Business letter Archives - ℄ Real Estates

Real estate stock corporation (REIT-AG) – Real estate management & stock exchange listing

Laura — Tue, 09 Mar 2021 07:25:43 +0000

Real estate stock corporation / REIT-AG – You don’t find the idea of a stock corporation bad at all and are now wondering how you can combine your capital company with the real estate industry? A real estate company is a company that serves the financing, development, realization, leasing, or marketing of real estate – starting with a single property up to a real estate portfolio in the three or multi-digit range. The management of real estate property or third-party real estate on behalf of third parties can also be handled by a real estate company. Here you can find all legal forms and here you can go back to the overview AG.

Immobilien AG: activities, stock exchange, conditions & advantages

A real estate stock corporation – or real estate AG for short – is a real estate company that has the legal form of a regular stock corporation (AG) and whose core business is primarily focused on the real estate sector. The company’s assets are thus used primarily – or exclusively – for real estate investments, or they consist of the construction of real estate and the subsequent sale of the same.

The largest German listed companies for residential real estate (as of 31.12.2o19):

Vonovia
German Housing
LEG
DAY
Grand City Properties
Adler Real Estate
GAG

Business Activities Real Estate AG – Construction, Trading, Management & Co.

The range of activities of real estate stock corporations focuses, for example, on project development and the construction of real estate. The management and sale of real estate are also not uncommon focal points of this type of company. All in all, public limited companies can be involved in real estate trading, the brokerage of real estate as well as the holding and management of their own portfolios or offer corresponding services for non-corporate investment portfolios. Real estate stock corporations are a particularly popular choice for leasing.

Possible activities at a glance:

Project development
- Building
Real Estate Trading
- Acquisition
- Distribution
Real estate management
- Hold
- Farm
- Rent
Third-party services
- Brokerage of real estate not owned by the company

Real estate company on the stock exchange – legal requirements & advantages

Real estate stock corporations can choose whether or not they want to be listed on the stock exchange. If you are a shareholder of a real estate stock corporation and decide to list your company on the stock exchange, you are subject to the German Real Estate Investment Trust Act (REIT Act). The REIT Act specifies which general regulations apply to your company and which qualifications your company must have in order to be admitted as a REIT stock corporation, as well as which tax regulations must be taken into account.

Many family businesses wishing to operate in the real estate sector as a public limited company (AG) deliberately decide against such a stock exchange listing, as the shareholders of their company are to be restricted to their own family circle of contacts and no share trading in public is envisaged.

Exchange-traded real estate stock corporation / REIT-AG

The REIT corporation is originally based on a US corporate form, namely the “Real Estate Investment Trust” – REIT for short – which gave the listed real estate corporation its name. Since its beginnings, the trust has experienced a considerable upswing. Little known in 1960, the corporate legal form slowly but steadily conquered the world in the 1990s and gained international renown. With the enactment of the REIT Act in 2007, the legal form of the REIT-AG was also introduced in Germany.

To make it easier to distinguish between them, German REITs are also often referred to as G-REITs, with the “G” standing for “Germany”. Sometimes REITs are also incorrectly translated as real estate funds in this country – however, there are some legal and economic peculiarities compared to the German legal form of the real estate fund.

Legal requirements according to REITG – stock exchange listing, quota & Co

In order for real estate stock corporations to be recognized as REIT corporations and to enjoy the corresponding advantages and benefits, they must meet a number of requirements defined in the German Real Estate Stock Corporations with Listed Shares Act (REITG). One of these rules requires that the real estate stock corporation be mandatorily listed on the stock exchange. Other restrictions relate to the company’s permitted free float – i.e. all company shares distributed among several, smaller investors – as well as the participation by shareholders together with per capita distribution of the shares. Other conditions regulate the equity capital, the fixed assets and also the turnover generated by the management of real estate.

Legal requirements for a REIT-AG:

Headquarters & Management within Germany
Listing on the market obligatory
Free float at the time of listing: at least 25%.
Free float after listing: at least 15%.
Equity ratio: at least 45
Real estate investments (immovable assets): at least 75%.
Income from real estate: at least 75
REIT participation per shareholder: max. 10%.
Distribution ratio (net profit): at least 90%.

Small tip: For real estate stock corporations shortly before listing, a time window of two years is granted in order to fulfil all necessary requirements. Until all requirements under the REITG have been fulfilled, such a company is considered a pre-REIT.

Advantages for REIT stock corporations – tax exemption, competitive advantage & Co.

Real estate stock corporations with a stock exchange listing are particularly popular for financiers and large investors, as they are exempt from both corporation tax and trade tax, provided they meet the legal requirements in accordance with the REITG. As real estate is a particularly safe investment opportunity, it offers the chance to cushion inflationary fluctuations and risks. Furthermore, the purchase and sale of shares is simple thanks to market access, and transfers of ownership can be carried out quickly and flexibly.

