Dissolving a GmbH or UG: How to close down a company in Germany

Strict rules apply to the dissolution and liquidation of a GmbH or UG. Find out what you need to do and what special requirements apply at each stage of the process.


Closing down your company? Get legal advice on the dissolution of your UG or GmbH from a lawyer with the expertise you need:


How to close down a GmbH or UG


  1. Initiation of dissolution proceedings
  2. Liquidation (winding up)
  3. Removal from the commercial register


If you want to dissolve your UG or GmbH (limited liability company) in Germany, you must officially start the liquidation (winding up) process. Only after the company has been wound up can the company be removed (deleted/struck off) from the Handelsregister (commercial register). There, of course, are exemptions to this rule but in most cases, this is the order the closing down process follows.

Stage 1: Initiate dissolution proceedings

The first step in dissolving a GmbH or UG is a purely formal one. The shareholders decide to cease the company’s business activities. This is also the beginning of the end for the company’s existence as a legal entity.

Requirements to dissolve a company

The cases in which you may dissolve your GmbH or UG are defined by law (§§ 60 ff. GmbHG):

  • Expiry of the period of business operations specified in the articles of association (i.e., the shareholders agreed in the founding documentation that the business was a temporary project)
  • Shareholders with 75% of the voting rights agree to the dissolution by way of a shareholder resolution (exception: a different majority rule can be stipulated in the articles of association)
  • Dissolution by judicial judgement (i.e., an administrative court or authority decision)
  • Opening of insolvency proceedings (if insolvency proceedings are discontinued/cancelled, continuity is possible by company resolution)
  • Rejection of insolvency proceedings due to lack of assets 
  • Legally binding order of the registry court on the discovery of a defect in the articles of association
  • Cancellation of the company due to a lack of assets
  • Individually agreed reasons in the GmbH’s articles of association (e.g. business purpose of the non-profit UG is fulfilled)


Resolution to dissolve the company

Generally, the shareholders of a GmbH or UG decide to dissolve the company themselves. For this purpose, an Auflösungsbeschluss (dissolution resolution) is passed at the Gesellschafterversammlung (shareholder/general meeting). Unless the articles of association say otherwise, the resolution requires a majority of 3/4 of the votes (§ 60 Paragraph 1 No. 2 GmbHG). The resolution should also cover the following points:

  • Appointment of the liquidators
  • Who keeps the records (books) until the statutory periods have expired
  • Revocation of the authorised representatives (powers of attorney), if applicable

When does the resolution come into effect?

If no future effective date is agreed, the resolution takes effect immediately. This date is of particular importance as it is also the balance sheet date for the preparation of the Liquidationseröffnungsbilanz (opening liquidation balance sheet) and the determination of taxable profits.

When is notarisation necessary?

If the articles of association set a specific duration for the company, you’ll need a notary to confirm the resolution to dissolve the company. If you want to do this earlier than this date, you’ll need to change the articles of association. The notary also has to certify this change and send it to the commercial register. The dissolution of the company only takes effect once the change in the articles of association is registered in this way.

Changing the company suffix

After the resolution has come into effect, the company must use the suffix i. L. (in Liquidation) or i. Abw. (in Abwicklung) in business transactions (invoices, emails, legal disclosure, etc.).

Dissolution vs. liquidation vs. removal

When closing down a GmbH or UG there are three distinct stages to get clear on:

  • Auflösung (dissolution/resolution to dissolve the company)
  • Liquidation (liquidation/winding up)
  • Löschung (deletion/removal)

The liquidation phase begins only after the commercial register entry has been updated. The GmbH remains in existence during the Abwicklungsphase (winding-up phase) in which the company is liquidated – lasting until it’s removed from the register. This has the following implications for the company:

  • Capable of acting, i.e. it can continue to carry out transactions that serve the purpose of settlement
  • Legal capacity, i.e. it is still considered a legal entity and can act as a creditor or debtor
  • Capable of being a party, i.e. it may appear as a party in court proceedings
  • Still has accounting and balance sheet obligations
  • Need legal advice on closing down your company in Germany?
    Get a fixed-price consultation here

Stage 2: Liquidation

Liquidation is the process of winding up a company by converting its capital into liquid assets, i.e. cash or assets that can be easily converted into cash. Both the liquidation and the liquidators must be notified to the commercial register.

Appointing liquidators

The GmbH Act says all company closures must be supervised by people called liquidators. Usually, the company’s managing directors take on this role, unless it’s already decided that someone else will. A court or the company’s shareholders can also choose a different person as a liquidator. (If that happens, the manager’s power to act on behalf of the company ends.) All liquidators must be able to prove to the registry court that there are no grounds under commercial, criminal or professional law (i.e., they haven’t done anything illegal) that would make them unfit for the job.

