Company objective: How to define the your business activities in Germany

What is a company objective?

A company objective 💬Unternehmensgegenstand is short text that

• outlines the company’s business activities,
• can exclude certain activities that require additional licenses,
• can define additional rights, e.g. the right to set up subsidiaries.

The company objective is mandatory for all merchants and must be included in the articles of association and their commercial register entry. In short, the company objective explains to third parties and the public, what the company does to generate revenue—or in pursuit of charitable goal.

📌 It it useful to have your company objective along with the company checked by the chamber of industry and commerce before you move on to schedule a notary appointment.

Writing a viable company objective is just one step in the formation process in Germany.

Special case: asset management

Asset-management companies are an exception. To qualify for a trade-tax exemption, the asset-management activities must be clearly identifiable—both in the company objective and ideally in the company name.

You can find more details in our guide to asset-managing LLCs.

Company objective vs business purpose

Another term that often appears in relation to the company objective is the corporate purpose 💬Gesellschaftszweck. The standard corporate purpose is generating profit. The exception are non-profit legal forms such as gGmbH and gUG. Their purpose must be charitable, altruistic, or ecclesiastical. A correct corporate purpose is necessary to obtain a non-profit status by the tax office.

If the company purpose is not legally compliant, contradictory or too vague, the tax office will reject the application for recognition of non-profit status.

Without recognised non-profit status, no tax exemptions apply and your organisation will be taxed like any regular company. To correct this, the articles of association must be amended, notarised, and updated in the commercial register, which leads to additional costs and administrative work. It can also affect your organisation’s credibility, as you can no longer present yourself as a non-profit until the issue is resolved.

📌 Don’t just come up with your non-profit corporate purpose, it takes much more than that! Seek expert legal advice by a law firm with expertise in non-profits to make sure your articles of association tick all the boxes.

Purpose of the company objective

The company objective does far more than inform partners or investors about what your business does. It plays a key legal role:

• Defines management powers
• Limits the influence of blocking minorities
• Helps avoid breaches of non-competition rules.

Defining management powers

The company objective sets the scope of the company’s business activities. Management is required to act within this scope and in the interests of the company.

Actions outside the company objective remain legally valid, but managers may become personally liable for resulting losses. A clearly formulated company objective therefore creates binding limits for management and helps prevent liability risks.

Protecting against blocking minorities

A precisely drafted company objective can prevent minority shareholders from blocking decisions that fall within the company’s defined objective. By clarifying what the company is meant to do, it narrows the situations in which a blocking minority may validly oppose majority decisions. Learn more about making resolutions during shareholder meetings.

Avoiding breaches of non-competition clauses

Non-competition obligations apply to activities that fall within the company’s business objective. A clear company objective helps determine when a shareholder or managing director is engaging in a prohibited competing activity. If the company objective is drafted too broadly, it may unintentionally trigger non-competition issues where none were intended.

Getting the wording right

Many founders struggle with the same question: How do I write a good and lawful company objective? Getting it right from the start saves time, money and later notary amendments.

A company objective should be clear, specific and tailored to your business. Anyone reading it —partners, investors, judges— should immediately understand what your company does.

📌 Rule of thumb: Write it as narrow as needed, not broader than necessary.

Common mistakes to avoid

There are no rigid legal wording rules, but courts and the chamber of commerce regularly reject unclear or meaningless objectives. Avoid:

⚠️ Overly general or generic descriptions

• “Trade / import / export of goods” without stating which goods
• “Consulting” without naming the area of expertise
• “Services” without explaining which services
• Single nouns that do not describe an activity, e.g. “electricity”, “IT”, “agency”

When are general terms allowed? Only if they still clearly describe one business sector, such as: “Operation of gambling halls”, “Trade in knitwear”, “Sanitation services and related work”.

⚠️ Empty formulas

• “Operation of a retail shop”
• “Commercial activities of all kinds”

⚠️ Unlimited extensions
These make the objective meaningless and will almost always be rejected:

• “… and all other businesses”
• “… and related businesses”

Frequent errors made in formulating the company objective

There are no precise legal requirements for the formulation of an Unternehmensgegenstand, but various court rulings provide a rough guideline. The following formulations should be avoided at all costs:

Tips for the strong company objective

Here’s how to drastically reduce the risk of rejection by the IHK or the commercial register:

1. Make a clear reference to your company name without mentioning it. There should be an obvious connection.
2. Describe the activities only, not the company’s purpose or mission.
3. Avoid phrases like “later also”—the objective must always be valid as-is.
4. Do not include the company name in the objective.
5. Avoid personal pronouns.
6. Skip foreign terms and jargon—clarity wins.