Access to the capital market enables a real estate stock corporation to skilfully generate equity capital, which can then finance the investment in real estate. As a result, real estate stock corporations have a clear advantage in terms of the speed of growth of their equity, which means greater competitiveness in the market as a whole. Other legal forms of companies, on the other hand, are dependent on retaining their profits – that is, leaving the profits in the company instead of distributing them and accumulating them there – in order to increase their company’s equity capital or have no legal claim to a distribution of profits. The legal form also offers a considerable degree of security, as the equity capital accounts for just under half of the stock corporation’s total capital.

Advantages for listed real estate companies:

No corporate income tax
No trade tax
Secure investment through tangible assets (real estate)
Chance to offset inflation
Quick & easy purchase/sale of shares
Flexible share transfer
Simple equity procurement
Competitive advantage due to high growth rate
High security due to equity ratio

Advantages for investors – Stable cash flow, growth & 90 % dividend

Another plus: the REIT corporation also offers a lucrative business for investors. Public limited companies are generally established for the long term, which means that the company can offer investors the prospect of a stable cash flow and long-term growth without exposing them to increased risk. The dividend payout is also very attractive for shareholders, with a statutory minimum requirement of 90 percent of the net profit for the year under commercial law.

Advantages for real estate AG investors:

Stable cash flow
Long-term corporate growth
Low risk
Attractive dividend payout

However, the application of the half-income method is not possible for shareholders with regard to the distribution of profits. Their profits must be fully taxed.

Real estate stock corporation / REIT-AG – For whom is it worthwhile?

Are you thinking about founding a real estate company or investing in an existing real estate company? For construction companies and development companies, this is often a lucrative venture, but also as a financier or shareholder of a real estate holding company, the formation of a real estate corporation can be quite worthwhile. Furthermore, the economic occurrence of real estate stock corporations extends to housing associations, property management companies and large brokerage firms.

Ownership of the real estate portfolio may be held either by the real estate company itself as a direct investment or by another real estate company whose shares are acquired by the real estate company by means of a participation. A mixture of direct investments and third-party investments is often used to acquire, hold or sell real estate. Due to the wide range of residential and commercial properties, the stock exchange listing is an attractive model for real estate companies.

AG: foundation, legal form, real estate shares (list)

Stock corporation (AG)
Real estate shares: List of companies
Real estate company
Alternatives to the REIT: Legal forms in Germany

Stock corporation (AG): Formation, liability, legal form & Co.

Aktiengesellschaft (AG) – The stock corporation is a German legal form founded by at least one person and organized by different bodies. Instead of a managing director, the company is managed by a board of directors consisting of at least one person. As the name already indicates, this legal form of a company primarily stands for stock trading. You would like to start a company alone or together with other people and learn more about company law forms in advance? Then you’ve come to the right place!

Stock corporation (AG)

Real estate shares: List of companies

Real Estate Shares – Not everyone can afford real estate as a capital investment. Through real estate shares, however, everyone can participate in the real estate market and invest money. The share prices of the big players are rising year after year. Vonovia, Deutsche Wohnen, Dream Global, CBRE and Patrizia are a few of the best known active companies in Germany. In addition, there are more than 25 other companies. We have an overview of the most popular real estate stocks for you as an investor. But first a look at the risks of a stock, the stock market, for beginners and beginners. Now to the list and more on the real estate market, your investment options and all prices at a glance, here in the article on real estate stocks.

Real Estate Stocks

Real Estate GmbH & Asset Management GmbH

Alternative – In this article you will learn the basics about real estate companies. Briefly explained, a real estate company is a company that has the purpose of leasing, developing, financing, realizing and/or marketing. It doesn’t matter if it is one or more properties. The management of residential and commercial real estate – in its own interest or as a service offered to third parties – is also a popular focus for real estate companies and asset management GmbHs. Find out more about the main advantages and disadvantages of buying real estate and the expected costs.

Real estate company

Alternatives to the REIT: Legal forms in Germany

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

Legal forms: List

Company types in detail:

Der Beitrag Real estate stock corporation (REIT-AG) – Real estate management & stock exchange listing erschien zuerst auf ℄ Real Estates.

Stock corporation (AG) – formation, liability, legal form, management, taxes

Laura — Tue, 09 Mar 2021 07:21:24 +0000

Aktiengesellschaft (AG) – The stock corporation is a German legal form founded by at least one person and organized by different bodies. Instead of a managing director, the company is managed by a board of directors consisting of at least one person. As the name already indicates, this corporate legal form primarily stands for stock trading. Learn everything important about it here! In addition, you will find all German company types and legal forms, as well as tips for founding a company, including the special case of real estate GmbH, family foundation & Co.

Joint stock company: formation, advantages and disadvantages

In the following, you will find out everything you need to know about setting up an AG. How do you become a shareholder of an AG? What are incomplete and complete companies? What are the advantages? What are the disadvantages? How do I set up a company? What is a company? Many questions – many answers! Plus everything you need to know about taxes and real estate trading.

