type and size.

The existence of an open commercial company does not depend on the continued existence of the original shareholders. The circle of shareholders can therefore change over time. Existing shareholders may leave the OHG, join new shareholders or shareholdings may be transferred legally or inherited.

The legislature has legally regulated the event of a shareholder leaving the company. Reasons for withdrawal are regulated in § 131 paragraph 3 HGB.

3.1.1. Death of a partner

Accordingly, the creation of a shareholder ends in principle with the death of the shareholder. A continuation with the heirs as shareholder therefore does not take place. However, as a community of heirs, the heirs enter the legal position of the retired testator and engage in dispute with the other shareholders. They are entitled to the severance payment credit (§ 738 BGB, § 105 (3) HGB). The share of the deceased, on the other hand, grows to the other shareholders.

Regularly, however, provisions are made in the articles of association regarding what happens in the event of the death of a shareholder and the statutory provisions cancelled. In particular, agreements for a continuation of the company with all (simple succession clause) or with certain heirs (qualified succession clause) are considered.

In addition, heirs can also be granted the right to demand acceptance into society. For this case, § 139 HGB contains a special regulation. This is to prevent the unlimited personal liability of § 128 HGB being imposed on the shareholders. The heirs may make their stay in the company conditional on their being granted the position of limited partners while retaining their previous share of the profits and on their being recognised as a limited partnership contribution. Then the OHG becomes a KG. If the other shareholders reject the request of the heir, the heir is entitled to declare his departure from the company without observing a notice period.

We have our own contribution to the different regulatory options in the event of the departure of a shareholder (death of a shareholder: dissolution or continuation of the company? Continuation clauses – How to regulate the succession) published.

3.1.2. Insolvency proceedings

In addition, the shareholder leaves the company if insolvency proceedings have been opened concerning the assets of the shareholder. The shareholder’s severance payments will then fall into the insolvency estate for the benefit of his creditors.

3.1.3. Termination by the shareholder

The shareholder can also terminate his membership in the company and thus leave the company. A termination right exists in the case of extraordinary and ordinary termination.

An ordinary termination can, if no special provisions have been made in the articles of association, be declared according to § 132 HGB without a special reason. The period of notice shall be six months at the end of the financial year in the case of a company received for an indefinite period.

The possibility of leaving society for an extraordinary reason is one of the basic principles of company law. Therefore, the right exists as an ultima ratio if the continuation of the company relationship is unreasonable for the partner concerned.

A private creditor of a shareholder can also terminate the creation of a shareholder in accordance with § 135 HGB. The aim of this is to satisfy oneself from the severance payment credit of the departing shareholder. Therefore, the termination presupposes that the creditor, after an unsuccessful attempt at enforcement, has obtained the attachment and transfer to the movable property of the shareholder of the right to severance payable to that shareholder upon his departure. In addition, the right of termination cannot be restricted in the articles of association in order to protect creditors.

3.1.4. Resolution of the members

Furthermore, it can also come by resolution of the shareholders to the departure of a shareholder. This decision shall in principle be subject to unanimity. An exclusion against the will of the person concerned is in principle only possible if there is an important reason by exclusion action according to § 140 HGB. However, a compulsory exclusion of the shareholder may also be provided for in the articles of association. However, this termination clause may not be arbitrarily placed at the discretion of the other shareholders.

Further reasons for withdrawal can be agreed in the social contract. This can be, for example, the achievement of a certain age limit, the inability to cooperate further in society or marriage without agreement of separation of property. However, a privately autonomous regulation must either be justified by a factual reason derivable from the company relationship or be linked to an automatically occurring reason for withdrawal, such as age.

New shareholders can join OHG. The prerequisite for this is the conclusion of a hosting contract between the applicant and all previous partners. Internally, this leads to the acquisition of all member rights and obligations. In relation to third parties, the entry takes effect upon registration of the nineth shareholder in the commercial register or upon continuation of business with the consent of the new shareholder. At the same time, ancillary liability according to §128 HGB occurs, which also extends to the liabilities of the company according to §130 HGB. This can result in considerable liability risks for a newly entering shareholder, especially in the presence of previously unknown liabilities.

The inclusion of a new shareholder can also take place at the same time as the departure of a previous shareholder. This can be done on the one hand by combining the exit and entry of those affected. Then there is no legal succession. However, such a situation arises if the shareholder transfers his share directly to the substitute by legal transaction. The transfer is subject to the approval of all shareholders. However, this can also be granted in advance in the social contract. Also in this case, the liability of the retired person in accordance with § 160 HGB continues. In addition, according to § 130 HGB, the standing party must stand for the old liabilities of OHG.

The OHG can be terminated. A distinction must be made between the phases of dissolution, dispute and completion.

At the dissolution, the open commercial company initially remains in place. Only the company purpose changes from an advertising activity to a company purpose aimed at dispute. However, the claims of individual partners against the company or co-partners can no longer be asserted independently. Rather, they are only taken into account as accounting items in the context of the dispute. The dispute aims at the abolition of the collective hand and distribution of the company assets, insofar as it is not used to satisfy the creditors.

In order to save the OHG from destruction, a resolution is only possible to a limited extent. The reasons for dissolution are regulated in § 131 HGB and can, however, be extended in the social contract. It is possible to resolve a temporal OHG with time expiration. In addition, the dissolution is possible by resolution of the shareholders. It must in principle be adopted unanimously. The opening of insolvency proceedings concerning OHG’s assets also entails the dissolution of OHG. After opening insolvency proceedings, the company can be continued under the conditions of § 144 HGB. In addition, OHG can be dissolved by a court decision after an action for dissolution has been brought. The requirement of a judgment is intended to provide clarity with regard to the time of dissolution.

The dispute takes place by way of liquidation (§§ 145 ff. HGB), insofar as the articles of association do not provide for any other form of dispute. The aim of liquidation is to turn company assets into money. The task of the liquidators is therefore to terminate the company’s current business, collect claims, convert remaining assets into money and satisfy the creditors. Liquidators are in principle the shareholders of OHG. If the company assets are not sufficient to satisfy all creditors, the shareholders are obliged to make back payments. The assets remaining after the correction of the debts are to be distributed among the members according to the ratio of the capital shares.

However, in order to prevent the company from being dismantled, instead of liquidation, the articles of association regularly provide for the takeover of the company by a shareholder with the simultaneous payment of the rest or the sale of the company to a third party. Until the conclusion of the dispute, the shareholders have the opportunity to decide on the continuation of the company with effect ex nunc and to continue conducting business.

The conclusion of the dispute, therefore, when the assets are fully distributed, leads to the complete termination of the company, so that the existence of OHG as a legal entity ends. However, the liability of the shareholders according to § 128 HGB continues despite the termination of the company.