What is lmtd

Legal form for companies: Establish a limited company

Ltd - found the English Limited

The English limited company was an interesting alternative to the GmbH in the past due to the limitation of liability and the low start-up capital of one British pound. The Limited is still popular with start-ups today, as it enables a flexible, international corporation in which the partners are only liable for the amount of their contribution.

With the introduction of the Unternehmergesellschaft (UG), there is now a similar German legal form. The following is intended to point out the essential points that you must bear in mind when setting up a limited company.

Set up a limited company

  • When you set up a limited company, unlike a GmbH, no notarial certification is required.
  • If you set up a limited company, the limited company must first be registered with the English company register. There must be an office address in England for this. The registration of the Ltd. Specialized service providers take over this for an annual fee that amounts to several hundred euros per year.
  • If you, as a German, set up a limited company with headquarters or branches in Germany, there are additional registration obligations such as registration in the commercial register with notarial certification and business registration.
  • When you set up a limited company, the name of the company can in principle be chosen freely, but it must include the word "limited".

Establish a Limited: Taxes, Rights and Bodies

  • Organs of the Limited are: director, shareholders' meeting, company secretary
  • Annual financial statements are to be drawn up in accordance with English law, which may be accompanied by an auditor's certificate. Violations of the publication requirements will be severely punished. In the event of legal disputes, lawyers should be employed on site.
  • If you set up a limited company that operates exclusively in Germany, you pay your taxes here.
  • With the Limited's headquarters in Germany, the usual IHK contributions are also incurred.

So you should think twice about whether the Limited is the right legal form for your own formation. Further information on how to set up a limited company can be found below in a presentation by our sponsor GO AHEAD.

Setting up a Limited: pros and cons

Establishing an English limited company is a popular alternative for many German start-ups, because establishing a limited company appears to be easier and much cheaper than, for example, establishing a GmbH. But what are the advantages and disadvantages of establishing a limited company?

  • If you set up a limited company, a partnership agreement is required in simple written form without notarization - a cost advantage for start-ups. However, these articles of association must be concluded in accordance with English law and in the English language. This can make legal advice necessary, which incurs new costs.
  • A key benefit for entrepreneurs setting up a limited company is that only a minimum of one pound capital is required to set up. This advantage appears all the more remarkable if you bear in mind that the establishment of a GmbH requires a minimum capital of € 25,000.
  • However, the benefit of lower minimum capital that you benefit from when you set up an English limited company can have a negative impact on your company's creditworthiness with credit institutions and suppliers. The partially lacking acceptance of the legal form Limited in Germany also plays an important role here.
  • Another major advantage for entrepreneurs who set up a limited company is the short time it takes to set up a company, which usually does not take longer than 10 working days. The establishment of a GmbH, on the other hand, can take up to three months.
  • One advantage that the Limited shares with the GmbH is that the functions of managing director and partner can be filled by one and the same person. In addition, the shareholders of both legal forms are liable with their share capital. However, since the paid-in equity at the Limited can be very low, the Limited offers another advantage from an entrepreneur's point of view.
  • A disadvantage for entrepreneurs who set up a limited company is the strict English disclosure requirements, such as the preparation of the annual financial statements and the business report in English. A violation of these obligations is punished with heavy fines and possibly even with the deletion from the register.
  • Another disadvantage for founders of a Limited is the annual costs for the representation and postal address of the Limited in England.

When choosing the legal form, various aspects must ultimately be weighed up. The establishment of a Limited may appear to be quick, inexpensive and unbureaucratic, but the numerous obligations and costs that arise after the establishment of a Limited under English law must not be disregarded. When you set up a limited company, as an entrepreneur, you have to constantly strike a balancing act between two legal systems.

Further legal forms for the establishment

In addition to the English Limited, you can also set up other corporations or partnerships. You can also use the legal form comparison to find the right legal form for you.

Author: Für-Gründer.de editors

As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Gründer.de for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Gründer.de, he advised listed companies in the field of financial market communication.