An important step when incorporating a company (UG or GmbH) in Germany is drafting its articles of association. To do this, founders have two options: They can either opt for the Musterprotokoll, which directly translates to ‘model protocol’ – a standardised template for a company’s articles of association, or bespoke articles of association (Gesellschaftsvertrag).
What are the real differences? And what do they mean for your company? You’ll find answers to these questions plus plenty of practical tips for choosing the right articles of association here.
Musterprotokoll vs Gesellschaftsvertrag: How do the two compare?
Both the Musterprotokoll and the classic articles of association (Gesellschaftsvertrag) can be used to incorporate a UG or GmbH in Germany. In this table, you’ll find a quick overview of all the important differences:
|Adjustable content?||❌||✔️ within the framework of the GmbH law (GmbHG) |
Legal advice is strongly recommended!
|Shareholder list included?||✔️||❌ it must be created separately|
|Appointment of CEO included?||✔️||❌ must be done separately|
|Number of shareholders||Maximum of three||Flexible: one or more|
|Number of CEOs||Maximum of one||Flexible: one or more|
|Flexible financial year?||❌ always must be the calendar year||✔️ Can be set as needed|
|Assets in kind possible?||❌||✔️ at GmbH |
❌ at UG
|Tax-deductible start-up costs?||✔️ up to max. €300 |
Up to the amount of the share capital if < €300
|✔️ individually adjustable|
|Flexible distribution of profits?||❌ corresponds to the ratio of company shares held by the shareholders||✔️ individually adjustable|
|Entitlement to severance pay when a shareholder leaves the company? |
|✔️ The amount corresponds to the market value of the shares||✔️ individually adjustable |
Musterprotokoll vs Gesellschaftsvertrag: How does it effect the company formation process?
The Musterprotokoll and Gesellschaftsvertrag are not the same, even though they serve the same purpose. Both documents define the rights and obligations of the shareholders of a GmbH or UG.
However, the Gesellschaftsvertrag refers only to the company agreement – i.e. statutes that govern how the company is run. The Musterprotokoll, on the other hand, includes a standardised Gesellschaftsvertrag as well as templates for the official list of shareholders and the appointment of the CEO. Anyone not using the Musterprotokoll will need to draft their own shareholder’s list and the CEO appointment documents in addition to the agreement.
Though the term Mustersatzung is often used on the Internet, this designation does not officially exist and causes unnecessary confusion. This is not the official Musterprotokoll. The official model protocol was introduced by legislators to make the formation of a UG or GmbH more efficient.
This means that forming a company with the Musterprotokoll costs less and is less time-consuming than when using a customised Gesellschaftsvertrag and shareholder list. However, the details in the Musterprotokoll are fixed and changes are only possible to a limited extent. Somethings that aren’t significant factors in the formation of a one-person UG or one-person GmbH, can be problematic with teams of founders with several shareholders.
Creating your own Gesellschaftsvertrag offers more flexibility to adjust its structure, but is also subject to certain regulations (eg the Gesellschaftsvertrag, which is shareholders contract for a UG or GmbH, must be in written form).
In the following, the unique characteristics of the Musterprotokoll and the Gesellschaftsvertrag are explained in detail.
What is a Musterprotokoll?
The Musterprotokoll can be used as an alternative to the typical articles of association when establishing a GmbH or UG. There is a variant for single founders as well as one for groups of founders consisting of up to three partners.
The content of the protocol is specified in § 2 and § 3 para. 1 GmbH Law (GmbHG) and cannot be changed. The Musterprotokoll is a cloze text – ie the founder fills in the relevant information in the designated places. Subsequently, the Musterprotokoll is signed by all shareholders and notarised by a notary. It is then submitted to the commercial register (Handelsregister) before the business is incorporated.
The Musterprotokoll shall contain the following information:
- Company name and addresses
- Business purpose
- Share capital
- Start-up costs
- Copies (shareholders keep the original; tax office and registry court each receive a copy)
- Further information (supplemented as required by the notary)
The Musterprotokoll may be used for establishing a company under the following conditions:
- A maximum of three shareholders participate.
- A maximum of one CEO is appointed. The latter must be exempted from the restrictions of § 181 of the German Civil Code (BGB).
- The financial year must be based on the calendar year.
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Which articles of association is right for your company?
Although the Musterprotokoll is faster and cheaper, it’s not necessarily always the more advantageous option. Particularly in litigation, tight regulations are often a hindrance. For example, the following regulations do not exist in the Musterprotokoll:
- Shareholder payments
- Powers of the CEOs
- Legal consequences after termination or death of a shareholder
- Distribution of profits
- Change of shareholders
- Shareholders’ resolutions
- Type of deposits (Only for GmbHs)
- Prerequisites for severance payments for shareholders
- Allocation of profits
- Redemption of business shares
- Conflicts within the company
You can create customised articles of association later down the track but this will cost you time and money.
What do articles of association look like in Germany?
Articles of association in Germany are an agreement drawn up between the shareholders of a corporation, which is reflected in the word Gesellschaftsvertrag that literally means company agreement. Since the Gesellschaftsvertrag allows founders to create an agreement that reflects a company’s unique circumstances – this is often the more practical solution in the long term. Here are the advantages of having your own articles of association:
- Any number of shareholders and CEOs is possible
- Flexibility in the design of the rules
- Start-up costs are tax completely deductible
- The articles of association can be changed later
- A non-compete clause may be established
- Distribution of profits can be regulated individually
- Shareholders and CEOs can change freely among themselves
- The company does not automatically dissolve after the termination of a shareholder
- Termination regulations can be defined on an individual basis
- Regulations regarding shareholder resolutions and shareholder meetings can be defined on an individual basis
- Inheritance regulations can be defined on an individual basis
- Dissolution of the GmbH or UG can be determined on an individual basis
- Incorporating the company with half the share capital (€12,500) is possible
If you create your own articles of association yourself, note the obligatory components according to § 3 GmbhG:
- Company and address of the corporation
- Business purpose
- Amount of the share capital (Stammkapital)
Other important points that you should discuss with your co-founders:
- The number and the nominal amount in shareholdings/capital contributions, which together make up the UG or GmbH share capital (if more than one shareholder is involved in establishing the company)
- As with the Musterprotokoll, the articles of association must be submitted to the commercial register after notarisation. Additionally, there is the list of shareholders and the appointment of CEOs.
- You’re allowed to contest the company’s articles of association. However, if the company is already registered in the commercial register, the contract cannot be contested retroactively.
- If the company is already active, contractual defects can only be asserted to a limited extent. In the case of silent partnerships, the general provisions for challenging and voiding can be asserted.
- Any change to the articles of association must be approved by a three-quarters majority in the shareholders’ meeting of the UG or GmbH (§ 53 II GmbHG). Furthermore, every change must be certified by the notary and relayed to the commercial register. The amendment is only valid from the publication of the updated commercial register entry.
Think about whether it would more advantageous for you to set up your company with the Musterprotokoll or with a Gesellschaftsvertrag. If you decide on the latter and need help drafting a watertight agreement, be sure to seek the advice of a specialised lawyer.
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The information published on our site is all written and checked by experts with the greatest care. Nevertheless, we cannot guarantee the accuracy of this information, as laws and regulations are subject to constant change. Therefore, always consult an expert in a specific case – we would be happy to connect you with the right professional.
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