Those looking to establish a UG or GmbH must decide: Musterprotokoll, which directly translates to ‘model protocol’ – a standardised template for a company’s articles of association, or bespoke articles of association (Gesellschaftsvertrag) drafted by the founders? But what’s the difference? And what do you need to take into account when establishing a company?
You’ll find answers to these questions and plenty of practical tips for establishing a GmbH or UG in Germany right here.
The Musterprotokoll vs Gesellschaftsvertrag – a comparison
Both the Musterprotokoll and the classic articles of association/Gesellschaftsvertrag can be used to establish a UG or GmbH in Germany. In this table, you’ll find a quick overview of all the important differences:
|Musterprotokoll||Classical articles of association|
|Adjustable content?||No||Yes, as long as the legal |
framework conditions in the
GmbHG are adhered to
|Shareholder list included?||Yes||No, it must be done separately|
|Appointment of CEO included?||Yes||No, it must be done separately|
|Number of shareholders||Maximum of three||One or more|
|Number of CEOs||Maximum of one||One or more|
|Financial year||The calendar year||Can be defined as needed|
|Assets in kind possible?||No||Yes (only with the GmbH)|
|Tax-deductible start-up costs?||No||Individually adjustable|
|Distribution of profits||Corresponds to the ratio of company shares held by the shareholders||Individually adjustable|
|Entitled to severance pay in the event of the departure of a shareholder||Yes (amount corresponds to the market value of its share)||Individually adjustable |
Formation of a GmbH or UG: Musterprotokoll or articles of association?
The Musterprotokoll and articles of association 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 articles of association are a component of the model protocol in a greatly abbreviated form. In addition to the articles of association, the Musterprotokoll includes the list of shareholders and the appointment of the CEO. Anyone establishing a company without a model protocol will need separate articles of association, as well as their own list of shareholders and the appointment of the CEO.
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 model protocol. The Musterprotokoll was introduced by legislators to make the formation of a UG or GmbH more efficient.
This means that establishing a company with the Musterprotokoll costs less and is less time-consuming than establishing it in the typical way with your own articles of association and list of shareholders. 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 articles of association offers more flexibility to adjust its structure, but is also subject to certain regulations. The contract for a UG or GmbH must be in written form.
In the following, the unique characteristics of the Musterprotokoll and the articles of association are explained in detail.
Musterprotokoll for GmbH and UG: Definition
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: The founder fills in the relevant information in the designated places. Subsequently, the model protocol is signed by all shareholders and notarised by a notary. It is then submitted to the commercial register (Handelsregister) before the business is registered.
The model protocol 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 model protocol 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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Practical tips: Musterprotokoll or articles of association?
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?
Since you can define your own regulations in advance with your own articles of association, which are created specifically with your company in mind, this is often the more practical solution in the long term. Here are the advantages that having your own article of association offers you:
- 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 (German article)
- Inheritance regulations can be defined on an individual basis
- Dissolution of the GmbH or UG can be determined on an individual basis
- Establishing the company with half the share capital (€12,500) is possible
Drafting the articles of association yourself
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 start-up capital
Other important points that you should discuss with your co-founders:
- The number and the nominal amount in shareholdings/capital contributions (German article), 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 standard protocol or with your own articles of association. If you decide on an individual contract and need support in drawing it up, 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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