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> It must put limited liability out of reach of so many people. That's the entire point. The concept that any idiot can start an LLC with no collateral (which

> It must put limited liability out of reach of so many people. That's the entire point. The concept that any idiot can start an LLC with no collateral (which the 25k are) is completely, absolutely, mind bogglingly bonkers to us Germans. Sounds like a scam imo.

yieldcrv 3y ago
why is there an assumption that people starting an LLC in Germany not an idiot? no wonder you guys fell for Wirecard good thing the EU/Eurozone/EFTA/EEA lets anyone do business with a business entity registered in any member state and accept SEPA in any regional currency so some microstate with competitive laws and more egalitarian access can circumvent Germany’s exclusionary hurdles
- awesomeMilou 3y ago
  I'm not saying it's great, it's just that German culture has no place for no collateral LLC's. We don't do this here, our business culture is much closer to medieval trade guilds still, rather than a modern globalized economy.
  - yieldcrv 3y ago
    I really get tired of the old world bullshit, especially regarding share capital. It seems it was more useful as a form of Proof of Stake to support old isolated currencies that doesn't have much relevancy in a monetary union. But I'm glad Luxembourgh, Estonia and others do things that mirror new world novelties, while remaining easier to bank in the EU with than non-EU entities, and look familiar to EU residents.
mac-mc 3y ago
Companies are the legal ownership equivalents of shipping containers, and enabled a revolution in humanity despite being so simple, much like shipping containers. There is something up with your laws if that is not what they effectively act as to need collateral like that.
OtherShrezzing 3y ago
I don't fully understand the comment you've made. Why do you believe it to be bonkers or a scam to allow no-capital limited liability firms? It effectively puts the entire country into a position where unless a citizen is born relatively wealthy, they have to perform labour for someone else for several years while they save up enough to start their own business. Who does the system benefit? What is it preventing? Why has the sky not fallen in on the UK with a near identical economy, but near-zero cost ltd company startup fees?
- badpun 3y ago
  There are plenty of other forms of companies than LLC which people can use. With an LLC, the company is only liable with the capital that it has, and if it has none, then it can scam people with impunity (there can be criminal charges if there's outright fraud, but you won't win any money in a civil case against a company that scammed you, if the company has no money).
  - zeroCalories 3y ago
    Don't know how it works in the UK/Germany, but an LLC isn't a complete shield against liability. If you're scamming people or acting recklessly you could easily find your personal assets targeted by a judge.
- awesomeMilou 3y ago
  > It effectively puts the entire country into a position where unless a citizen is born relatively wealthy, they have to perform labour for someone else for several years while they save up enough to start their own business. Yup that's pretty much the idea. If you think that's unfair, oh boy, wait until you hear about our infamous trade schools and apprenticeships. Though you're right, incorporation doesn't shield from scammers. We as a nation fell for Wirecard after all.
  - data_maan 3y ago
    > If you think that's unfair, oh boy, wait until you hear about our infamous trade schools and apprenticeships. Got any stories to tell? ;)
blackhawkC17 3y ago
If we follow your logic, only the rich will be able to create LLCs then..
deleted 3y ago
[deleted]
fl7305 3y ago
> The concept that any idiot can start an LLC with no collateral (which the 25k are) is completely, absolutely, mind bogglingly bonkers to us Germans. Uhh, what? Have you never heard of UGs? That is, 1 Euro GmbHs.
- awesomeMilou 3y ago
  No it's not. With UG's limited liability is only extended to the collateral put in, meaning that as soon as someone sues you for 2€, suddenly you're liable with your private wealth. A GmbH is a true shield against that, you can be sued for millions and are shielded behind the 25k collateral.
  - fl7305 3y ago
    That sounds unlike anything I've ever read about it? Where have you seen this? Here is the law that regulates GmbHs, with the paragraph specific to UGs: https://www.gesetze-im-internet.de/gmbhg/__5a.html https://www.gesetze-im-internet.de/gmbhg/__5a.html Where in the GmbH-law do you find anything to support your claim?
    - awesomeMilou 3y ago
