Paying In Share Capital for UG and GmbH: Process, Proof and Typical Mistakes
After the notary appointment, the account for the company in formation is usually opened next. The question then quickly arises as to which amount must be paid in before the filing with the commercial register and which proof the notary’s office needs. Unclear payments or missing documents can trigger queries and delay the process. It therefore pays to prepare the amount, allocation and proof cleanly from the outset.
Table of contents
At a glance
For a UG and GmbH, paying in the share capital is a central step between the notary appointment and entry in the commercial register. The most important points at a glance:
- UG: the share capital specified in the articles of association must be paid in full as a cash contribution. Contributions in kind are excluded at formation.
- GmbH: the minimum share capital is EUR 25,000. In a cash formation, at least a quarter of the nominal amount of each share and in total at least EUR 12,500 must be paid in before submission. Section 7(2) GmbHG expressly refers to a quarter of the nominal amount of each share.
- Proof: in practice, the notary’s office regularly requires a bank statement or bank confirmation before it submits the filing. The register court can demand further proof if there are serious doubts.
How the payment works in practice
1) Notary appointment: notarisation and formation “in formation”
First, the articles of association or the model protocol are notarised. From this point, the company in the formation stage is run as UG (haftungsbeschränkt) in formation or GmbH in formation. The commercial register filing is prepared by the notary’s office. Depending on the process, the managing directors sign it at the formation appointment or after the payment. Their signatures are publicly certified. The notary’s office submits the filing electronically as soon as the required raising of capital has been confirmed or proven.
2) Opening a business account for the company in formation
For the payment, an account is typically opened in the name of the company in formation. This allows the payment, sender and purpose to be clearly documented.
3) Payment per shareholder: clearly attributable
The amounts to be paid on the individual shares must be clearly attributable to the respective shareholders. The articles of association and the statutory minimum requirements are decisive. To keep the payment traceable, the following has proven useful in practice:
- Allocate payments as separately and clearly as possible to one shareholder and their shares.
- Use an understandable purpose, for example “share capital contribution, share no. …”.
- Avoid payments via untraceable intermediate or third-party accounts, or agree them with the notary’s office in advance.
- Do not make any pre-agreed repayments or returns to shareholders.
4) Securing proof of the share capital and transmitting it to the notary's office
Keep the bank statement or a bank confirmation in an orderly manner and transmit the proof in accordance with the requirements of the notary’s office. In the commercial register filing, the managing directors assure that the required contributions have been made and are finally at their free disposal. The register court can demand further proof if there are serious doubts.
A bank statement or bank confirmation typically serves as proof of the share capital. It should show the following details:
- account holder
- payment amount and booking date
- sender and clear purpose
5) Commercial register filing and registration
With the filing, it is assured, among other things, that the required contributions have been made and that their subject matter is finally at the free disposal of the managing directors.
Only upon registration does the UG or GmbH come into existence as a legal entity.
How much must be paid in, and when?
UG (haftungsbeschränkt)
The share capital of the UG specified in the articles must be paid in full as a cash contribution before the filing. For a single-member UG, the share capital can in principle be EUR 1. With several shareholders, each must take over at least one share with a nominal amount in full euros. The articles of association must name the shares taken over by each shareholder; each share must be denominated in full euros. Contributions in kind are excluded at the formation of a UG (Section 5a GmbHG).
GmbH
The statutory minimum share capital of the GmbH is EUR 25,000. In a pure cash formation, at least a quarter of its nominal amount must be paid in on each share before the filing. In total, at least EUR 12,500 must be paid in. A higher payment on one share does not compensate for a shortfall below the quarter on another share. Unpaid remaining amounts continue to be owed. These requirements follow from Sections 5 and 7 GmbHG.
Cash or non-cash contribution: which form is possible?
Cash contribution: usually by bank transfer in practice
A cash contribution is a contribution in money. In practice, it is usually transferred to an account of the company in formation. Such an account is the usual and easily verifiable practical route, but not a form of payment prescribed by law without exception.
Contributions in kind at the formation of a GmbH
At the formation of a GmbH, contributions in kind are generally possible, whereas at the formation of a UG they are excluded. For a GmbH formation in kind, the following applies:
- The subject of the contribution in kind and the nominal amount of the share taken over for it must be specified in the articles of association.
- The contribution in kind must be fully at the free disposal of the managing directors before the filing.
- The shareholders must prepare a report on the formation in kind. Documents showing that the value of the contribution in kind reaches the nominal amount of the share taken over for it must also be attached to the filing.
These requirements follow in particular from Sections 5, 7 and 8 GmbHG.
Typical mistakes and how to avoid them
Precisely because so much comes together at the same time during formation, the same mistakes creep in at this point. Many of these problems can be avoided through clear allocation and complete documentation.
- UG not paid in full. For the UG, full payment is a prerequisite for the filing; contributions in kind are excluded.
- Minimum amount considered only in total. For a GmbH, it is not enough if EUR 12,500 is received in total but less than a quarter of its nominal amount was paid on an individual share.
- Proof incomplete or not attributable. Unclear purposes, collective transfers without traceability or unidentifiable senders can lead to queries from the notary’s office and, later, from the register court.
- Account opening started too late. Banks require different documents and review times depending on the constellation. If a document is still missing or a participant has to be additionally identified, the payment and thus the submission to the commercial register can be postponed.
- Confusing share capital with private funds. After registration, the share capital is not a permanently blocked bank balance. The company’s assets can generally be used for the company’s business expenses. However, repayments or other benefits to shareholders are subject to additional statutory limits. In particular, the assets required to maintain the share capital may generally not be paid out to shareholders.
Anyone who clearly allocates the payments to a shareholder and their shares from the outset and keeps the receipt in an orderly manner makes it easier for the notary’s office to check and prepare the submission.
Costs
No notarial or court fee is charged for the payment itself. Depending on the bank, account management or transaction costs may arise. In a formation in kind, additional costs for valuation and documentation may be added.
More from the series: after formation
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Frequently asked questions about paying in the share capital
The statutory minimum payment must have been made before the notary’s office submits the commercial register filing. For a UG, the specified share capital must be paid in full. For a GmbH, a partial payment may initially suffice under the statutory conditions.
In a pure cash formation, the full EUR 25,000 does not necessarily have to be paid in before submission. At least a quarter of the nominal amount of each share and in total at least EUR 12,500 are required. The outstanding contribution amounts continue to be owed.
In practice, the share capital is usually paid into an account of the company in formation. This allows the payment to be clearly documented. Which documents the bank requires for opening the account depends on the provider and the specific formation.
In principle, the company’s assets may be used for the company’s business expenses. The share capital is not a permanently blocked bank balance. However, private withdrawals or other benefits to shareholders are subject in particular to the capital maintenance rules.
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Paying in the share capital as a prerequisite for registration
Paying in the share capital is not a “paper step” but the basis for your UG or GmbH being properly registered. If you follow the sequence (notary appointment, account for the company in formation, payment, proof, filing), observe the minimum requirements of the respective legal form and document the payments cleanly, this stage can usually be completed quickly and with legal certainty.
For Berlin: better to plan a few days’ buffer for bank and proof processes than to let the entire formation timetable hang on a missing receipt.
