Joint ventures in Germany: overview

A Q&A guide to joint ventures law in Germany.

The Q&A gives a high level overview of joint ventures law, including regulation of joint ventures, types of joint ventures permitted in the jurisdiction, whether corporate joint ventures are subject to the corporate law, formalities for formation and registration of joint ventures, statutory limits on duration, anti-trust rules, termination, rules relating to joint ventures with foreign members, and incentives.

This Q&A is part of the Joint Ventures Law Global Guide.

Andreas F Bauer, GSK Stockmann + Kollegen

Domestic company joint ventures (JVs)


1. Are JVs expressly regulated?

Both German business and legal practice do not have a clear definition for the term "joint venture". While some practitioners use the term in a narrow sense to define a jointly owned and managed business enterprise, others advocate a much broader concept that includes any form of formalised co-operation between independent companies. From a commercial perspective, German business practice JVs in the broader sense can be found in the following arrangements:

  • Long-term supply arrangements.

  • Co-operative distribution arrangements.

  • Joint development agreements.

  • Joint project agreements.

  • Cartels.

  • JV companies.

As there is no JV concept under German law, the legal form of organisation of a JV varies widely, depending on the depth of co-operation the JV partners elect. Consequently, a JV under German law can be organised as:

  • Contractual JV.

  • Civil law and other non-registered partnerships.

  • Partnership JVs.

  • Limited partnership JVs.

  • JV companies (other than partnerships such as the JV corporation (Aktiengesellschaft) (AG) or the limited liability company (Gesellschaft mit beschränkter Haftung) (GmbH)).

Silent partnerships (stille Gesellschaft) and sub-participations (Unterbeteiligung) are also used in German law to organise a JV.

Due to the large variety of JV forms available under German law, the legal rules applying to the different organisational forms are found in a range of different areas of German law, in particular in the areas of contract, partnership, corporate, anti-trust and tax law.


2. Which types of JV are allowed?

All kinds of JVs are allowed under German law. No specific legal framework for JVs exists under German law (see Question 1).


All types of contractual JV agreements are permissible under German law as long as they comply with general rules of German law of contracts.


All corporate legal forms available under German law can be used to form a corporate JV. These are, in particular, the corporate forms such as the joint stock corporation (AG) or the limited liability company (GmbH) as well as partnership JVs, either organised as partnership JVs (Offene Handelsgesellschaft) (oHG) or as limited partnership (Kommanditgesellschaft) (KG). The most commonly used legal forms are the KG and the GmbH.


German business and legal practice have developed some JV structures going beyond a mere contractual JV arrangement but falling short of establishing a real JV company. These forms include, in particular, civil law partnerships (Gesellschaft des bürgerlichen Rechts) and other non-registered partnerships such as the silent partnership (stille Gesellschaft) and sub-participation (Unterbeteiligung).

3. Are corporate JVs subject to the corporate law?

Corporate JVs are subject to the respective corporate law, which depends on the corporate form that its founders have chosen. No specific rules exist for corporate JVs under German corporate law (see Question 1).

Formation and registration

4. Is the use of foreign language in a JV's founding documents (both corporate and contractual) restricted?

For contractual JVs there is no restriction whatsoever in the use of foreign language for the founding documents. In fact, a civil law partnership can be validly formed under German law by oral agreement. However, whenever a corporate JV requires registration of the corporate form with the commercial register (Handelsregister), the founding documents must be submitted in German. However, this requirement is also fulfilled when a bilingual version (German and one other foreign language) is submitted to the commercial register.

5. Are public officers (for example, public notaries) involved in a JV's formation procedure?

If the JV company is formed as a limited liability company (Gesellschaft mit beschränkter Haftung) (GmbH) or as a joint stock corporation (AG), the formation deed (Gründungsurkunde) requires notarisation by a German notary public. For all GmbHs, AGs, and KGs, their formation must be registered with the commercial register (Handelsregister) and the signatures of founders and/or management below the application for registration with the commercial register must be authenticated by a notary public.

6. Are JVs registered with any local registries? Are public sector bodies' authorisations required for a JV's establishment?

Local registries

German law does not have a public register listing corporate or contractual JVs. To the extent required by the respective corporate law, the JV company must be registered with the commercial register (Handelsregister).

Public sector bodies

If a JV is concentrative in its nature, its formation may be subject to the restrictions contained in:

  • EU regulation 139/2004 EC of 20 January 2004 (EU Merger Regulation).

  • German Act against Restraints of Competition (ARC).

