Founding a company: the GmbH & Co. KG

The abbreviation stands for Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft. This form of company combines the advantages of the GmbH and the KG.

As a rule, at least two people are required for the company formation of a limited partnership (KG). A managing director (general partner) is fully liable with all his assets, while the investors (limited partners) are only liable with their contribution and are excluded from management. The GmbH & Co. KG is a special form of limited partnership, in this variant of the limited partnership a GmbH takes over the position of management, the limitation of liability of the GmbH therefore also applies to the KG. Important for founders: The GmbH & Co. KG is also possible as a one-man company, in which case one owner holds all the shares in the GmbH and the KG.

Advantages and disadvantages of the GmbH & Co. KG

The big advantage here is obvious: the liability of a GmbH is limited to the share capital, so the risk is very manageable in contrast to a regular KG. Nevertheless, company owners can raise money very flexibly and involve a large number of investors. The management tasks are then the sole responsibility of the GmbH, the investors have no say.

Although it is very easy to set up a GmbH & Co KG online today, a GmbH & Co. KG also means additional work, because ultimately two separate companies have to be founded and kept running. This is reflected in the administrative effort and costs. The limitation of liability also results in a lower credit rating, as the shareholder has to guarantee a loan privately. And while no share capital has to be provided in the regular KG, the company formation of the general partner GmbH requires a contribution of 12,500 euros.

For whom the GmbH & Co. KG is suitable for

The GmbH & Co. KG is well suited for commercial enterprises, especially if the entrepreneur is not liable with his private assets but still wants to acquire investors without decision-making powers. The company form is also very popular with family businesses, as it guarantees clarity in succession planning: a GmbH is not limited in time and so the general partner GmbH continues to exist even after the death of a partner.

A helpful overview of the structure of a GmbH & Co. KG can be found in the founder lexicon.