      My understanding was so far, that if the initial Stammkapital for an UG is too low, it then is seen under constant thread of insolvency under the law. Meaning that you're effectively always delaying insolvency, which is a crime. So if you then actually go bankrupt, assuming you're both Gesellschafter and Geschäftsführer, you're pretty much guaranteed to be convicted. Though I have to admit this was 10 years ago when I looked into it. I remember there being a lot of fearmongering around starting an UG back then.
      - fl7305 3y ago
        I'm not an expert, especially not on the German law. But here's my understanding: If a UG with 1 euro in share capital has a large equity, low expenses, and is run prudently, then I don't think the CEO/shareholders are personally liable if the UG is sued for a million euros and must pay that? Both a GmbH and a UG have a "share capital" (Stammkapital). It is at least 25 000 euros for a GmbH, and 1 euro for a UG. On day 1, this is also the equity (Eigenkapital). If the company makes profits, that will increase the equity. The equity makes it possible to keep spending money for a while even if the cash flow is negative. A 1 euro UG can in theory have 1 million euros in equity. In both cases, the CEO is legally obligated to start insolvency proceedings immediately if it looks like the company can't pay its bills or loans any more. This is also required if the equity goes below half the share capital (same as in Sweden, "kontrollbalansräkning"). > if the initial Stammkapital for an UG is too low, it then is seen under constant thread of insolvency under the law I don't think it's that simple? To begin with, it's the equity and the cash flow that matters, not just the Stammkapital (share capital) by itself. A UG can start out with a very low share capital, but if it has no expenses and a positive cash flow, then insolvency is not a risk, right? If the cash flow suddenly becomes negative, for instance by losing a big client, or the main product suddenly can't be sold any more, then even a GmbH can be under immediate threat of insolvency. The 25 000 euro in share capital is nothing compared to salaries for a bunch of people, plus an office lease agreement that runs for another couple of years, etc. So if you're operating a GmbH with employees and an office, then I'd say that it can be "seen under constant threat of insolvency" if it only has the share capital available as equity (or worse, just half of it), and the future income is very uncertain. So both a GmbH and a UG can put the CEO in jail if he plays it fast and loose. I can definitely see how it is easier for a UG to get into insolvency territory, and above all, people running UGs aren't as familiar with the rules and pitfalls. I could be wrong on some things? I'm interested to learn more in that case.
NoboruWataya 3y ago
I have a hard time believing there are many scams that have succeeded specifically because the scammer was permitted to set up an LLC with nominal share capital (at least in the last few decades). In the business world it is pretty standard to do due diligence and get collateral for any material exposure to an LLC. So the people who would be taken in would mainly be the vulnerable and uneducated who could likely be scammed without an LLC. There are additional protections against scams via various laws relating to bankruptcy, creditor protection and "piercing the corporate veil" (https://en.wikipedia.org/wiki/Piercing_the_corporate_veil https://en.wikipedia.org/wiki/Piercing_the_corporate_veil). Not to mention that the minimum capital requirement is unlikely to deter any determined scammer. All you're really doing is making life slightly difficult for scammers who can't scrape together €12.5k in capital, while simultaneously also making life hard for all the legitimate contractors and (would-be) entrepreneurs who can't scrape together that amount.
- awesomeMilou 3y ago
  If you read the German version of the Wikipedia article you linked, you'll find that this concept is rarely, and I mean _rarely_ applied by courts. It is also case law, which is exceedingly rare in German law. You're going to have a hard time arguing for it's application in court. Regardless, most laws around incorporation in Germany are a deterrent to any founder, I agree, but I honestly think we don't want this as a society. German culture is about work, and working for _someone_, not starting your own business. I agree it could, and should be easier, at the same time you won't change a system that evolved from medieval trade guilds.
  - data_maan 3y ago
    > German culture is about work, and working for _someone_, not starting your own business. I wonder how Germany will survive the 21st century, where a key part is to make/capture a market first by some innovation that comes out of some startup scene (Silicon Valley most prominently) and push out all the other players. German's in tech spheres keep complaining that they are being "ripped of" by the Anglo-Saxon space, but it seems to me it's actually their own mentality that is holding them back. And of course everyone knows the story about the mp3 format, apparently invented in Germany and monetized in the US

