Public Limited Company (AG)

The founding of a public limited company (AG) is modern. Even if an initial public offering (currently) is not intended, the public limited company (AG) offers an alternative to the private limited company (GmbH) for medium-sized companies. However, it should not be overlooked that a public limited company (AG) and a private limited company (GmbH) differ significantly in legal terms.

An (apparent) advantage of the public limited company (AG) is certainly the reputation that is widely associated with this form of company in contrast to the private limited liability company (GmbH). In addition, shares can be transferred informally, since no notarial certification is required, and thus less expensively than shares of a private limited liability company (GmbH) to another person – admittedly, with the disadvantage of an absence of legal review of the transfer agreements. Finally, employees of the company can be involved in the company with employee stocks, and provisions for a subsequent initial public offering already exist.

The public limited company (AG) also brings along a row of disadvantages with it, which are mainly in their legal complexity: In addition to the board of the public limited company (AG), which manages the business, there is also a supervisory board. The supervisory board assumes the task of an internal control body, which is to be involved in a number of fundamental decisions. Often it is not easy to find suitable people for the supervisory board.

The stock corporation law, which is tailored to large companies, aims at protecting smaller shareholders through many regulations. Therefore, it contains a multitude of difficult-to-understand formalistic provisions, which, for example, makes the orderly convocation, execution and recording of a general assembly meeting almost impossible for a legal layman. Therefore, the legal form of the public limited company (AG), in particular, requires a familiarization with the legal regulations and regular contact to a knowledgeable corporate lawyer. We, as notaries, are at your disposal for this. Not to be overlooked in this context are the strict requirements for the annual financial statements and the disclosure requirements. All of this means that the public limited company (AG) is a very cost-intensive legal form as compared to the private limited liability company (GmbH). Finally, the stock corporation law allows little freedom in contract configuration. A “tailor-made charter” can therefore – as opposed to the private limited liability company (GmbH) - practically not be adopted.

The founding of a public limited company (AG) requires notarial certification. Due to the formal requirements of the Stock Corporation Act, which does not allow much room for maneuvering in the configuration of the statutes, the provisions of the Articles of Association are often not considered to be sufficient, so that supplementary provisions are made in a shareholder agreement, also called pool agreement.

The corporate law also allows the transformation of an already existing company into a public limited company (AG). This transformational act, which is subject to a variety of formal requirements, also requires notarial certification. A new formation audit is often necessary, which can lead to undesired time delays. The tax consequences of such a transformation should be discussed with a tax consultant in any case.