7 ms·

OK but how is it that other countries get by without them for founding LLCs? Are there countless scams going on in the UK surrounding limited company for examp

OK but how is it that other countries get by without them for founding LLCs? Are there countless scams going on in the UK surrounding limited company for example since you don't need a notary there? There's often lots of post hoc justifications in Germany for "why it is that way" (and has to be that way). But nobody ever seems to stop and think: ok but the rest of the world seems to get by OK without these reams and reams of bullshit? The problem with Germany is not that it is stuck in the 20th century and completely backwards, but that nobody seems to care that it is. Worse, if anything there seems to be a degree of pride among Germans of the "process". As soon as you criticise some piece of particular bullshit German bureaucracy (as opposed to bureaucracy in general, which generally you're permitted to criticise) then they start circling the wagons (often pointing to other countries where the situation is supposedly the same or worse). So it is never going to change.

calvinmorrison 3y ago
My assumption of the bureaucracy is that it stems out of the German empires professional service
freyfogle 3y ago
I now have a German GmbH and had a UK Ltd in the past for 10 years. Definitely there is more seriousness/trustworthiness to a GmbH. I am not sure there are "countless" scams in the UK, but yes, in 10 years of commercial operation did come across a few oddities. Example - a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. See https://en.wikipedia.org/wiki/Pre-packaged_insolvency https://en.wikipedia.org/wiki/Pre-packaged_insolvency I have not come across this kind of thing in Germany.
- rrr_oh_man 3y ago
  > I have not come across this kind of thing in Germany. Oh, it does exist :)
  - freyfogle 3y ago
    Obviously there is fraud everywhere. Still, I have a higher level of basic trust when dealing with a GmbH than someone who created their Ltd Co 3 hours ago. It's just a sign they are a more serious/stable business counter party to deal with.
  - RamblingCTO 3y ago
    Yeah! Especially rampant is reusing names of closed GmbHs, reopening them, sending out invoices and stuff like that. Or spamming newly created GmbHs with phantasy invoices. Or the scam that's called Abmahnung by lawyers. There's plenty in Germany, so don't be fooled.
- ProjectArcturis 3y ago
  > a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. That is... how bankruptcy works? He literally didn't owe you money anymore. Obviously you shouldn't extend his new company credit, but extinguishing old debts is the exact purpose of bankruptcy.
  - theshrike79 3y ago
    I think the idea here is that you can't just "declare bankruptcy" in Germany, it's a Process with checks and balances.
    - denotational 3y ago
      It’s a process in the UK too, abuse of which could lead to the courts imposing sanctions ranging from barring the directors from company directorship all the way to piercing the corporate veil and holding directors liable for the company’s debts. Corporate insolvency requires an “insolvency practitioner” to be appointed by the directors; this is a regulated profession, and this ensures that the company is wound up according to the regulations and statutes. You cannot just “declare bankruptcy” in the UK either.
    - redrove 3y ago
      Your comment is a bit tongue in cheek: it’s a process with checks and balances everywhere in the developed world, and scams aren’t common at all. You’re insinuating that due to the bureaucracy Germany is somehow better at this; it is not, it’s just more inefficient.
    - throw__away7391 3y ago
      The US concept of bankruptcy is basically unimaginable in most (all?) of Europe. There's an old movie, The Edukators, where one of the protagonist is effectively broke and working a low wage job but has spent years already and has many years more left to pay off a debt she incurred by accidentally crashing into an expensive car without insurance. This situation is basically impossible in the US where the term "uncollectible" is used to describe such debts.
- denotational 3y ago
  How does the involvement of a notary at the time of formation reduce the risk of the company going bankrupt? Is the notary able to model creditworthiness (i.e. they’re acting as a rating agency), or do they just sniff out “undesirables” by some ad hoc, unregulated process involving their personal judgement, or is it something else entirely?
- csomar 3y ago
  > Example - a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. Depends. This can be illegal and he is personally liable for the amount. That being said, he might have done things by the book and his previous venture is bankrupted.
splatzone 3y ago
Fraudulent limited companies are a major problem in the UK. But I think the tradeoff is probably worth it https://amp.theguardian.com/business/2022/dec/03/crisis-uk-companies-house-fake-directors-fraud https://amp.theguardian.com/business/2022/dec/03/crisis-uk-c...

calvinmorrison 3y ago

My assumption of the bureaucracy is that it stems out of the German empires professional service

freyfogle 3y ago

I now have a German GmbH and had a UK Ltd in the past for 10 years. Definitely there is more seriousness/trustworthiness to a GmbH. I am not sure there are "countless" scams in the UK, but yes, in 10 years of commercial operation did come across a few oddities. Example - a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. See https://en.wikipedia.org/wiki/Pre-packaged_insolvency https://en.wikipedia.org/wiki/Pre-packaged_insolvency I have not come across this kind of thing in Germany.

rrr_oh_man 3y ago
> I have not come across this kind of thing in Germany. Oh, it does exist :)
- freyfogle 3y ago
  Obviously there is fraud everywhere. Still, I have a higher level of basic trust when dealing with a GmbH than someone who created their Ltd Co 3 hours ago. It's just a sign they are a more serious/stable business counter party to deal with.
- RamblingCTO 3y ago
  Yeah! Especially rampant is reusing names of closed GmbHs, reopening them, sending out invoices and stuff like that. Or spamming newly created GmbHs with phantasy invoices. Or the scam that's called Abmahnung by lawyers. There's plenty in Germany, so don't be fooled.
ProjectArcturis 3y ago
> a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. That is... how bankruptcy works? He literally didn't owe you money anymore. Obviously you shouldn't extend his new company credit, but extinguishing old debts is the exact purpose of bankruptcy.
- theshrike79 3y ago
  I think the idea here is that you can't just "declare bankruptcy" in Germany, it's a Process with checks and balances.
  - denotational 3y ago
    It’s a process in the UK too, abuse of which could lead to the courts imposing sanctions ranging from barring the directors from company directorship all the way to piercing the corporate veil and holding directors liable for the company’s debts. Corporate insolvency requires an “insolvency practitioner” to be appointed by the directors; this is a regulated profession, and this ensures that the company is wound up according to the regulations and statutes. You cannot just “declare bankruptcy” in the UK either.
  - redrove 3y ago
    Your comment is a bit tongue in cheek: it’s a process with checks and balances everywhere in the developed world, and scams aren’t common at all. You’re insinuating that due to the bureaucracy Germany is somehow better at this; it is not, it’s just more inefficient.
  - throw__away7391 3y ago
    The US concept of bankruptcy is basically unimaginable in most (all?) of Europe. There's an old movie, The Edukators, where one of the protagonist is effectively broke and working a low wage job but has spent years already and has many years more left to pay off a debt she incurred by accidentally crashing into an expensive car without insurance. This situation is basically impossible in the US where the term "uncollectible" is used to describe such debts.
denotational 3y ago
How does the involvement of a notary at the time of formation reduce the risk of the company going bankrupt? Is the notary able to model creditworthiness (i.e. they’re acting as a rating agency), or do they just sniff out “undesirables” by some ad hoc, unregulated process involving their personal judgement, or is it something else entirely?
csomar 3y ago
> Example - a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. Depends. This can be illegal and he is personally liable for the amount. That being said, he might have done things by the book and his previous venture is bankrupted.

splatzone 3y ago

Fraudulent limited companies are a major problem in the UK. But I think the tradeoff is probably worth it https://amp.theguardian.com/business/2022/dec/03/crisis-uk-companies-house-fake-directors-fraud https://amp.theguardian.com/business/2022/dec/03/crisis-uk-c...