yieldcrv 3y ago

why is there an assumption that people starting an LLC in Germany not an idiot? no wonder you guys fell for Wirecard good thing the EU/Eurozone/EFTA/EEA lets anyone do business with a business entity registered in any member state and accept SEPA in any regional currency so some microstate with competitive laws and more egalitarian access can circumvent Germany’s exclusionary hurdles

awesomeMilou 3y ago
I'm not saying it's great, it's just that German culture has no place for no collateral LLC's. We don't do this here, our business culture is much closer to medieval trade guilds still, rather than a modern globalized economy.
- yieldcrv 3y ago
  I really get tired of the old world bullshit, especially regarding share capital. It seems it was more useful as a form of Proof of Stake to support old isolated currencies that doesn't have much relevancy in a monetary union. But I'm glad Luxembourgh, Estonia and others do things that mirror new world novelties, while remaining easier to bank in the EU with than non-EU entities, and look familiar to EU residents.

mac-mc 3y ago

Companies are the legal ownership equivalents of shipping containers, and enabled a revolution in humanity despite being so simple, much like shipping containers. There is something up with your laws if that is not what they effectively act as to need collateral like that.

OtherShrezzing 3y ago

I don't fully understand the comment you've made. Why do you believe it to be bonkers or a scam to allow no-capital limited liability firms? It effectively puts the entire country into a position where unless a citizen is born relatively wealthy, they have to perform labour for someone else for several years while they save up enough to start their own business. Who does the system benefit? What is it preventing? Why has the sky not fallen in on the UK with a near identical economy, but near-zero cost ltd company startup fees?

badpun 3y ago
There are plenty of other forms of companies than LLC which people can use. With an LLC, the company is only liable with the capital that it has, and if it has none, then it can scam people with impunity (there can be criminal charges if there's outright fraud, but you won't win any money in a civil case against a company that scammed you, if the company has no money).
- zeroCalories 3y ago
  Don't know how it works in the UK/Germany, but an LLC isn't a complete shield against liability. If you're scamming people or acting recklessly you could easily find your personal assets targeted by a judge.
awesomeMilou 3y ago
> It effectively puts the entire country into a position where unless a citizen is born relatively wealthy, they have to perform labour for someone else for several years while they save up enough to start their own business. Yup that's pretty much the idea. If you think that's unfair, oh boy, wait until you hear about our infamous trade schools and apprenticeships. Though you're right, incorporation doesn't shield from scammers. We as a nation fell for Wirecard after all.
- data_maan 3y ago
  > If you think that's unfair, oh boy, wait until you hear about our infamous trade schools and apprenticeships. Got any stories to tell? ;)

blackhawkC17 3y ago

If we follow your logic, only the rich will be able to create LLCs then..

deleted 3y ago

[deleted]

fl7305 3y ago

> The concept that any idiot can start an LLC with no collateral (which the 25k are) is completely, absolutely, mind bogglingly bonkers to us Germans. Uhh, what? Have you never heard of UGs? That is, 1 Euro GmbHs.

