Again and again one hears of errors that founders are set up by Google research and the like. One of these major misconceptions is that the share capital cannot be used in the formation of a limited liability company and would therefore lie uselessly in the account.

Since I heard today from a client that this was said – frighteningly – even at a foundation consultation in Hamburg, I would like to clear up with it once.

The money paid into the account of the limited liability company within the framework of the establishment of the limited liability company can be used for company purposes and under the restrictions of § 30 of the Limited Liability Company Act, of course. It can be used to pay lawyers, transfer salaries, hire service providers and much more.

Of course, it may only not be paid out again to the shareholders, although exceptions are also possible here within the framework of regular salary payments.

Principle

The only thing that must always be taken into account is that the assets required to maintain the share capital are always protected. Expenditures that are not matched by an appropriate service in return are therefore problematic. This can be complicated in detail, which is why I advise learning the basics of capital maintenance in an IHK course or similar. Within this framework, one will certainly be able to exclude further errors, e.g. that account balance and capital are not the same.

The consequences

If the shareholders violate the prohibition of disbursement, there is a right of recourse pursuant to Sec. 31 (1) of the German Stock Corporation Act (AktG). 1 GmbHG, the Company has a claim for reimbursement against the shareholder to whom the distribution was made. Especially in the context of insolvency disputes, this can also become a problem at some point. Incidentally, a managing director who pays out money to the company in an improper manner can also be liable to prosecution for breach of trust!

And therefore

Trustworthy advice on the formation of a company, for example on the advantages and disadvantages of a particular form of company, is just as important as basic knowledge of the duties and tasks of a managing director. This is the only way to avoid wrong decisions, which often become “expensive” later on, or to take personal liability risks.

And to draw the bow to headline for this post: If you stick to the “rules of the game” of capital preservation, you can of course use the deposited money to start the business!