Follow these principles and your wording is far more likely to get approved without delays.

When to use ‘extending additions’

Extending additions allow you to include closely related activities without needing a notary every time the business grows.
These additions are only allowed if a clear link to the main business is still recognisable.

If your real business activity moves too far away from what is stated in the company objective, you will need to update the articles of association via a notary.

Examples of inadmissible extensions:

• “… and all other businesses”
• “… and all related activities”

Presenting an objective that is too broad or contains empty formulas or unlimited extensions will lead to rejection—your notary may not even submit it, or the district judge will refuse it.

Examples

Basic pattern

There is no model wording for each specific sector, but this is a basic framework for the wording in the articles of association:

(1) The company objective is […]. 💬Gegenstand des Unternehmens ist […].
(2) The company shall be entitled to establish branches in Germany and abroad, establish subsidiaries and acquire shares in similar enterprises. 💬Die Gesellschaft ist berechtigt, im In- und Ausland Zweigniederlassungen zu errichten und Tochtergesellschaften zu gründen und sich an gleichartigen oder ähnlichen Unternehmen zu beteiligen.
(3) The company is entitled to all actions which appear appropriate to promote the company purpose directly or indirectly. 💬Die Gesellschaft ist zu allen Handlungen berechtigt, die geeignet erscheinen, den Gesellschaftszweck unmittelbar oder mittelbar zu fördern.

📌 The company objective must be submitted in German!

Sample sentences

In the following, you’ll find some phrases that are common in company objectives. Please note that these phrases should not be used as are. Instead, you should carefully consider whether you need an extension or specialisation to best describe your business.

• “Manufacture of tableware.”
• “Distribution of baked goods and food.”
  
• “Geriatric care, home nursing care.”
  
• “Retail sale of clothing.”
  
• “Trade in lighting accessories and spare parts.”
  
• “Trade in and training for the sale of motor vehicles.”
  
• “Creating and operating websites, affiliate marketing and services.”
• “Activities in the field of entertainment gastronomy, in particular, the operation of discotheques.”
  
• “Installation in the field of sanitary facilities and related services.”
  

Example 1: Regular LLC

The company objective of ABC Software Solutions GmbH is the development and sale of software in the fields of financial services, asset management and related applications. ABC Software Solutions GmbH is authorised to establish, acquire or hold shares in similar or related companies. The company is also authorised to establish branch offices.

💬 Gegenstand der ABC Software Solutions GmbH ist die Entwicklung und der Vertrieb von Software in den Bereichen Finanzdienstleistung, Vermögensverwaltung sowie branchenverwandten Anwendungen. Die ABC Software Solutions GmbH ist berechtigt, gleichartige oder ähnliche Unternehmen zu errichten, zu erwerben oder sich an solchen Unternehmen zu beteiligen. Die ABC Software Solutions GmbH ist weiterhin berechtigt, Zweigniederlassungen zu gründen.

Examples 2: Non-profit LLC

The company pursues exclusively and directly charitable purposes within the meaning of the section “Tax-privileged purposes” of the German Fiscal Code (§§ 51 ff. AO). The purpose of the company is the promotion of education and vocational training, in particular through programmes that support digital literacy and equal access to learning opportunities. The company is not required to pursue all of its purposes with the same intensity or at the same time.

💬Die Gesellschaft verfolgt ausschließlich und unmittelbar gemeinnützige Zwecke im Sinne des Abschnitts „Steuerbegünstigte Zwecke“ der Abgabenordnung (§§ 51 ff. AO). Zweck der Gesellschaft ist die Förderung von Bildung und beruflicher Weiterbildung, insbesondere durch Programme, die digitale Kompetenzen und einen gleichberechtigten Zugang zu Lernmöglichkeiten unterstützen. Die Gesellschaft muss nicht sämtliche Zwecke mit derselben Intensität oder zur selben Zeit verfolgen.

⚠️ This is just a simplified example. Please always talk to a lawyer before you finalise a non-profit company objective and corporate purpose.