What is an Aktiengesellschaft (AG)?
An Aktiengesellschaft (AG) is the German legal form for a public limited company — a business whose ownership is divided into shares that can be offered to the public and listed on a stock exchange. Shareholders’ financial responsibility is limited to the amount they invested; they do not personally cover company debts beyond their share capital.
Key features (short definitions)
– Public limited company: a company whose ownership is represented by tradable shares and which can be listed on a public market.
– Limited liability: shareholders are liable only up to the value of their shares.
– Articles of association: the founding document that sets out the company name, registered office, share capital and the rights/obligations attached to shares.
– Managing board (Vorstand): the executive body responsible for day-to-day operations.
– Supervisory board (Aufsichtsrat): the non-executive body that appoints and supervises the managing board.
– Commercial Register: the official registry where corporations are recorded and obtain legal personality.
How an AG is governed
– Shareholders exercise control through general meetings where major policy decisions are taken.
– The managing board runs operations and reports to the supervisory board.
– The supervisory board appoints and monitors the managing board and may include employee representatives under certain conditions.
– Independent auditors review the company’s financial statements when statutory thresholds are met.
Main legal and structural requirements (summary)
– Minimum founding members: the formation procedure described in the sources requires a group of founders (the BODY notes five or more members for setup).
– Minimum share capital: roughly €50,000. At registration at least one-quarter of the nominal share capital must be paid in cash.
– Corporate name: must include the word “Aktiengesellschaft” (or the abbreviation “AG”) and should reflect the company’s purpose.
– Articles of association must be notarized and state the key company facts (name, seat, capital, shareholders’ contributions, and share details).
– Registration steps: deposit required capital in a bank account, submit notarized documents and application to the Commercial Register. If all documentation is correct, the AG becomes a legal entity within seven days, and a registration certificate is issued; the formation is also announced publicly.
– Board composition: the supervisory board must have at least three members; the managing board can be one or more people. For AGs with share capital ≥ €3 million, there must be at least two managing board members.
– Employee representation on the supervisory board: if the company employs more than 500 workers, employees may fill one-third of supervisory-board seats; if more than 2,000 employees, they may fill half.
– Audit triggers: an ordinary statutory audit is required when the company meets at least three of the listed thresholds for two consecutive years (examples in the BODY: more than 50 full-time employees; revenues over $2 million; balance sheet above $100,000).
GmbH vs. AG (high level)
– AG = public company form, suitable when issuing shares to outside investors and listing on an exchange.
– GmbH (Gesellschaft mit beschränkter Haftung) = a private limited company; typically used for closely held or privately controlled businesses. GmbH literally means “company with limited liability.”
Checklist for founding an AG
1. Draft articles of association listing name (with “Aktiengesellschaft”/“AG”), registered seat, purpose, share capital and share classes.
2. Engage a notary (and typically legal counsel or a bank) to prepare and notarize the articles.
3. Open a corporate bank account and deposit the required capital (at least €50,000 nominal capital; minimum 25% of each cash contribution paid at registration as noted).
4. Prepare notarized registration application and attach proof of capital deposit and founders’ signatures.
5. File documents with the Commercial Register; await certificate of registration and public announcement.
6. Establish corporate bodies: appoint supervisory board and managing board, arrange statutory auditors, and schedule inaugural general meeting.
Worked numeric example
Assumptions from the requirement in the BODY:
– Nominal minimum share capital = €50,000.
– Minimum cash payment at registration = 25% of nominal capital.
Example structure:
– Total nominal capital: €50,000.
– If shares are issued with a nominal value of €50 each, number of shares = €50,000 / €50 = 1,000 shares.
– Minimum cash to be paid at registration = 25% × €50,000 = €12,500.
– That means founders must deposit at least €12,500 into the company bank account before or at registration; the remaining €37,500 remains as outstanding share capital owed by shareholders until fully paid according to the terms in the articles.
Practical notes and assumptions
– The numeric example uses the capital figures cited in the source material. Actual procedures and thresholds for audits, board composition, or capital payments can change with law or regulation; always confirm current statutory amounts and steps with official sources or legal advisers.
– The BODY gave certain thresholds (e.g., for audits) in USD and modest balance-sheet numbers; national law typically uses euro-denominated thresholds and statutory tests — check official texts for precise criteria.
Selected sources for further reading
– Federal Ministry of Justice — Stock Corporation Act (AktG): https://www.gesetze-im-internet.de/aktg/
– Federal Ministry of Justice — Commercial Code (Handelsgesetzbuch, HGB): https://www.gesetze-im-internet.de/hgb/
– Firma.de — How to set up an Aktiengesellschaft (AG): https://firma.de/en/startup/germany/aktiengesellschaft-ag/
– Deloitte — Doing Business in Germany (guide and resources): https://www2.deloitte.com/global/en/pages/tax/articles/doing-business-in-germany.html
Educational disclaimer
This explainer is educational and descriptive only. It is not legal or investment advice. For formation steps, governance questions, or financial decisions, consult qualified lawyers, accountants, or financial professionals and confirm current legal requirements.