There is a distinction in german law between companies limited by shares (limited liability company, joint stock company, partnership limited by shares) and partnerships (general partnership, limited partnership, dormant partnership).

The most widespread company form in the Federal Republic of Germany is the company with limited liability (GmbH). The shareholders participate in the form of contributions to the basic 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 25,000. In order to set up a GmbH, an agreement between shareholders must be drawn up in notarial form. The company's legal existence starts only when it is entered into the Commercial Register. The company (name) must either be derived from the purpose of the enterprise or be taken from the shareholders name. It must always contain the addendum "with limited liability".

In order to set up a joint stock company, there must be at least five members. The lowest amount of required share capital amounts to € 50,000. Articles of association authenticated by a court or notary are initially required to set up a joint stock company (AG). The AG only turns into a legal entity when it has been entered in the Commercial Register. The name of the AG can generally be taken from the purpose of the enterprise. It must show the words "Aktiengesellschaft (AG)" (joint stock company).
In addition to setting up independend companies, irrespective of their legal form, it is possible to establish non-independend subsidiaries or branch offices.

The subsidiary is defined as a company physically seperated from the parent company. It is to a certain degree independend, usually confirmed by having its own management, accounting system, balance sheet procedure and its own business assets.
Branches have the character of non-independend sales centres. They depend in every respect on the head office, which also is in charge of central administration.
The distinction between a subsidiary and a branch office is important regarding the question of whether or not an entry has to be made in the Commercial Register. This obligation to register only arises in the case of genuine subsidiaries. This distinction is also important in determining whether a place of business exists within the meaning of tax law because this, in turn, creates tax liability.

An investment commitment may also be made by setting up a joint venture. These are extremely common in the European Union. German company law does not lay down any special provisions for the setting up of a joint venture. German and foreign partners are shareholders in the joint venture, as well as other companies. In the case of the companies limited by shares, they are only liable with their contribution. In partnerships, the liability of the limited partners may be restricted, i.e. only one of the partners (general partner) is fully liable. There are neither upper limits to the share capital nor licensing procedures. The incorporation of a new joint venture must only be entered in the Commercial Register by means of a foundation charter authenticated by a notary.

Source: German Embassy, Washington