If you’re considering forming a corporation, the first thing you need to know about is the formation process: Who can incorporate, when, at how many, what exactly… what are the differences and similarities between the various forms of corporate law? It is equally important to know the advantages and disadvantages of an AG: From profit distribution to saving taxes – an overview of the seven most important founding criteria for you.

What are the founding criteria?

Number of shareholders
Management
Foundation
Company name
Funding
Liability
Profit distribution

Corporation AG: Management according to HGB

In the entrepreneurial world, there are many different forms of business you can choose from. They are roughly divided into two categories, namely sole proprietorship and companies, which in turn are divided into incomplete companies – these include dormant companies and BGB companies – and complete companies – partnerships, corporations and some more.

The stock corporation – AG for short – is one of the so-called complete companies and, in contrast to incomplete companies, is not subject to the German Civil Code (BGB) but to the German Commercial Code (HGB). As a corporation, the AG has a more complex structure than other forms of corporate law, since – like a limited liability company (GmbH) – it cannot simply be founded informally, but rather certain formal requirements must be met in advance for the company to be founded. This essentially includes the notarial certification of the shareholders’ agreement.

Other typical corporations:

European Company (Societas Europaea, abbreviated to SE)
Partnership limited by shares (KGaA)
Entrepreneurial company / UG (limited liability)
Limited liability company (GmbH)

Together with the GmbH, the stock corporation is the best-known form of corporation. In Germany, it is primarily chosen as the legal form for listed companies and is considered the “big sister” of the limited liability company – not least because of the higher founding capital.

Legal form variant AG & Co KGaA – KGaA with general partner AG

Sometimes the AG also appears in combination with a partnership limited by shares (KGaA). Family businesses, for example, occasionally organise themselves as Aktiengesellschaft & Compagnie Kommanditgesellschaft auf Aktien – in short: AG & Co KGaA. In this case, they form a stock corporation in the legal sense – however, the general partner as a personally liable partner is not just any natural person, but specifically also a stock corporation. If the general partner is instead embodied by a GmbH, it is referred to as a GmbH & Co KGaA, and in the case of a Societas Europaea, as an SE & Co KGaA.

More about the individual hybrid forms:

GmbH & Co KGaA – see limited liability company (GmbH)
SE & Co KGaA – see Societas Europaea (SE)

Companies operating under the legal form variant of AG & Co KGaA have only existed since the end of the 1990s, following the unambiguous declaration of open legal issues by a court ruling of the Federal Court of Justice (BGF). The holding company of the well-known Hornbach Baumarkt AG, Hornbach Immobilien AG and Hornbach Baustoff Union GmbH has opted for the formation of an AG & Co KGaA, as have many other companies from a wide range of sectors: Ticketing & Live Entertainment, Medical and Security Technology, Adhesives, Cleaning Agents and Beauty Care, to name but a few.

Examples of AG & Co KGaA companies:

CTS EVENTIM AG & Co. KGaA
Drägerwerk AG & Co. KGaA
Fresenius Medical Care AG & Co. KGaA
Henkel AG & Co. KGaA
HORNBACH HOLDING AG & Co. KGaA
ProCredit Holding AG & Co. KGaA

CEWE Stiftung & Co. KGaA is a special case: In this company, the general partner is embodied by a foundation. In principle, the partnership limited by shares is possible in all conceivable combinations, as GUB Investment Trust KGaA points out as an example.

Continue reading here on the topic of setting up a family foundation:

Establish a family foundation

Establishment & Formation of an AG – From Articles of Association to Registration

You want to found an AG and live your dream of independence in reality? No problem! Because for the foundation of a GmbH a natural – or legal – person is completely sufficient. If you want, you can be the sole founder of the company – called a shareholder – and thus automatically be the sole managing member of the board of directors. Such a one-person AG is often called a “small public limited company”. However, it is not possible to go it alone: a “small AG” must appoint at least three supervisory board members, which means that the smallest possible public limited company consists of four people.

The process of founding an AG can be divided into two phases, namely the internal formation of the AG and the external formation of the AG. While the first phase is basically a kind of preparatory phase or pre-foundation – in other words, it forms the basic framework for your public limited company – in the second phase you present your company to the public.

Phase 1 – Preparation & Basic Framework

You set up your public limited company internally. One of the most important steps is to draw up articles of association for your AG – also known as a shareholders’ agreement – which must later be certified by a notary public. For the formulation of the articles of association, all founding members must be fully present and the future executive board and the future supervisory board must also be present. At this first meeting it is decided how announcements are to be made in the company and how many board members are to be appointed.