In theory, the managing director can reject the role of liquidator by quitting. But this doesn’t mean there won’t be consequences. This is because company closure usually doesn’t count as a good enough reason for a manager to end their contract. And, if the contract has specific clauses about resignation, these might affect whether the manager director can quit without issues or penalties.

Entering the dissolution resolution in the Handelsregister

Initially, the resolution to dissolve the company has to be submitted to the Handelsregister (commercial register). A notary certifies this dissolution resolution and forwards it to the register court (§ 65, Subsection 1, GmbHG). The responsibility for this task falls either on the managing director or a liquidator, depending on when the resolution takes effect. If it’s effective immediately, the managing director handles it. On the other hand, if the resolution becomes effective only when the dissolution is entered, the liquidators assume the responsibility.

This process updates the company’s commercial register entry by adding information that the company is in liquidation. This makes the company’s status publicly visible.

Registering the liquidators

After deciding who will act as the liquidators of the GmbH, their names must be registered with the commercial register. Usually, the dissolution resolution and the names of the liquidators are registered together, but this is not necessary.

Responsibilities of the liquidators

When a UG or GmbH is being liquidated, the liquidators take over the management of the company and represent it to the outside world. They assume the same rights and responsibilities as the previous management and must handle the remaining business during the liquidation process. It’s important to note that the purpose of the company during liquidation is solely to liquidate, not to continue its normal operations. This means that the liquidators are liable for any mistakes they make while carrying out their duties, just like the previous management. Generally, the liquidators are responsible for the following tasks:

  • Prepare a Liquidationseröffnungsbilanz (opening liquidation balance sheet) to determine the asset situation
  • Publish a Gläubigeraufruf (notice to creditors) in the Bundesanzeiger (federal gazette)
  • Terminate current transactions
  • Collect receivables
  • Servicing liabilities
  • Repay debts
  • Convert remaining company assets into cash
  • File for insolvency in good time, if necessary


Sperrjahr (blocking year) for the liquidation of GmbHs and UGs

When a company is dissolved, its creditors must be notified through an official notice known as a Gläubigeraufruf. The notice must also invite creditors to contact the company. It is important to publish the notice ASAP because the Sperrjahr (blocking year) starts only after publication.

A Sperrjahr (blocking year) is a one-year period that starts once a company has published its dissolution resolution (notice to creditors) in the digital Bundesanzeiger (federal gazette) and appointed a liquidator. This period serves to protect the company’s creditors and prevents any distribution of assets to shareholders during this time. However, other creditors can still be paid. In other words, the distribution of assets can’t take place until the company’s debts are repaid or secured, and not before one year from the date the notice to creditors was published in the gazette.

During the Sperrjahr (blocking year) all creditors have the opportunity to register with the GmbH/UG in liquidation and to collect their outstanding claims. This phase is not only prescribed by law but also has very strict rules:

  1. Ausschüttungsverbot (prohibition of distribution): Shareholders may not receive any assets of the dissolved company. That is, if a resolution to dissolve the company has been passed, the shareholders can’t strip it of its money or valuables.
  2. Forderungen (claims): Only third-party creditors may be satisfied and not the claims of participating companies, shareholders, directors or their relatives. In other words, only people or companies outside the company can be paid. So if you did business with the company or are part of it, you can’t claim the money.
  3. Verbindlichkeiten (liabilities):
    • The maturity and amount of other liabilities remain unchanged
    • The Sperrjahr (blocking year) is not a limitation period for claims
    • Claims of bekannte Gläubiger (known) creditors who haven’t registered within the blocking year don’t expire
    • Claims of unbekannte Gläubiger (unknown)* creditors lapse when the blocking year has expired and the company’s assets have been used

The time limit for making a claim is not limited to a specific year. If you’re a known creditor who didn’t register your claim within the Sperrjahr (blocking year), it doesn’t automatically disappear. However, if you’re someone the company owes money to and you didn’t show up during that time, your claim will expire when the ‘blocking’ period is up and the company’s assets have been distributed/used.

*Unknown creditors (unbekannte Gläubiger) are those who make claims (e.g. warranty claims or claims for damages) during or after the Sperrjahr (blocking year). That is, unknown creditors are people or groups who claim that the company owes them money after the blocking year has begun.  Heirs or assignees (someone to whom a right or liability has been legally transferred) of known creditors are also included in this definition.

Distribution of remaining assets: Sharing what’s left over

Once the waiting period (Sperrjahr) is over, the remaining property and money of the GmbH or UG can be divided between the owners. This includes the money they have put into the company in the form of Stammkapital (share capital).

If, at this point, there are still liabilities to known creditors who have not registered during the blocking year, security must be provided (§ 73 GmbHG). In other words, if there are still debts to people we know who haven’t asked for their money during the waiting period, the company must put money aside to cover them. Security can be provided via:

  • Securities or money
  • Pledges of tangible assets or receivables in the federal/state debt register
  • Mortgages on domestic properties
  • Pledging of receivables secured by mortgages
  • Guarantees
  • And the like


Can a company be dissolved sans liquidation and the blocking year?