awesomeMilou 3y ago
No it's not. With UG's limited liability is only extended to the collateral put in, meaning that as soon as someone sues you for 2€, suddenly you're liable with your private wealth. A GmbH is a true shield against that, you can be sued for millions and are shielded behind the 25k collateral.
- fl7305 3y ago
  That sounds unlike anything I've ever read about it? Where have you seen this? Here is the law that regulates GmbHs, with the paragraph specific to UGs: https://www.gesetze-im-internet.de/gmbhg/__5a.html https://www.gesetze-im-internet.de/gmbhg/__5a.html Where in the GmbH-law do you find anything to support your claim?
  - awesomeMilou 3y ago
    My understanding was so far, that if the initial Stammkapital for an UG is too low, it then is seen under constant thread of insolvency under the law. Meaning that you're effectively always delaying insolvency, which is a crime. So if you then actually go bankrupt, assuming you're both Gesellschafter and Geschäftsführer, you're pretty much guaranteed to be convicted. Though I have to admit this was 10 years ago when I looked into it. I remember there being a lot of fearmongering around starting an UG back then.
    - fl7305 3y ago
      I'm not an expert, especially not on the German law. But here's my understanding: If a UG with 1 euro in share capital has a large equity, low expenses, and is run prudently, then I don't think the CEO/shareholders are personally liable if the UG is sued for a million euros and must pay that? Both a GmbH and a UG have a "share capital" (Stammkapital). It is at least 25 000 euros for a GmbH, and 1 euro for a UG. On day 1, this is also the equity (Eigenkapital). If the company makes profits, that will increase the equity. The equity makes it possible to keep spending money for a while even if the cash flow is negative. A 1 euro UG can in theory have 1 million euros in equity. In both cases, the CEO is legally obligated to start insolvency proceedings immediately if it looks like the company can't pay its bills or loans any more. This is also required if the equity goes below half the share capital (same as in Sweden, "kontrollbalansräkning"). > if the initial Stammkapital for an UG is too low, it then is seen under constant thread of insolvency under the law I don't think it's that simple? To begin with, it's the equity and the cash flow that matters, not just the Stammkapital (share capital) by itself. A UG can start out with a very low share capital, but if it has no expenses and a positive cash flow, then insolvency is not a risk, right? If the cash flow suddenly becomes negative, for instance by losing a big client, or the main product suddenly can't be sold any more, then even a GmbH can be under immediate threat of insolvency. The 25 000 euro in share capital is nothing compared to salaries for a bunch of people, plus an office lease agreement that runs for another couple of years, etc. So if you're operating a GmbH with employees and an office, then I'd say that it can be "seen under constant threat of insolvency" if it only has the share capital available as equity (or worse, just half of it), and the future income is very uncertain. So both a GmbH and a UG can put the CEO in jail if he plays it fast and loose. I can definitely see how it is easier for a UG to get into insolvency territory, and above all, people running UGs aren't as familiar with the rules and pitfalls. I could be wrong on some things? I'm interested to learn more in that case.

NoboruWataya 3y ago

I have a hard time believing there are many scams that have succeeded specifically because the scammer was permitted to set up an LLC with nominal share capital (at least in the last few decades). In the business world it is pretty standard to do due diligence and get collateral for any material exposure to an LLC. So the people who would be taken in would mainly be the vulnerable and uneducated who could likely be scammed without an LLC. There are additional protections against scams via various laws relating to bankruptcy, creditor protection and "piercing the corporate veil" (https://en.wikipedia.org/wiki/Piercing_the_corporate_veil https://en.wikipedia.org/wiki/Piercing_the_corporate_veil). Not to mention that the minimum capital requirement is unlikely to deter any determined scammer. All you're really doing is making life slightly difficult for scammers who can't scrape together €12.5k in capital, while simultaneously also making life hard for all the legitimate contractors and (would-be) entrepreneurs who can't scrape together that amount.

awesomeMilou 3y ago
If you read the German version of the Wikipedia article you linked, you'll find that this concept is rarely, and I mean _rarely_ applied by courts. It is also case law, which is exceedingly rare in German law. You're going to have a hard time arguing for it's application in court. Regardless, most laws around incorporation in Germany are a deterrent to any founder, I agree, but I honestly think we don't want this as a society. German culture is about work, and working for _someone_, not starting your own business. I agree it could, and should be easier, at the same time you won't change a system that evolved from medieval trade guilds.
- data_maan 3y ago
  > German culture is about work, and working for _someone_, not starting your own business. I wonder how Germany will survive the 21st century, where a key part is to make/capture a market first by some innovation that comes out of some startup scene (Silicon Valley most prominently) and push out all the other players. German's in tech spheres keep complaining that they are being "ripped of" by the Anglo-Saxon space, but it seems to me it's actually their own mentality that is holding them back. And of course everyone knows the story about the mp3 format, apparently invented in Germany and monetized in the US