Together you also decide on the company name – i.e. the name of your company as it is to be entered in the commercial register -, the registered office, the amount of share capital – 50,000 euros or more – as well as the nominal value and the number of shares, including details of the respective share type. From bearer shares to par value shares – find out more about the individual types of shares here:

Types of shares – transferability, legal scope & share capital breakdown

The second step is the acquisition of the shares and the appointment of the bodies of a joint stock company, which must be notarized. The deposit of the securities itself can also take place after the notary appointment. Optionally, the auditor for the annual financial statements can already be appointed here. The supervisory board then appoints the management board of the public limited company as its first official act. At this point at the latest, the contributions must also be paid into the business account until at least a quarter of the share capital has been recorded.

Phase 2 – Entry in the Commercial Register

To complete the formation process for your public limited company, your company must be entered in the commercial register. This step equips the public limited company with its own legal personality and signals to the public that a new public limited company exists on the market. The founding members together with the supervisory board and executive board carry out the application for registration in the commercial register together. An overview of all supervisory and executive board members, various deeds and notarial certifications are required, the contribution of the shares must be documented and a price for the subsequent share issue must be defined.

After all documents and records have been submitted, the registration court assesses whether the formation of the public limited company has been carried out properly. In a final step, the entry is made in the commercial register and your public limited company is officially deemed to be established.

The foundation process at a glance

Here is an overview of all the steps up to the official, externally effective formation of your corporation:

Phase 1 – Establishment in the internal relationship
- Adoption of the Articles of Association (certified by a notary)
- Share acquisition
- Appointment of the AG bodies (notarized)
- Appointment of the auditor, if applicable
- Payment of deposits (min. 1/4 share capital)
Phase 2 – External incorporation
- Application for registration
- Submission of documents & records
- Assessment by the registry court
- Entry in the register of companies

Entry in the Commercial Register: The most important applications for AG founders

The internal relationship determines the beginning of the company as the date contractually agreed between the shareholders. In the external relationship, however, the formation of the AG is dated on the first action on behalf of the company, i.e. at the latest with the binding entry in the commercial register. Registration costs you on average around 200 to 300 euros and is usually carried out by a notary.

As you are registered in the commercial register as a shareholder of an AG, you can officially trade under a company name – just like a shareholder of a GmbH. This means that your company has a company name, i.e. an official name, which you can freely design together with the other shareholders. It doesn’t matter whether it’s a personal company, a real company, a fancy company or a mixed company… As long as the name is in line with the prohibition of misleading people and bears the suffix “AG”, almost anything is allowed.

Tax ID, Trade Licensing Office, Articles of Association & Notary Public

You will first receive a tax identification number – tax ID for short – from your local tax office, which serves as a basic prerequisite for all other formalities and applications. The registration of your AG as a company or commercial enterprise is carried out by the Trade Licensing Office for a processing fee of approximately 10 to 65 euros.

According to the law, there is no obligation to make additional contributions for stock corporations, in contrast to cooperatives with and without limited liability, just as there is for general partnerships (Offene Handelsgesellschaften, OHG) or limited partnerships (Kommanditgesellschaften, KG). In the case of shares with restricted transferability, however, it is possible to stipulate in the articles of association that the shareholders are to make recurring payments – excluding cash payments. The precise ancillary obligations of shareholders are explained in the German Stock Corporation Act (AktG).

Excerpt from the law – § 55 AktG:

(1) If the transfer of shares is subject to the consent of the company, the articles of association may impose on shareholders the obligation to make recurring non-cash contributions in addition to the contributions to the share capital. In doing so, they must determine whether the payments are to be made against payment or free of charge. The obligation and the scope of the benefits shall be stated in the shares and interim certificates.
(2. The statutes may lay down contractual penalties in the event of failure to fulfil the obligation or failure to fulfil it properly.

Excerpt from the law – § 180 AktG:

(1) A resolution imposing ancillary obligations on shareholders shall require the consent of all shareholders concerned in order to be effective.

(2) The same shall apply to a resolution by which the transfer of registered shares or interim certificates is made subject to the consent of the Company.

Equity capital: 50,000 Euro Share capital & reserves

The share capital of a joint-stock company is called capital stock, because it forms the basis for the equity capital of the joint-stock company. The share capital is defined as the sum of all contributions and is given the term “subscribed capital” in the balance sheet. A prerequisite for registration in the commercial register is the payment of the required share capital of at least 50,000 euros into the business account. This means that twice as much share capital is required for the formation of a public limited company as for the formation of a private limited company, where 25,000 euros is sufficient as share capital. A return of the share capital to the shareholders is not permitted.

Excerpt from the law – § 57 AktG:

(1) Shareholders may not be repaid their contributions. The payment of the purchase price in the case of a permissible acquisition of treasury shares shall not be deemed to be a return. Sentence 1 shall not apply in the case of payments which are made in the event of the existence of a control or profit and loss transfer agreement (§ 291) or which are covered by a fully-fledged claim for consideration or restitution against the shareholder. Sentence 1 also does not apply to the return of a shareholder loan and payments on receivables from legal acts that correspond economically to a shareholder loan.
(2) Interest may neither be promised nor paid to shareholders.
(3) Prior to the dissolution of the Company, only the distributable profit may be distributed among the shareholders.

