General partnership

An open trading company (abbreviation: OHG or oHG ) is in Germany a commercial partnership in which two or more natural and / or legal entities have joined forces to operate under a joint name a trade.

Company

The company in a general partnership shall be called a general partnership or a generally understandable abbreviation therefor ( OHG or oHG ) contain ( § 19 Section 1 No. 2 of the German Commercial Code ). If a general partner is a natural person, then the company must be given a name which refers to the limitation of liability ( § 19 para 2 HGB). It is similar to the GmbH & Co. KG customary to call the legal form of the legal person, eg GmbH & Co. OHG or AG & Co. OHG. Also possible is the legal form OHGmbH.

Foundation

A partnership is established by at least two natural or legal persons by an agreement. If none of the § § should be excluded 110-122 HGB, the social contract requires no specific form. Basically needed to set up a general partnership is thus only the declared intention of the partners to operate under a joint name a trade. Irrespective of this paperwork ( business registration at the trade office, registration in the commercial register) must be observed. The effectiveness of the social contract is unaffected. The registration is not a requirement foundation. For the establishment, only the shareholders' agreement and the commencement of business are required.

Be incorporated plots in the society is a notarization of the social contract necessary ( § 311b BGB).

Limitations of liability against third parties can not be agreed in the framework of general terms and conditions, but must be agreed in individual contracts.

Capital contribution

The foundation of the partnership is not dependent on a certain minimum capital. The shareholders may provide their deposits both in money and in kind or in services. The individual partners are liable with all its assets ( general partner ), so that information on the amount of the capital contribution in the partnership agreement are as optional as the ratio moderate participation of each shareholder in the company. Unless controlled, the shareholders participate equally in society.

Obligations

The following listed obligations of the Company set was designed by the legislator " basic pattern " which is a deviation from the practice in the time allowed by the social contract freedom in many cases.

Contribution obligation

The obligation to pay the contributions resulting from the association ( see § 705, § 706 BGB in connection with § 105 paragraph 3 HGB ). Contributions are usually capital contributions in the form of cash payments in kind ( eg land ) and rights (eg patents). However, the contribution can also be made by the fact that a shareholder of OHG provides services.

The deposit shall become the property of the general partnership, the shareholders now belongs jointly ( joint property ). The individual shareholders can not dispose of his deposit thereafter.

Management

Basically, each member shall be required to manage the company. Unless otherwise agreed, the principle of individual management applies, that is, the individual shareholders can without the participation of other shareholders take actions that brings with it the ordinary operating their business ( § 116 paragraph 1 HGB). In case of extraordinary transactions of a resolution by all shareholders is required ( § 116 paragraph 2 HGB).

Even in ordinary transactions, each shareholder has a right ( § 115 paragraph 1 HGB ). Contradict a managing partner, the act must be avoided.

To the ordinary operation of a commercial activity includes all actions, insofar as these are industry-specific or do not exceed the normal course of business.

Examples: purchase and sale of goods, hiring and firing staff

Among the more unusual transactions include all transactions that go beyond the ordinary operation.

Examples: purchase and sale of land, inclusion of large exposures, the establishment of branches, structural measures larger scope, unusual long contracts.

Loss sharing

A loss is distributed on a per capita: the loss of assets are charged to the capital accounts. Regardless of whether profit or loss has been determined, each shareholder may 4 % of its observed for the last financial year for capital share his private life found (see § 120, § 121, § 122 HGB).

Competition clause

Prerequisite for a fruitful cooperation of the partners in the partnership is a mutual trust and loyalty. Therefore, there is a general duty of loyalty to the shareholders ( § 242 BGB). A special form of this fiduciary duty is the prohibition of competition. Without the consent of the other shareholders, a shareholder may not transact business on their own account in operating their business or as general partner to an identical, ie same sector enterprise, participate ( § 112, § 113 HGB).

In violation of the prohibition of competition, the partnership may claim damages or make use of a right of entry, that is, the partnership can pull the business ' outcomes. If the other shareholders demand that, it can even come to the dissolution of the company ( § 133 paragraph 2 HGB).

Entry in the Register

The partners of the general partnership must leave the company in the commercial register ( Section A ), which in Austria Company registration, register. Also, the entry or exit of a shareholder, the change of the company or the registered office of the general partnership must be filed for registration in the commercial register. The general partnership is created internally with the conclusion of the social contract ( constitutive ) and the external relationship with the commercial register entry ( declaratory ), but in any event, with the commencement of operations ( § 105 para 2 HGB in conjunction with § 1 para 2 HGB). When registering a fall OHG notary fees for logging in to the Commercial Register and court fees after KostO for registration with the competent registration district court and the statutory notice.

Management / external representation

To guide the shops all shareholders are generally entitled unless the partnership agreement otherwise agreed. So it may be agreed in the partnership agreement:

• Transferring the administration of one or more shareholders
• The so-called joint representation, that is, the persons authorized to Board members are required to perform the business together (eg when making a purchase decision, all managers must approve the purchase.)

The Managing Director salaries for the owner-manager are not tax deductible as a business expense; they are allocated to the respective shareholders as a pre- payment at the tax profit distribution. The management authority may be withdrawn at the request of the shareholder through judicial decisions, if good cause exists (eg gross breach of duty ).

