The legal form of the KGaA is regarded under company law as a mixed form between a KG and a public limited company. In particular, the low influence of foreign shareholders makes this legal form very interesting for family businesses. Also in current DAX companies this form of company often plays a role. Among others, the companies Fresenius, Merck and Henkel are all represented in the legal form as KGaA in the DAX40. The risk of liability for the general partner can be reduced by using a GmbH as personally liable general partner. This is because it replaces a personally liable partner.

At the beginning, it can be said quite clearly that the legal form of the KGaA, or even advertised by the limited partnership on shares, is an extremely rare legal form in Germany. In this legal form, elements of a public limited company are linked to a limited partnership. Mostly, family businesses use the construct and also secure themselves with a GmbH as a complementary. Otherwise, the general managers, who in all other cases are natural persons, would be liable with their personal property. It should also be noted that, despite the characteristics of a partnership, the KGaA must be classified in the category of limited liability companies.

The limited partnership on shares thus has certain advantages that exist only within the framework of the corporation and some other characteristics that exist exclusively in the legal form of the partnership. On the one hand, it is important to address the possibility of KapG that a large number of shareholders can be included. In addition, the complementaries continue to provide a kind of personal connection between the shareholders and the company. Thus, the KGaA can rely on the possibility of funds from external financing and continue to hold the management and decision-making authority.

For the establishment of a limited partnership on shares, as already mentioned, it applies that, similar to the circumstances of a limited partnership, limited partners and general managers are the shareholders. The latter are even liable with their personal assets. In the limited partnership on shares, however, the limited partnership shareholders are called limited partnership shareholders, who do not make a contribution in the proper sense, but rather buy shares and are liable to the amount thereof. As a legal entity, which is quite close to a public limited company, the share capital of the KGaA is at least 50,000 euros.

In the founding process, it is logically not yet foreseeable and also not necessary to know how many limited partners ultimately participate in society, the necessity also exists for the existence of a complementary. It should also be noted that the statutes must be notarized at the time of incorporation, because it is important, among other things, that the allocation of shares and their distribution among the shareholders are precisely regulated here. In addition, a limited partnership on shares has the obligation to register itself and the economic participants in the commercial register and in the transparency register. A special feature that basically applies to most corporate forms is the company name KGaA at the end.

Basically, it can be said that the same corporate bodies must be present in a KGaA as in a pure public limited company. This therefore requires a Management Board, a General Meeting and a Supervisory Board. Since family entrepreneurs are usually cited as a prime example at KGaA, it can basically be said that the personally liable general managers take over the board function or that the general manager GmbH provides it. In particular, the statutes of the KGaA must be considered. Finally, it can be said that the limited shareholders can hardly exercise influence.

Since the legal form of the KGaA constitutes a legal person, the taxation also corresponds to that of a limited liability company according to § 1 (1) no. 1 KStG. It is therefore subject to business tax and corporate tax. However, the profit shares and any agreed management salaries of the general managers pursuant to § 9 (1) sentence 1 (1) KStG shall be deducted in the calculation of the income of the KGaA.

Since a personally liable general partner is provided here as in a pure limited partnership, his profit share is taxed according to § 15 (1) no. 3 EStG with his personal income tax rate. In addition, this is initially subject to business tax, which may be counted against income tax. The above-mentioned deduction of the profit shares and the managing director’s remuneration does not lead to a pre-charge of income with corporation tax or business tax. As a result, it is only at the level of limited shareholders that corporate tax is applied.

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on the legal form of the KGaA

First, let’s look at the advantages of starting a limited partnership on shares. The issue of raising capital plays a major role here. Why else should you choose this rare form of society. Because by issuing shares, this turns out to be much easier than it is possible with a pure limited partnership. It should be emphasized at the KGaA that even high capital contributions do not reduce the personal bond of the shareholders to the company and is definitely wanted.

Otherwise, the Management Board of a KGaA has significantly more power than the Management Boards of an AG. For example, family members of a family business can retain control influences in the form of a KGaA, even if large parts of the company's share capital are sold through shares.

For all this, a limited partnership on shares is considered very resistant to taking over. This is because the limited shareholders have no influence on the appointment of the management, as this is due either to the personally liable general partner or to a legal person appointed for this purpose.

In the case of a KGaA, the general manager must be personally liable for the company with a possibly large capital injection. The risk of liability for the general partner can be reduced by using a GmbH as personally liable general partner. This is because it replaces a personally liable partner.

A disadvantage for the often large number of limited shareholders is the low influence and little decision-making power over personnel and the actions of the management. In addition, a correspondingly high share capital is required for the establishment of a KGaA. However, the low influence for starting family entrepreneurs can in turn be presented as an advantage rather than a disadvantage. Basically, there are different views of the different participants here, of which there may still be many at the KGaA.

In addition, it can sometimes be complicated for outsiders to understand the company structure. Because a KGaA can develop a very complex corporate structure as a general partner, especially in the case of a legal person, for example a GmbH.

Finally, the KGaA can be seen as an attractive option for companies in which trust in the shareholders is a relevant topic. Because they continue to run the business and are therefore responsible. But companies that need capital and want to protect themselves against hostile takeovers can also choose this legal form without hesitation due to the company structure.