Political, Legal, and Regulatory Environments

All about those politics!

It quickly became a successful model and a prime export: After the Second World War, the Basic Law provided freedom and stability – albeit initially only for the Germans in the West of the nation that remained divided until 1990. The basic cornerstones of Germany democracy includes: the primacy of the basic rights, the definition of the principles of a democratic and social federal state, and the foundation of a supreme court that watches over adherence to the constitution.


Legal
The state, the legal system and the citizens

The political system of the Federal Republic of Germany represents the second democratic system in German history. At the Parliamentary Council when designing the new constitution, the Basic Law, the founders of the Federal Republic took into account the lessons that had been learned from the failure of the first democracy, namely the Weimar Republic, and the Nazi dictatorship. The Federal Republic of Germany was born from the ashes of World War II. And in 1949 democracy was initially established only in the Western section of a Germany that had been divided into two states. Yet the Basic Law, although originally intended as a temporary solution, stated that its goal was reunification “in free self-determination”.

The second German democracy turned out to be a success. There were several reasons for this, among which were the value placed on a way of life based on the principle of liberty following the dictatorship and a striving for acceptance by the country’s democratic neighbors. But the Basic Law also had its role to play in the success. In 1990, when 40 years of German division came to an end, the Basic Law was adopted as the constitution of a united Germany.

Regulatory Environment

German law distinguishes between companies limited by shares and partnerships (general partnership, limited partnership, dormant partnership).

The most common type of business organizations in Germany is the company with limited liability (Gesellschaft mit beschränkter Haftung = GmbH) governed by the Act concerning Companies with Limited Liability (Gesetz betreffend die Gesellschaften mit beschränkter Haftung - GmbHG) The shareholders participate by means of capital contributions into the share capital, broken down into initial individual payments on the total investment, but without being personally responsible for the company debts. Just one person is sufficient to set up a GmbH. The share capital must be at least EURO 25,000. In order to set up a GmbH, an agreement between the shareholders must be prepared and notarized by a notary public. The company's existence becomes legally effective upon its registration into the commercial register. The company name of the GmbH must always contain the addendum "with limited liability" or the pertinent abbreviation mbH.