Process to Open a UG Company in Germany: 6 Steps You Must Follow

Setting up a company in Germany offers exciting opportunities to entrepreneurs looking to tap into the European market. One of the most popular ways to begin a business venture in Germany is by forming a Unternehmergesellschaft (UG), often referred to as the ‘Mini GmbH.’ This type of company is ideal for startups, as it allows entrepreneurs to incorporate with a minimal capital investment of just €1.

The process to open a UG company in Germany is quicker and simpler than many people realize, often taking as little as 3-4 weeks. Whether you are located in Germany or abroad, the process can be streamlined and handled efficiently with the help of professionals. 

In this comprehensive guide, we’ll walk you through the essential process to open a UG company in Germany, from company formation to gaining access to the EU Blue Card.

Step-by-Step Process to Open a UG Company in Germany

Are you wondering how you can start a UG company in Germany? Listed below are the steps for company formation:

Step 1: Complete the Director KYC Process

The first step in the process of opening a UG company in Germany is completing the KYC (Know Your Customer) process for the company’s directors. This is a standard requirement for all company formation procedures in Germany to verify the identity of the directors and ensure they meet the legal and regulatory requirements.

Time Required: The KYC process usually takes about 7 days to complete, depending on the submission of the required documents.

You will need to submit personal identification documents, proof of address, and other important information. Once your KYC is approved, you will be able to proceed with the next steps in forming your UG company.

Step 2: Reserving Your Company Name with the Commercial Register

Once the KYC process is complete, the next step is to reserve your company name with the German Commercial Register (Handelsregister). You must pick a name that is original and not already being used by another German company.

Time Required: Name reservation typically takes about 5 days.

The company name must comply with German regulations, such as not being misleading or too similar to existing business names. It’s recommended to perform a name search beforehand to ensure your desired name is available.

Read More: How to Protect Your Business Name in Germany?

Step 3: Drafting the Power of Attorney

Next, the Power of Attorney has to be drafted. This document is necessary to grant authority to an individual (often a legal representative or a company formation specialist) to act on your behalf during the company formation process.

What You Need to Do? All you need to do is sign the Power of Attorney.

The Power of Attorney gives the designated representative the right to handle the necessary administrative and legal steps, such as notarizing documents and submitting them to the relevant authorities.

Step 4: Preparing the Company Incorporation Documents

Incorporation documents must be prepared at this stage, including the Articles of Association (Satzung), which outline the company’s structure, business purpose, shareholder rights, and other important information. This is a legally binding document that governs how the company will operate.

This document will need to be notarized before it can be submitted to the Commercial Register, which is the next step in the process.

Step 5: Notarizing the Documents

The next key step is having your company documents notarized by a German Notary Public. The notarization ensures that all documents are legally valid and comply with German law.

In-Person vs. Remote Notarization:

If you are located in Germany, you can visit the notary office in person to sign the required documents.

If you are outside of Germany, you don’t have to worry. You can appoint a proxy or rely on a professional service to act on your behalf, ensuring that the signing process is completed without requiring your physical presence in Germany.

Step 6: Deposit the Minimum Share Capital

Once the documents are notarized, the next step is to deposit the minimum required share capital into a German bank account. For a UG, the share capital can be as low as €1, which makes this type of company attractive for new entrepreneurs with limited capital.

You have a couple of options when it comes to making this deposit:

• Virtual Bank Accounts: If you are outside Germany, you can open a virtual bank account in Germany with services like Revolut, Payoneer, or InterPolitan. These platforms make it easy to manage international business accounts and receive payments.
• Envelope Approach: In some cases, you can use the “Envelope Approach,” where the shareholder declares (via notary) that the share capital will be deposited once the bank account is open.

After depositing the capital, the bank will provide a statement confirming the deposit, which will be submitted to the Commercial Register.

Step 7: Submitting the Documents to the Commercial Register

The final step in the formation process is submitting your notarized documents and proof of share capital deposit to the Commercial Register (Handelsregister). Once submitted, the Commercial Register will process your application and officially register your UG company.

Once your company is formally enrolled, you will receive a certificate of incorporation, which is proof that your business has been legally established in Germany.

Time Required: The registration process typically takes about 1-2 weeks.

Additional Benefits After Setting Up Your UG Company

After establishing your UG firm, you may concentrate on expanding your enterprise in Germany. But there’s an additional benefit that comes with company formation in Germany—the EU Blue Card.

The EU Blue Card

The opportunity to apply for the EU Blue Card is one of the biggest benefits of establishing a UG business in Germany. This visa allows entrepreneurs, skilled professionals, and their families to live and work in Germany, with a pathway to permanent residency.

The EU Blue Card provides:

• Right to Live and Work in Germany: As an entrepreneur, you and your family will have the legal right to reside and operate your business in Germany.
• Pathway to Permanent Residency: After just two years, you can apply for permanent residency in Germany, making it a fantastic opportunity for those looking to establish a long-term future in Europe.

Conclusion

Starting a UG company in Germany is a fantastic way to enter the European market. The process is relatively straightforward, and with just €1 in capital, you can establish your company in as little as three to four weeks. Whether you’re based in Germany or abroad, professional services can help streamline the process, ensuring you meet all the legal requirements while saving time.

Once your company is established and operating, the EU Blue Card offers additional benefits, such as residency and work permits, making Germany an attractive destination for entrepreneurs and skilled professionals. 

If you’re considering expanding your business into Europe, the UG structure is an excellent choice, offering flexibility, limited liability, and a smooth path to success in one of the world’s leading economies. You can consult with our incorporation experts to set up your business today.