If certain things are true, you don’t have to go through the usual steps of closing down a company (i.e., liquidation and the subsequent blocking year):

  • The company has no assets or liabilities
    The company doesn’t own anything or owe any money
  • The company is over-indebted and an application for insolvency has been filed
    The company owes more money than it has and has already asked the court for help (filed for bankruptcy).
  • All business transactions have already been completed
    All the money matters are settled.
  • No pending legal proceedings
    No ongoing court cases
  • No real estate assets or land register entries
    The company doesn’t own any buildings or land.
  • The company’s assets have been used to satisfy creditors 
    Whatever the company owned has been used to pay off debts
  • Residual assets are distributed to the shareholders
    The extra money left after paying all debts is given to the company owners.
  • Taxation proceedings have been completed and the tax office has no objection to the company’s deletion from the commercial register
    The tax stuff is all sorted out, and the tax office is okay with the company being closed down.

If all of the above applies, the company can be closed down immediately (i.e., deleted from the commercial register) without the owners having to wait for a year and then liquidate the company. To make this happen, the person in charge (the liquidator) needs to ask the local court to officially cancel the company’s registration. Usually, the court wants to see the company’s current financial situation and hear from the liquidators that there are no assets left, and everything is settled. Only if the court thinks something is fishy with the numbers (justified doubts about their “correctness and completeness”), does it have the right to investigate further.

People like this method because it saves money on bookkeeping, annual accounts, renting the Geschäftssitz (registered office), etc. during the waiting period (Sperrjahr). But it’s important to be careful because non-compliance can lead to a costly Nachtragsliquidation (supplementary liquidation).

Another way to avoid liquidation (and thus the waiting period and bureaucracy) is to dissolve the GmbH or UG and merge it with another company.

Note: The direct liquidation procedure can also be initiated ex officio. That is, if the Finanzamt (tax office), Registergericht (registry court) or Kammer (professional association/body) thinks it’s necessary, they can also start the winding-up process.


Stage 3: Removal of the company from the commercial register

Once the liquidation process is done, the final step is to create a:

  • Liquidationsschlussrechnung (liquidation account/statement), and
  • Liquidationsbilanz (liquidation balance sheet).

After this, the liquidators can request to remove the company from the Handelsregister (commercial register). This marks the end of the company as a legal entity. However, retention obligations still apply. That is, important financial records still need to be kept for another ten years.


This is the final financial report when a company goes out of business. It details what has happened to the company’s money, how debts have been settled and where any money left over has gone. This report is important for officially closing down the company.


This is the final financial statement (set of accounts) produced when a company is wound up. It shows (and accounts for) how the company’s money and debts are sorted out during the closure process.

Note: Although a company’s entry may be officially deleted from the commercial register, it doesn’t vanish completely. You can still find historical information about the company in the commercial register database, with a note about the removal.

Handelsregister: Hinweis auf Löschung
Handelsregister: Hinweis auf Löschung (commercial register: notice of cancellation)



What happens when the German authorities close down GmbH or UG?

As mentioned above, a company can also be removed from the commercial register ex officio. This means that the authorities can decide to close a company independently. When this happens, they must inform the owners/shareholders or their representatives. They are given notice and a ‘reasonable’ period to say if they don’t agree with the authorities closing of the company (as per § 394(2) FamFG).

Handelsregister: Löschung von Amts wegen
Handelsregister: Löschung von Amts wegen (commercial register: deletion ex officio)




How much does it cost to close down a company?

Figuring out the exact cost of shutting down a company depends on each situation. But, if there’s a Sperrjahr (blocking year/waiting period) involved, it’s realistic to expect it to be a few thousand euros.

What is Nachtragsliquidation?

Nachtragsliquidation‘ is a German term that can be translated as ‘supplementary liquidation’. Essentially, it is a process that may be needed after a company has officially closed down. Even after a company has been officially removed from the register, there may still be things left over, such as debts, property or tasks that need to be dealt with. This often happens when the authorities carry out a direct removal due to a lack of assets, skipping the liquidation and the blocking year. Alternatively, the liquidators may have been aware of or overlooked some of the steps involved. To get things back on track, supplementary liquidators are appointed by the relevant court. It’s not just the owners who can apply. Anyone can apply, including the authorities, people owed money (creditors) or relevant family members.

Typical tasks for supplementary liquidation

  • Cancellation of mortgages
  • Sale of real estate
  • Distribution of assets to creditors or shareholders


My company is insolvent. Do you still have to file for insolvency even though the company is in liquidation?

Yes, handling an Insolvenzantrag (insolvency application/filling) is the job of the liquidators. Registering the dissolution with the commercial register doesn’t mean that they are exempt from this obligation during the liquidation period. If they don’t file for insolvency on time, the liquidators risk the legal consequences of delaying the insolvency process.


Want to know more?

Continue browsing