How the KG Sytem works

Legal structure:

GmbH (Gesellschaft mit beschränkter Haftung)
A GmbH is a legal entity with limited liability. The minimum capital is EUR 25,000, which at the same time represents the maximum amount the company is liable for. A GmbH has to have at least one managing director.

KG (Kommanditgesellschaft)
According to basic principals, a KG consists of two different kinds of shareholders. One is the so called “Komplementär” (general partner), who bears unlimited liability for the actions of the KG and assumes the management’s duties, whereas the “Kommanditist” (limited partner) is only an investor and liability is limited to the amounts of his share. No minimum capital is required.

GmbH & Co. KG
The GmbH & Co. KG was developed to combine the benefits of both company types described above. It is a KG whose general partner is a GmbH, so that on the one hand the general partner’s liability will be assumed by a legal entity (GmbH), and on the other hand this structure of a GmbH & Co. KG represents a single purpose company.