Foreign Shareholders or Managing Directors: What to Consider with a GmbH

You want to set up a GmbH and a shareholder or managing director lives abroad, holds a foreign nationality or a company based abroad is to hold a stake. The question then quickly arises whether the formation is possible in Germany and which additional documents are needed.

Under company law, such constellations are generally possible. What matters above all is that identity, authority to represent and the ownership structure can be documented in a traceable way.

At a glance

Foreign individuals and companies can generally become shareholders of a German GmbH.
A managing director does not need to hold German nationality or live in Germany either.
Which documents are required depends in particular on the country of origin, the legal form and the ownership structure.
For foreign companies, proof of existence, authority to represent and beneficial owners is regularly required.
Depending on the case, translations, apostilles, legalisations or other proof of authenticity may be required.
Participation is possible in person, under certain conditions online, or through an authorised representative.
Appointment as managing director does not create a right of residence or a permit to work in Germany.

Foreign shareholders: admissibility and documents

Foreign individuals and companies with legal capacity based abroad can generally become shareholders of a German GmbH. GmbH law generally requires neither German nationality nor a German place of residence for this. Depending on the sector, country of origin and type of transaction, further requirements under public law, foreign trade law or sanctions law may also need to be examined.

In practice, the identity of the persons involved and, in the case of a foreign company, its legal existence, authority to represent and ownership structure must be proven in a traceable way. Which documents are required in the specific case depends on the country of origin, the legal form, the content of the documents and the requirements of the notarising notary’s office and, where applicable, the register court. Depending on the constellation, the following in particular come into consideration:

for individuals, a valid official photo ID, usually a passport or a suitable identity card
for a foreign company, a current register extract or comparable proof of its legal existence
proof of who may validly represent the foreign company
documents on the ownership and control structure down to the individuals who are the beneficial owners
depending on the legal system, the articles of association, certificate of incorporation or other company documents
depending on the language and purpose, a German translation, where applicable by a publicly appointed or generally sworn translator
depending on the country of origin and the competent authority, an apostille, legalisation or other proof of authenticity

Early coordination makes sense because missing documents, or documents not available in the required form, can delay the appointment or the register filing. A register extract may be up to date in content but still insufficient for the specific notarial or register procedure because a translation or proof of authenticity is missing.

Do I have to travel to Germany to set up a GmbH?

If a participant lives abroad, they may not want to travel to Germany just for a signature, or may only discover shortly before the appointment that their identity document is not suitable for the online procedure. In practice, three routes come into consideration:

Notarisation in person at the notary’s office: all participants appear on site.
Notarial online procedure: provided the specific transaction, the identity documents and the local jurisdiction allow it.
Representation by an authorised person: with a power of attorney in the required form.

A GmbH or UG formation, a power of attorney for the formation and commercial register filings can generally be carried out in the notarial online procedure permitted by law, provided no other formal requirement stands in the way in the specific case. How this works in detail is explained on the page about the online notary. However, foreign participants need suitable electronic means of identification for this and, where applicable, a suitable passport for reading the photograph. A foreign passport alone therefore does not automatically enable participation. The local jurisdiction of the chosen notary must also be given in the online procedure.

If participation in person or by a permissible digital route is not possible, the formation can be carried out by an authorised person. Signing by an authorised representative requires a notarised or notarially certified power of attorney. For a power of attorney executed abroad, it should be checked in advance whether its form, content and proof of authenticity are sufficient for use in the German procedure. Particular care is needed with powers of attorney executed in a foreign online procedure, as these do not necessarily meet German procedural and technical requirements.

If a participant does not sufficiently understand the German language of the deed, it should also be clarified early whether an interpreter is needed. This must be distinguished from the translation of foreign register and company documents. One concerns communication during the notarisation, the other the documents submitted.

Foreign managing directors: appointment and working in Germany

Appointment as managing director

Foreign nationals can also be managing directors of a German GmbH. Foreign nationality or a place of residence abroad generally does not preclude appointment as managing director. The law requires a natural person with full legal capacity and provides for certain grounds for exclusion, but no general residence or nationality requirement.

Shareholders hold the shares and exercise their rights in particular through shareholder resolutions, while the managing directors run the company and represent it externally. The articles on the roles and duties of shareholders and on representation by managing directors provide more detailed explanations.

Residence law must be distinguished from this. Appointment under company law alone does not create a right of residence or an entitlement to work in Germany.

Residence law when working in Germany

If the managing director is actually to work in Germany, the residence law requirements must be examined independently of the appointment under company law. In particular, a distinction must be made:

Special freedom of movement rules apply to nationals of the EU and the EEA and to Swiss nationals.
For other third-country nationals, which residence permit is required depends, among other things, on nationality, the planned stay, an existing residence title and the specific activity.

The residence law assessment is not part of the notarisation and should, if necessary, be clarified early with the competent foreigners’ authority or a specialised advice centre.

Typical causes of delay in practice

In practice, additional coordination is often needed when foreign documents, proof of authority or ownership chains have not yet been fully clarified. Typical causes are:

incomplete or outdated register documents from abroad
translations that are missing or not in the required form
foreign powers of attorney not coordinated in advance
identification documents unsuitable for the online procedure or unclear need for an interpreter
additional proof where an increased money laundering risk is identified in the individual case

Submit register documents, proof of authority, powers of attorney and an overview of the ownership structure as early as possible. This allows it to be clarified before the appointment which translations or proof of authenticity are required in the specific case.

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Frequently asked questions about foreign shareholders and managing directors

Does a foreign shareholder have to travel to Germany for the formation?

Not necessarily. In suitable cases, the notarial online procedure comes into consideration, although it requires suitable electronic means of identification and the local jurisdiction of the notary. Alternatively, the participant can be represented by a person with a power of attorney in the required form.

Which documents does a foreign company need as a shareholder?

Usually required are proof of legal existence, such as a current register extract, and proof of authority to represent. Depending on the legal system, the articles of association or incorporation documents are added, as well as German translations and, where applicable, proof of authenticity depending on the case. The specific list depends on the country of origin and the legal form.

When are an apostille or legalisation needed?

Whether proof of authenticity is required and which procedure applies depends in particular on the issuing state, international conventions and the requirements of the authority where the document is used. A general list of countries or documents therefore cannot be given.

Does a foreign managing director need a residence title?

For appointment as managing director, a German residence title is generally not a requirement under company law. If the work is actually to be carried out in Germany, the residence law requirements must be examined separately. Which residence permit is required depends in particular on nationality, the planned stay and the specific activity. Special rules apply to nationals of the EU and the EEA and to Swiss nationals.

Does every foreign shareholder have to be reported to the transparency register?

No, not merely because of their foreign nationality or place of residence. What matters is whether the individual is deemed a beneficial owner by the nature and extent of their shareholding or in another way. The notification obligation generally lies with the GmbH. If, after comprehensive examination, no individual can be identified as the actual beneficial owner, or if there are doubts, the legal representatives are generally deemed to be notional beneficial owners.

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Preparing an international GmbH formation

Notary Franke can clarify with you which proof is required for the notarisation and how the company law arrangement chosen by the parties can be implemented notarially. The competent register court decides on the registration.