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German UG can operate as a "Holding"

An UG can also be registered as a "Holding" if no holding structure exists at the time of registration.

The UG (Unternehmergesellschaft - haftungsbeschränkt) is also known as Mini-GmbH. It corresponds in its substantial characteristics to the GmbH, gets along however - similarly to the English Limited - with a substantially smaller share capital. In principle it can be equipped with a capital of only a few euros. 

Nevertheless, the UG can also be the parent company of a holding structure.

In this context, it has now also been clarified in court that the "holding" UG can already be registered as such at the time of its initial registration, even if no holding structure exists at that time, but is merely planned.

When such a "holding" UG was founded, the registration court had initially refused to register it. The court was of the opinion that the term "holding" was a protected element of a company's name, the requirements of which the UG would not fulfil. Moreover, the registration of a "holding" UG without a holding structure would be misleading for legal practice. This would apply in particular to a UG which, by its nature and size, is generally not suitable to be a parent company of a holding structure.

The OLG Frankfurt rejected these arguments and considered the registration of a "holding" UG to be admissible. In the court's view, there is no particular need for protection of the name component "holding", as there are no legal requirements for the use of this term.

Furthermore, the designation of a UG as "holding" would not per se constitute a deception, as the term "holding" does not require a certain type or size of the company. It merely refers to a typical structure, namely that there is at least one subsidiary or majority shareholding.

Nor can the existence of this structure be a prerequisite for the initial registration of a "holding company", since the structure can necessarily be established only after the company has been set up, without bearing the risk of liability for an understatement of the balance sheet.

As a result, the "Holding" UG can therefore be established as such, even if the holding structure does not yet exist at that time, but is only planned. In order to avoid a later (compulsory) deletion due to misleading information, the planned holding structure must then actually be established within a reasonable period of time.

Source: OLG Frankfurt, decision of 15.04.2019, Ref: 20 W 53/18

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