The second pillar of equity is the capital reserves. This includes all amounts that are added to equity, for example by means of a premium – alternative designation: issue premium or premium – i.e. the amount by which securities are priced above their nominal value. If shares are issued, the premium must be allocated to the capital reserves and thus contributes to the equity capital shown in the balance sheet. In addition, there are the revenue reserves, which are made up of the statutory reserves, the reserves under the articles of association and other reserves.

Caution: Reserves and provisions are not the same thing: Reserves are amounts of money that are saved for security or emergencies. Reserves, on the other hand, represent future liabilities and therefore do not count as equity under any circumstances!

Dividend & Reserve Accumulation

The distribution of profits takes place differently in the joint-stock company Kraft legal form than in other forms of corporate law. As a share trading business, the shares are understood as profit shares, whereby one share corresponds exactly to one profit share. The shareholders of an AG therefore also do not receive a profit distribution, as is the case with the general partnership (OHG), the limited partnership (KG) and optionally also the limited liability company (GmbH), they rather receive so-called dividends. The distribution of dividends is decided by the general meeting.

In addition, the German Stock Corporation Act (AktG) requires stock corporations to form legal reserves until ten percent of the share capital is reached. For this purpose, five percent of the net income for the year is added to the statutory reserves each year – after adjustment of the net income for any losses carried forward from previous years. The same applies to the capital reserve, where contributions must also be made until the ten percent mark is reached.

Other revenue reserves are possible within the framework of the adoption of the annual financial statements by the Management Board and Supervisory Board. The allocation may amount to a maximum of half of the net income for the year; higher amounts are only permitted if the Articles of Association allow this. Further contributions may be made to the reserve if a corresponding resolution has been passed at the Annual General Meeting.

AG Organs: Management Board, Supervisory Board & Annual General Meeting

A joint stock company consists of several organs. These bodies are divided into:

The Management Board deals with the day-to-day business and other matters of the company and represents the stock corporation externally. The Supervisory Board is a legally prescribed self-monitoring body that appoints and monitors the individual members of the Management Board and, in case of doubt, also removes them. Furthermore, it is responsible for the written reporting of the annual financial statements as well as for annual reports. The Annual General Meeting acts as the decision-making body of the stock corporation.

Liability of an AG – internal relationship & external relationship

In the event of a loss, the stock corporation as a legal entity under private law is, to a certain extent, subject to a limitation of liability, because the liability burdens – with a few rare exceptions – exclusively the business assets of the company. In the external relationship, therefore, only the share capital is liable for any losses. In the internal relationship, however, the liability claim can vary depending on the governing body of the AG.

Liability in the external relationship with the AG: through share capital
Liability in the internal relationship with the AG: by the executive bodies

If you want to know in detail how a limitation of liability for shareholders, management board and supervisory board affects the internal relationship, read more here:

Limitation of liability for AG bodies

Advantages: Limitation of liability, financial independence & Co

After presenting the typical features of a public limited company, you have certainly already recognised the advantages that this legal form offers you: The high initial capital also makes the AG a reputable legal form, which can be an advantage especially in matters of company financing. Financial institutions are therefore often willing to issue good loans and business partners and customers gain more security due to the good credit rating.

At the same time, the financial risk remains relatively low, as the liability claims are limited to the share capital and the AG shareholders cannot be held liable externally with their private assets. Plus: As a listed legal form, stock corporations are financially independent through the IPO.

Respected legal form
High credit rating
More security for banks, business partners & customers
Low financial risk due to limitation of liability
Financial independence through IPO

Disadvantages: Share capital, formal incorporation & GewSt

The disadvantages that the formation of an AG can bring with it are also quickly located: On the one hand, the high share capital of at least 50,000 euros is an obvious problem for many start-ups. Also the social adhesion measures itself accordingly on at least 50,000 euro. The foundation may not take place informally, but is subject to extensive formalities and specifications. Banks can easily leverage the exemption from liability if, despite high creditworthiness, they aim for a directly enforceable guarantee from the shareholders. Last but not least, the AG is subject to trade tax and, depending on the purpose of the company and how it is handled, has to pay further taxes.

High share capital required
Liability based on share capital
No informal incorporation
Banks may require directly enforceable guarantees
High trade tax levies

Evaluation: Low-risk legal form for large companies

After comparing the advantages and disadvantages, it becomes clear that the formation process is significantly more complex and extensive than is the case, for example, with a civil law partnership (GbR) or even a limited liability company (GmbH). In addition to the formal formation, the appointment of the individual bodies of an AG is also obligatory and the formation process as a whole is very time-consuming. It is rather difficult for small to medium-sized companies to raise the necessary share capital. For larger companies, however, the legal form of an AG may be a good option for expanding and gaining an international foothold.

