Posted on
Wednesday 17 March 2010
"GmbH & Co. KG" what is this designation, and how did it come int o being?I believe the advantage of this construction is that a KG as a
partnership is similar to US partnerships and S corporations in that
the partners - including the GmbH as general partner - are the tax
paying entities. not the KG itself.
That is a simplification, since German tax law is quite complicated.Dear jrmith,
"GmbH & Co. KG" stands for "Gesellschaft mit beschr nkter Haftung und
Compagnie, Kommanditgesellschaft", which translates as "Limited
Liability Company and Partners, Limited Partnership".
A German "GmbH & Co. KG" is a limited partnership company (KG) whose
general partner (this means, the liable partner) is a limited
liability company (GmbH). That way, the possible extent of liability
of the general partner can be reduced without giving up the legal form
of a limited partnership. Usually, the general partner in a German
limited partnership is liable without limitation.
In legal relations (this includes offers, bills, etc.), the company
name must always include the reference to the existence of limted
liable partners. The designation GmbH & Co. KG must always be written
in full and may not be shortened to only KG, although the company
itself is, technically, a KG (limited partnership).
The GmbH (limited liability company) does not need to cede assets to
the KG. Also, it can confine itself to administration of the business,
which would be done by the representative of the GmbH, this means the
director of the limited liability company.
The main advantage of the GmbH & Co. KG legal form is that the GmbH (a
legal person) assumes and thus reduces the general partner's risk of
liability.
There are also disadvantages. For example, bookkeeping is considerably
more complex since both the KG and the GmbH must keep seperate books.
Furthermore, creditworthiness is severely limited because a bank would
get relatively few securities (only the total capital of the GmbH and
of the general partner), since there are no full partners who would be
personally liable.
The GmbH & Co. KG is originally based upon the German GmbH Act of 20 April 1892.
Hope this answers your question!
Regards,
Scriptor#If you have any other info about this subject , Please add it free.# |
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