The question
How do partners set up a joint enterprise without giving up their own businesses, and what needs to be agreed besides the articles?
In brief
In Germany the usual vehicle for a joint venture is the private limited company (Gesellschaft mit beschränkter Haftung, GmbH). Liability is limited to the company’s assets, holdings are clear and the organs can be shaped. The articles are public, so what the partners want to settle only among themselves usually goes into a shareholders’ agreement. Formation and shareholder resolutions are possible online, and larger joint ventures may be subject to merger control.
The law
The joint venture. Two or more businesses form a company, contribute capital, know-how, staff or customer relationships, and otherwise remain independent. Unlike a mere cooperation agreement, this creates a separate legal person with its own assets and organs. The cooperation gains a place of its own that none of the partners controls alone.
Formation. The articles must be notarised (Section 2(1) Limited Liability Companies Act, GmbHG) and state the company name, seat, object, share capital and shares (Section 3(1) GmbHG). The share capital is at least EUR 25,000 (Section 5(1) GmbHG). The company may be registered once a quarter of each share and at least half the minimum capital has been paid in (Section 7(2) GmbHG). It exists as a GmbH only upon entry in the commercial register; anyone acting in its name before then is personally liable (Section 11 GmbHG).
Articles and shareholders’ agreement. The articles are filed with the commercial register, where anyone can read them, and they bind the company and all future shareholders. Alongside them, partners often conclude a shareholders’ agreement. It binds only its parties but stays confidential. Typical contents are funding commitments, supply and service relationships between the partners and the joint venture, each partner’s right to nominate a managing director, reporting lines, non-compete clauses, a procedure for deadlock, and exit rules such as pre-emption, tag-along and buy-out rights. If the agreement contains an obligation to transfer or acquire shares, it must be notarised (Section 15(4) GmbHG). Anything that is to bind future shareholders belongs in the articles. Where the two documents contradict each other, disputes follow, so they are best drafted together.
Decisions. Shareholders decide by a majority of votes cast, each euro of a share carrying one vote (Section 47(1), (2) GmbHG). Amending the articles requires three quarters of the votes cast and notarisation (Section 53(2) GmbHG). In a 50:50 joint venture this means deadlock is always possible. The articles or the shareholders’ agreement should therefore say how a blockage is resolved: escalation to the partners’ senior management, mediation, an advisory board, or ultimately a buy-out procedure.
Management. The GmbH is represented by its managing directors (Section 35(1) GmbHG), jointly if there are several, unless the articles provide otherwise (Section 35(2) GmbHG). Shareholders can give instructions (Section 37(1) GmbHG) and remove directors at any time (Section 38(1) GmbHG). Every shareholder has a right to information and inspection (Section 51a GmbHG). In a joint venture, directors often come from the partners’ own organisations, yet their duty of care is owed to the GmbH (Section 43(1) GmbHG), not to the partner who nominated them. This double loyalty is one of the most common sources of mistrust.
The UG (haftungsbeschränkt). The entrepreneurial company is not a separate legal form but a GmbH with share capital below EUR 25,000 (Section 5a GmbHG). The capital must be fully paid in before registration, contributions in kind are excluded, and a quarter of annual net profit must go into a reserve until a capital increase takes the share capital to EUR 25,000. A UG may suffice for small joint projects. It does not suit a joint venture into which partners contribute assets or rights.
Competition law. A joint venture may be a concentration for merger control purposes. Under German law, where several businesses each acquire at least 25 per cent, this is also treated as a concentration between the partners themselves in the markets of the joint venture (Section 37(1) no. 3 sentence 3 Act against Restraints of Competition, GWB); joint control is also a concentration (Section 37(1) no. 2 GWB). If the turnover thresholds are met (Section 35 GWB), the project must be notified to the Federal Cartel Office and may not be implemented before clearance (Sections 39, 41 GWB). Where there is an EU dimension, the European Commission is competent (Art. 3(4) Regulation (EC) No 139/2004). Quite apart from this, cooperation in the joint venture must not lead the partners to coordinate their conduct in markets where they compete (Section 1 GWB, Art. 101 TFEU). See Competition.
Online
Formation by video. The articles can be notarised by video communication (Section 2(3) GmbHG, Sections 16a to 16e Notarisation Act, BeurkG). Shareholders take part through the Federal Chamber of Notaries’ video system and sign with a qualified electronic signature. Since 1 August 2022 this has applied to cash formations, and since 1 August 2023 also to formations with contributions in kind, unless other form requirements stand in the way, as with the contribution of land.
Resolutions by video and by circulation. Shareholder meetings may be held by telephone or video if all shareholders agree in text form (Section 48(1) sentence 2 GmbHG). Resolutions can be passed without a meeting if all shareholders agree in text form to the resolution or to casting votes in writing (Section 48(2) GmbHG). The articles can go further and permit video meetings or majority resolutions by circulation without such consent (Section 45 GmbHG). Amendments to the articles can be notarised online if the resolution is unanimous (Section 53(3) GmbHG), and applications to the commercial register can be certified by video (Section 12(1) sentence 2 HGB).
For a joint venture whose partners are based in different cities or countries, this is more than a convenience. The shareholders’ meeting need no longer be a rare event everyone travels to; it can become a regular date at which the partners follow developments together.
Cooperation within
A joint venture brings together three relationships: between the partners, between the managing directors, who often come from different organisations, and between shareholders and management. Each needs its own rules and its own places to talk. See Shareholders among themselves, Management as cooperation and Shareholders and management.
In which phases
- Designing the cooperation: contract or joint company, and if a company, with what holdings?
- Agreeing the cooperation: articles and shareholders’ agreement are drafted together.
- Dealing with conflict: deadlock, blockage and escalation.
- Ending the cooperation: a partner’s exit, buy-out procedures, dissolution.
Limits of this account
This page outlines the GmbH as a joint-venture vehicle. Tax, co-determination and the details of merger control are not covered.
As at 30 September 2026