A public limited company makes particular sense if business projects are planned that are exposed to a high level of risk, as the shareholders can protect themselves well through limitations of liability in the external relationship and optionally also in the internal relationship and their private assets remain unaffected. Fast-growing companies can also benefit from the formation of an AG.

Immobilien AG: Holding, trading, managing, letting

You don’t think the idea of an AG is bad at all and are now asking yourself how you can combine your capital company with the real estate business? A real estate company is a company that serves the financing, development, realization, leasing or marketing of real estate – starting with a single property up to a real estate portfolio in the three- or multi-digit range. The management of real estate property or third-party real estate on behalf of third parties can also be handled by a real estate company.

Real Estate AG / REIT-AG

Taxes for AG shareholders: corporate income tax, trade tax, VAT, capital tax & income tax

As a shareholder of a public limited company, you need to know about some types of tax, because when you set up your company, you receive income from your business and must of course also pay tax on this. In accordance with tax law, sales tax must therefore naturally be paid, insofar as the AG does not only carry out tax-free sales. Profit distributions to the shareholders of an AG are also subject to capital gains tax – for natural persons in the company, income tax is of course also due.

The following applies to all corporations: They are subject to corporate income tax. The payment of trade tax is also obligatory for an AG, even if all founding members were freelancers, because by virtue of its legal form it is always regarded as a commercial enterprise.

Here’s the entire list:

Taxes in Germany

Attention: As already mentioned, the obligation to pay corporation tax and trade tax does not apply to REIT real estate companies as soon as the real estate company fulfils the legal requirements!

You can find out what taxes you can expect with a real estate corporation here:

Save taxes on real estate

Conclusion: Public limited company – For whom is it worthwhile?

The formation of a public limited company requires a large amount of capital and an equally large amount of administrative work. For this reason, an AG is more worthwhile for large companies which, on the one hand, have the corresponding financial resources and, on the other hand, are already characterised by a certain routine in business processes and legal issues. Start-ups with monetary reserves and real estate investors are given an attractive opportunity by an AG to realise their dreams and entrepreneurial goals.

In the real estate industry, stock corporations are a stable legal form for the purpose of real estate preservation, real estate management as well as trading with and brokering real estate portfolios. If you are already trading within the meaning of the REITG, you can expect significant tax benefits. Real estate stock corporations are worthwhile for a variety of people of different professions: From builders to financiers to real estate fund shareholders, the real estate corporation can contribute significantly to stable cash flow and capital growth.

Tip: Apart from the stock exchange, a public limited company without a stock exchange listing is particularly suitable for families to jointly manage existing real estate portfolios.

Comparison: Sole proprietorship, one-man GmbH, small AG or entrepreneurial company?

If you plan to set up your business on your own, you can choose between different legal forms of business: On the one hand, there is the classic sole proprietorship, in which you act as a freelancer or registered trader, or set up a small business. Alternatively, you can choose between the one-man limited liability company and the entrepreneurial company – often referred to as a “mini-GmbH” – or set up a small public limited company.

You can find out more about the different legal forms for solo founders here:

Sole proprietorship (EU)
One-man limited liability company – see GmbH
Entrepreneurial company / UG (limited liability)

Sole proprietorship & one-person GmbH

Basically, there is not much difference between the two legal forms of a sole proprietorship and a single-member company, because in both cases you are the sole shareholder with sole power of management and sole power of representation. However, the decisive difference arises in the form of the liability issue: As a registered businessman (e. Kfm.) or registered businesswoman (e. Kff.) you are liable without limitation, directly and jointly and severally – as the sole shareholder of a one-person GmbH, on the other hand, you are liable exclusively for the business up to the amount of the capital contribution you have made.

Are you a sole proprietor yourself and no longer want to bear the enormous liability risk? Then you should think about converting your sole proprietorship into a one-person limited liability company. The change of form is easily accomplished, but can make a huge difference in case of losses! In order to avoid personal liability, as part of the registered traders (e. K.) you only need a notarial certificate confirming a value of at least 25,000 euros for your business and submit this to the commercial register together with the opening balance sheet. The sole proprietorship is practically brought into the GmbH as a contribution in kind.

Entrepreneurial company & small public limited company

Alternatively, you can consider setting up an entrepreneurial company (UG). Often referred to as a “small GmbH” or “mini-GmbH”, this legal form of company is a sub-form of the conventional limited liability company, but unlike the “normal” GmbH, it only requires a single euro as share capital. It is therefore particularly attractive for solo founders who do not have 25,500 euros in their bank account. Without the share capital of a GmbH, however, your image with the banks could be lower and your chances of getting a good loan could decrease.

