Characteristic features : chapter 4

• Date: 01 January 2008
• Author: Christoph Jaehne
• DOI: 10.10520/EJC74091
• Pages: 79-86
• Published date: 01 January 2008

79

CHAPTER 4

CHARACTERISTIC FEATURES

4.1 Introduction

Both the GmbH and the close corporation aim at providing alternative

legal options for small business entities, giving them a simpler and

less expensive legal form, which satisf‌ies their needs for f‌lexibility while

guaranteeing liability limitations and continuity. In addition, both enti-

ties are self-suff‌icient in that they do not rely on capital markets to

fund their operations. With this in mind, the following chapter brief‌ly

compares a few characteristic features of each, specif‌ics will be dealt

with at a later stage.1

4.2 Lawful purpose, certain restrictions

Both entities can be formed for any lawful purpose in accordance with

their respective Acts.

This purpose, of course, cannot disregard statutory prohibitions or

violate against public bona mores. Certain restrictions, however, which

explain themselves by reason of the legal form, do exist.

The form of a GmbH cannot be used for a mortgage bank;2 a private-

home savings bank;3 insurance societies and insurance companies

in the f‌ields of‌life-, liability-, f‌ire- and hail insurance;4 in the areas of

insurance trade;5 and pharmacy trade.6

Regarding the self-employed (‘freie Berufe’), the choice of a GmbH

is restricted. It is possible to practice in form of a GmbH for tax advi-

sors7 and accounting f‌irms8 and also without codif‌ied regulation for

architects and engineers. Regarding lawyers and medical doctors

1 For a very informative overview, see Olbrisch/Du Plessis, “Some struc-

tural differences between the South African close corporation and the

German GmbH”, 1997, TSAR 315 et seqq.

2 ‘Hypothekenbank’, §§1, 2 HypBG (‘Hypothekenbankgesetz’, Mortgage

Banks Act).

3 ‘Private Bausparkasse’, § 2 BspkG (‘Bausparkassengesetz’, Private

Home Savings Banks Act).

4 ‘Versicherungsvereine’ and ‘Versicherungsunternehmen’. ‘Lebens-, Haft-

pf‌licht-, Feuer- und Hagelversicherung’, §§7, 15 et seqq. VAG (‘Versi-

cherungsaufsichtsgesetz’, Insurance Regulation Act).

5 ‘Versicherungsgewerbe’, §34b (3) GewO (‘Gewerbeordnung’, Trade,

Commerce and Industry Regulation Act).

6 ‘Apothekengewerbe’, §8 ApothG (‘Apothekengesetz’, Pharmacy Act).

7 ‘Steuerberater’, §49 (1) StBerG (‘Steuerberatungsgesetz’, Tax Advisory

Act).

8 ‘Wirtschafts prüfungsgesellschaften’, §27 (1) WPO (‘Wirtschafts prüfer-

ordnung’, Public Accountants Act).