Income distribution

In a general partnership, the partners are liable with full deposit and in addition with their personal assets. The profit and loss distribution can be controlled in the partnership agreement. If this is not the case, this applies § 121 German Commercial Code, which states that initially each shareholder receives 4% of his investment as interest (if sufficient profits to do so. This not be sufficient, the percentage must be reduced so that the gain for those interest is sufficient. ). Is not thereby the total profit distributed, the remainder is distributed evenly.

Example: The shareholders Müller man, Schulz Huber and Kniesel have introduced 200,000, 50,000 and 350,000 euros as a deposit into a general partnership, in which a profit of € 51,000 is to be distributed. First, the shareholder will receive 4% of their contributions. These are 8,000, 2,000 and 14,000 euros here. In order to be already distributed from winning 24,000 euros. The balance, amounting 51000-24000 = 27,000 Euros will be distributed even after heads, so that each 27,000 / 3 = 9,000 euros will receive even more. Overall Müller man gets so (8,000 9,000 =) 17,000 euros, Schulz Huber 11,000 and 23,000 euros Kniesel.

If at a general partnership, a loss of, the deposits are of course not bear interest. The loss is then distributed only by heads to the owners.

Legal capacity of the OHG

A partnership can acquire rights and incur liabilities in its own name; they can acquire property and other rights in rem in immovable property and sue and be sued. Enforcement in the assets of the partnership is only one denominated judgment against the company (§ 124 para 2 HGB; individual judgments against the individual shareholder therefore not sufficient ).

Liability of officers

The partners in a general partnership are liable according to § 128 HGB for the liabilities of the Company jointly and severally personally. Each is directly liable, without limitation, jointly and severally, back and removals related (synchronism of domination and liability). If a shareholder of, he is liable for five years for the hitherto justified liabilities. It should be noted that an entering partner is also liable for the debts, which already existed when joining.

• Direct / direct: The creditor can each shareholder benefit directly and ask for the settlement of liabilities, regardless of whether the shareholder liability is received in person.
• Unlimited / personal: The shareholders are liable with their entire business and personal assets ( personal) in full ( without limitation ) for the liability ( s). In contrast, a limited partner of a limited partnership is liable, although his entire business and personal assets ( in person), but only to the extent of its limited partnership ( limited ) for the liability ( s).
• Jointly / jointly and severally: Each member shall be solely liable for all of the debts of the company. A shareholder can not be argued that the debt of all partners should be borne in equal parts to the creditor. Within the society, there are, however, among the members a right to compensation.
• Referred back: If the general partnership to new shareholders, liable for these existing liabilities.
• Disposal related: A common mistake in reference is to the liability of the retiring partner in the OHG: " The shareholders are liable up to 5 years after leaving the OHG. Contractually, however, an exclusion be agreed ". This error is based on a misunderstanding of § 160 I, p 1 HGB; which states: " If a shareholder of, he is liable for her until then any liabilities when they called before the expiration of five years after leaving due and any claims against him under § 197 I No. 3-5 Civil Code Art are detected or a judicial or administrative enforcement action is taken or applied for; public-law liabilities an administrative act is sufficient. " Example: G shareholder withdraws from the OHG 28 December 2003. This will be entered in the Commercial Register on 31 December 2003. On December 31, 2001, a tax claim against the general partnership, which will mature on 31 December 2008 arises. On 2 January 2009, the tax office issues a notice of liability against G. On December 30, 2009 enforced the authority permitted to G.

Resolution in a general partnership

The dissolution of a general partnership after the expiry of the partnership agreement, resolution of the shareholders, or opening of insolvency proceedings over the assets of the Company or a decision of a court.

A shareholder withdraws from OHG:

• By death of a partner
• By the opening of insolvency proceedings against its assets
• By giving notice of the shareholder
• By termination by a private creditor of the shareholder
• By resolution of the shareholders' meeting
• By entry of the agreed in the partnership agreement excretion reasons

Accounting of OHG

A partnership is a merchant according to the Commercial Code. A merchant is obliged to keep books and in these its trading business and the position of its assets in accordance with generally accepted accounting principles (GAAP ) to make visible ( § 238 paragraph 1 HGB ). A merchant has set up in support of his business and at the end of each financial year, a the ratio of its assets and liabilities constituting accounts (opening balance, balance sheet).

Tax treatment in a general partnership

Special operating assets

Assets which uses a partner in a general partnership for the purpose of OHG, belong to the special operating assets of the shareholder; they must be shown in a special so-called balance sheet.

Business tax

The partnership is subject to trade tax in general. The payable from the general partnership business tax shall be credited in accordance with the profit allocation rules on the income tax of the shareholder. In determining the business income an allowance of 24,500 Euros will be deducted. The tax rate for the trade income is 3.5 since 1 January 2008.

Income Tax

A partner in a general partnership achieved from his participation in the general partnership business income. Thus, each individual shareholder 's income tax.

VAT

The general partnership is a business within the meaning of the VAT Act.

Inheritance Tax

When transmitting an operating way of gift or inheritance to a successor, a special allowance for working capital shall be granted on inheritance tax.