The so-called “small AG” is primarily intended for individual shareholders who wish to keep their public limited company within a small group of people. Apart from the individual shareholder, who also equally assumes the role of the management board, only three other persons are required to be appointed as supervisory board members. However, the formation of a public limited company, regardless of its size, is very time-consuming and more cost-intensive than the other common forms of corporate law. Therefore, a one-person limited liability company or an entrepreneurial company may be more suitable if you intend to found your company on your own. Alternatively, you might also consider setting up a sole proprietorship.

AG: Special case real estate and more

Real estate stock corporation (REIT-AG)
Real estate shares: List of companies
Legal forms: List

Company types in detail:

Der Beitrag Stock corporation (AG) – formation, liability, legal form, management, taxes erschien zuerst auf ℄ Real Estates.

Types of shares – transferability, legal scope & share capital breakdown

Laura — Mon, 08 Mar 2021 11:56:38 +0000

Types of Stocks – A corporation, as the name suggests, deals with stock trading. I’m sure you’ve heard that stocks can go up and down. You may also know someone who has invested their wealth in stocks. But what exactly is a share? In a nutshell, a share is a document that determines your entitlement to the share capital of a public limited company and guarantees you a fixed share of the profits. In this context, there is often talk of “certifying a claim”. Here you can find all legal forms and here you can go back to the overview AG.

Types of shares: transfer, rights & capital split

There are many different types of shares, which in turn belong to different categories. For example, a distinction is made between types of shares according to the degree of transferability, or according to the scope of rights, or even according to the method of dividing the share capital. In some cases, the term “order paper” is also used. This simply refers to securities that are registered in a specific name and can change hands by agreement, transfer or endorsement. Incidentally, endorsement refers to the endorsement on such a security, which enables the rights to be transferred in part or in full. The word “order” thus derives from “order”, since the transfer of the share is ordered.

Generally speaking, the value of a share – or a bond or an investment certificate – can be expressed in two terms: On the one hand, there is the nominal value – also known as the face value – which is the numerical value expressed economically in money, as found on banknotes, coins or securities. On the other hand, there is the stock exchange price, the price of securities determined on the stock exchange – in other words, the current market value.

Types of shares by degree of transferability

When distinguishing types of shares according to the degree of transferability, bearer shares and registered shares as well as registered shares with restricted transferability are combined.

Bearer shares (inh.)
Registered shares (NA)
Registered shares with restricted transferability (vink. NA)

Bearer share – transfer by agreement & surrender

Bearer shares – in short: Inh. – are usually made out to the bearer according to their designation and form the standard type among the share types according to the degree of transferability. They can be transferred to a new owner by agreement and transfer, which enormously simplifies the tradability of this type of share. The only restriction is that the shares may only be issued if they are fully paid up.

Registered shares – minimum deposit 25% par value & premium

Registered shares – abbreviated to: NA – are “born” order securities in terms of form. By law, negotiable instruments are regarded as securities. In addition to registered shares, these include cheques and bills of exchange. Registered shares are made out to the shareholder who is listed in the share register. This authorizes him to participate in the Annual General Meeting and to exercise his voting rights. Furthermore, he is the only one entitled to dividend payments for these shares. The minimum payment amount corresponds to 25 percent of the nominal value and the premium. The transfer of ownership of registered shares is effected by endorsement, handover plus transcription in the company’s share register, which places a corresponding burden on tradability.

Registered shares with restricted transferability – transfer with the consent of the company

Registered shares with restricted transferability are abbreviated as vink. NA and represent a special form of conventional registered shares. In terms of features, there are no differences, but a registered share with restricted transferability is only transferable if the company confirms its approval. This is particularly advantageous in order to be able to precisely control the ownership of the shares and to be able to detect early on the intentions of other companies to take over these shares. However, if many small investors are represented by major shareholders – banks, for example – registered shares with restricted transferability can also be transferred easily. If a shareholder leaves the AG, he can even transfer his claims to shareholders unknown to him by means of blank assignment and the signing of a special deed.

Types of shares according to legal scope

In accordance with the distinction between types of shares based on the scope of rights, a distinction is made between ordinary shares and preference shares.

Ordinary shares (SA)
Preference shares (VA)

Ordinary shares – original form of the share with fourfold legal entitlement

Ordinary shares – abbreviation: SA) – are the standard type among the types of shares in terms of legal scope and probably represent the most original form of all shares. Ordinary shares contain four main rights: First of all, there is the right to a dividend payment, i.e. there is a legal entitlement to a certain share of the balance sheet profit. Furthermore, ordinary shares allow participation in the general meetings of the stock corporation, including the exercise of one’s own voting rights. A third aspect concerns the right to a share in the liquidation proceeds, according to which a portion of the money from the liquefaction is due to the holder of an ordinary share by operation of law. Last but not least, an ordinary share also entitles the holder to challenge resolutions adopted at the general meeting.

