What is the difference between a UG’s shareholder and its CEO?

updated on 10. April 2019 4 minutes reading time
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Shareholders and CEOs: You’ve already heard of both, but do you also understand the differences? Here we’ll give you a good explanation and tell you why sometimes both functions can be performed by the same person.

The shareholder of a UG

One difference between shareholders and CEOs of a UG is that the shareholder is the investor/shareholder of a company. He or she contributes, alone or with other shareholders, the share capital (Stammkapital) for the ‘UG (haftungsbeschränkt)’ and is as such involved in both profits and losses. That means he or she does not get a fixed salary. The amount of the participation depends in principle on the percentage share in the share capital of the company. As an example, the different shares of three shareholders are shown: Shareholder A, Shareholder B and Shareholder C have each made different contributions in their UG and as such also have different sized shares in the company:

Stammkapital €1,000
Shareholder A: €500 (50%)
Shareholder B: €100 (10%)
Shareholder C: €400 (40%)

At €10,000 in taxed profits, the respective UG shareholders would, therefore, receive the following amounts:

Shareholder A: €5,000
Shareholder B: €1,000
Shareholder C: €4,000

It’s also the obligation of the shareholders of a UG to appoint a CEO who runs the business of the entrepreneurial company.
Geschäfte der Unternehmergesellschaft.

The Limited Liability Companies Act (GmbH-Gesetz) also stipulates that all shareholders of a UG or GmbH must be included in a so-called list of shareholders (German article). This list of shareholders contains detailed information on each shareholder involved in the company and is required, for example, for entry in the commercial register (Handelsregister). Also, the CEO of a UG must be registered in the Handelsregister (German article), since he or she is responsible for representing the company externally.

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The CEO of a UG

Another difference between a UG CEO and a UG shareholder that the CEO is an employee of UG and represents the company’s interests both externally and internally. He or she assumes the leadership position in the company. His or her rights and obligations are laid out in the law, in the articles of association (Gesellschaftsvertrag) and in the managing directors’ contract (Geschäftsführervertrag) of the entrepreneurial company (German article). He or she may, under certain circumstances, be held personally liable if he or she does not fulfil their contractual obligations.

The managing partner of a UG (haftungsbeschränkt)

For a UG, it may be the case that there is only one shareholder. This can also be the CEO. This not only means that he or she appoints themselves, but also that, if a contract is concluded, he or she may receive a fixed salary. At the same time, the CEO, as a managing partner, receives the company’s taxed profits.

 

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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