The UG is a special form of GmbH.

Both the UG and the GmbH are corporations with limited liability. Both companies need one or more shareholders and have at least one managing director. In addition, both legal forms must be entered in the commercial register. So what advantages does the UG offer over the GmbH?

The limited liability UG has the advantage that the shareholders and managing directors are not liable with their private assets. This is not the case for partnerships (e.g. GbR). There, the shareholders are fully liable with their private assets. The UG (haftungsbeschränkt) provides for liability in exceptional cases, in the event of negligent or actively destructive actions within the company.

The formation of a UG haftungsbeschränkt differs significantly from other corporations in terms of costs. Only a minimum value of one euro must be paid in for the share capital. If you set up a GmbH, you must raise at least EUR 25,000 for the share capital.

The UG can also be founded using a model protocol. The sample protocol is a pre-formulated standardised template for the articles of association. By using the sample protocol, you can save time and money at the notary’s office. You can use the sample protocol if

• You have a maximum of 3 shareholders
• You only plan with one managing director
• and your financial year corresponds to the calendar year

If you are planning a more complex UG structure, it is advisable to have individual articles of association drawn up instead of the model articles of association. The articles of association give you more flexibility in terms of determining the distribution of profits, the right to sell and much more.

Are you wondering where the UG is regulated by law? Strictly speaking, there is no separate “UG law”. As the UG is a special form of GmbH, the regulations governing the GmbH apply to the legal circumstances of the UG. The legal basis for this can be found in the GmbHG (from § 5a). The GmbHG was merely expanded to include provisions on the UG. The general legal sources are therefore the GmbHG and the German Commercial Code (HGB).

Whether the UG (haftungsbeschränkt) is the right legal form for your start-up depends on various factors. If you opt for a UG, then you are opting for a limited liability company. The choice of a UG as a legal form is particularly attractive for young founders. The share capital is comparatively low compared to common legal forms such as the GmbH (EUR 25,000) and the AG (EUR 50,000). However, if you are planning to set up more complex company structures in the future, it may make sense to establish a GmbH directly. Although it is possible to convert the UG into a GmbH, this is associated with high costs.

The UG (haftungsbeschränkt) is an attractive legal form for founders who want to set up a company with little start-up capital and at the same time benefit from limited liability. It makes it possible to become entrepreneurially active without risking private assets and offers the option of converting the company into a GmbH at a later date if required. The UG is particularly suitable for smaller business models or start-ups that initially want to operate with limited financial resources. However, it is important to consider the long-term goals of the company, as the choice of legal form has a major influence on the development and structure of the company. Comprehensive advice, as offered in our start-up packages, will help you make the right decision and find the best start for your company.