Preference shares – privileges in profit distribution & company assets

Preferred shares – VA for short – are called preferred shares because their features include certain privileges compared with ordinary shares. These are usually either preferential rights in the distribution of profits or special rights with regard to the company’s assets. Preferred shares with multiple voting rights – so-called multiple voting shares – are not permitted in Germany under the German Stock Corporation Act (AktG).

Preferred shares without voting rights – also called non-voting preferred shares – are considered a special form of preferred stock. They are often used to finance equity when a capital increase is not possible due to poor share prices. In compensation for the loss of voting rights, the share holder is offered, for example, a higher dividend or a right of succession, and at the same time the equity capital requirement can be satisfied.

Excerpt from the law – § 12 AktG:

(1) Each share shall confer the right to vote. Preference shares may be issued as non-voting shares in accordance with the provisions of this Act.

(2) Multiple voting rights are not permitted.

Types of shares according to the method of dividing the share capital

If the method of dividing the share capital is considered, a distinction is made between par value shares and no-par value shares. The form and any applicable minimum amounts of the shares are specified in the German Stock Corporation Act (AktG).

Par value shares
Quota shares
No-par-value shares

Excerpt from the law – § 8 AktG:

(1) The shares may be created either as par value shares or as no-par value shares.
(2) Nominal value shares must be denominated in at least one euro. Shares with a lower nominal value shall be null and void. The issuers shall be jointly and severally liable to the holders for any loss arising from the issue. Higher nominal share amounts must be denominated in full euros.
(3) No-par-value shares do not have a nominal value. The no-par value shares of a company participate in the share capital to the same extent. The proportionate amount of the share capital attributable to each share may not be less than one euro. Paragraph 2 sentences 2 and 3 shall apply accordingly.
(4) The proportion of the share capital shall be determined, in the case of par value shares, by the ratio of their par value to the share capital and, in the case of no-par value shares, by the number of shares.
(5) The shares are indivisible.
(6) These provisions shall also apply to share certificates issued to shareholders prior to the issue of the shares (interim certificates).

Par value shares – Money shares from 1 Euro & par

Par value shares – sometimes also called nominal value shares or aggregate shares – are, as the name suggests, denominated in a fixed nominal amount or par value, which is expressed in monetary terms. They may not be issued below par, which means that the nominal value may not be less than the market value. If this is the case, the difference is called a discount. If the par value of a share is above par – i.e. if the par value is greater than the market price – the difference is known as a premium. Par value shares are set at a minimum value of one euro. The sum of the par values results in the share capital of a company.

Above par: nominal value > market price (difference in premium)
Par: Nominal value = stock market price
Below par: nominal value < market price (difference = discount)

No-par-value shares – Quota shares & no-par-value shares

No-par-value shares are a collective term for shares that have no stated par value. A distinction is made between quota shares – as “genuine no-par-value shares” – and no-par-value shares – as “non-genuine no-par-value shares”. Sometimes both types of shares are also referred to as genuine and non-genuine quota shares respectively.

Quota share: genuine no-par-value (quota) share
No-par-value share: non-genuine no-par-value (quota) share

Quota shares – shares in the share capital

Genuine no-par-value shares are quota shares whose share in the share capital of an AG is stated in a document, e.g. 1/1,000 or 1/50,000. They therefore represent a fraction of the company’s assets corresponding to the share right and are not, as the name “quota” might suggest, based on a certain minimum amount of the company’s share capital. Accordingly, no nominal value can be calculated for these shares. If the percentage of the share is indicated on the certificate, the quota share is referred to as “speaking”. A “silent” quota share, on the other hand, lacks this notation.

Caution: Although true no-par value quota shares are common in the USA, Canada, Belgium and Italy, among other countries, they are generally not permitted in Germany, as these shares are marketable and can therefore represent an extreme balance sheet concealment.

No-par-value shares – most common type of share since the introduction of the euro

No-par-value shares – abbreviated with o. N. for “without par value” – are considered “non-genuine”, as they are neither denominated in a certain par value nor in a certain quota. They are expressed in terms of quantity as the result of dividing the share capital by the number of shares, whereby their nominal value is calculated fictitiously. Thus, in contrast to quota shares, no-par shares embody a share in the capital stock of an AG and may not fall below a specified minimum amount of one euro per share. They are the most common type of share in Germany and were originally introduced to make the conversion of shares to the euro easier for stock corporations.

AG: foundation, legal form, real estate shares

Real estate shares: List of companies
Stock corporation (AG)
Real estate stock corporation (REIT-AG)
Real estate company

Real estate shares: List of companies

Real Estate Stocks

Stock corporation (AG): Formation, liability, legal form & Co.

Stock corporation (AG)

Real estate stock corporation (REIT-AG)

Real estate stock corporation (REIT-AG)

Real Estate GmbH & Asset Management GmbH

Real estate company

Der Beitrag Types of shares – transferability, legal scope & share capital breakdown erschien zuerst auf ℄ Real Estates.