This is normally the case when the parent companies combine their activities in a given relevant market and stop operating in that market. If both parent companies stay active in the given market, there is a risk that the JV will be considered to be of a co-operative nature. In this case, there is a risk that the competition authorities will consider this a co-operative behaviour of two previously independent market players who may infringe the cartel prohibition and therefore require an exemption.

If the JV is concentrative in nature, the EU Merger Regulation may apply, provided that the thresholds of combined annual sales of the merging enterprises exceed EUR5 billion worldwide, and at least two participating companies have annual sales in the EU of at least EUR250 million. In addition, the merging enterprises must not have more than two-thirds of their sales in one and the same member state. If the JV is concentrative in nature, Articles 101 and 106 of the Treaty on the Functioning of the European Union (TFEU) (2012/C 326/1) will not be applicable to the concentration itself or to any ancillary restrictions that are directly related to and necessary for the implementation of the concentration. If a concentrative JV is subject to scrutiny under the EU Merger Regulation, the national German rules contained in ARC will not be applicable to the JV. Additionally, if the JV obtained an exemption under EU law, the German Federal Cartel Office (FCO) cannot prohibit it.

The treatment of JVs in German anti-trust law is an extremely complicated matter. Therefore, the following summary focuses on the merger clearance process under ARC and will not deal in detail with the prohibition of cartels contained in section 1 of ARC.

Application to JVs

Where the JV partners plan to combine their existing activities or establish an entirely new business rather than only co-operating in specific, limited areas, the JV is concentrative in its nature. It is therefore subject to the merger clearance process prescribed in ARC (sections 23 and following, ARC) if it meets the merger (or concentration) test, irrespective of the legal form of the JV.

Definitions of merger

ARC contains six definitions of what transactions qualify as a merger (section 23, ARC). Without going into the details of the complicated provision, it is important to keep in mind that the transaction by which the JV is formed as a merger between the JV and the individual JV partner is considered under ARC, and mergers between the different JV partners is also considered (section 23, ARC).

Notifications requirements

If the JV fulfils the merger test, the JV and the JV partners must notify the merger to the Federal Cartel Office (FCO) before implementing it, if the following pre-merger thresholds are exceeded:

  • One of the participating enterprises has annual sales in excess of EUR1 billion.

  • Two of the participating enterprises have annual sales of EUR500 million or more.

Timing considerations

Following notification, the FCO may prohibit the JV within certain time periods. The FCO has one month to inform the parties that it intends to carry out on investigation of the case. If this one-month period runs out without the parties receiving the FCO notification letter, the merger is cleared and can no longer be prohibited. If the FCO starts an investigation, it has a maximum period of four months to issue a prohibition order. If no such prohibition order is issued, the merger is cleared and can no longer be prohibited.

Substantive test market dominance

Under the material merger control provisions contained in ARC, the JV must be prohibited if it creates or strengthens a market dominating position. If the JV partners can prove that despite the creation or strengthening of a market dominating provisions, the JV improves the competitive conditions in the same or another market that outweigh the negative impact of market dominance, the FCO may still grant merger clearance.

Presumption of market dominance

The ARC also contains certain presumptions of market dominance that lead to a shift of the burden of proof from the FCO to the JV partner and which are all based on certain market share thresholds.

7. What other formal requirements must be complied with to validly constitute a JV?

German law does not contain a general formal requirement to file a JV with the anti-trust authority or any other public body before it can be validly formed. However, JV companies are subject to the same regulatory provisions as all other companies in Germany. Therefore, if the JV company has a purpose for which a public licence is required (for example, financial services under the German Banking Act (Kreditwesengesetz) (KWG)), it can be formed. However, it will only be registered in the commercial register once the respective KWG licence is granted by the banking supervisory authority.

Permitted markets

8. Can the JV instrument be used in every market? Are there any restrictions to be considered and carefully assessed before investing?

JVs can be used in every sector of the German economy. Based on the different types of JV arrangements most frequently used in Germany (see Question 1), they are mainly used for projects that require extraordinary means such as real estate development projects in the building industry or the joint development and distribution of new drugs in the pharmaceutical industry. JV arrangements are often used in old industries to institutionalise long-term supply arrangements, sometimes coupled with some form of technical co-operation and assistance to develop or adapt existing products of one party to fit a particular purpose of the other party. Additionally, where two parties' products are complementary, they may decide to enter into a co-operative distribution arrangement where one party will sell its own as well as the JV partner's products.

There are some business areas where every company (and not only JV companies) require an upfront public authorisation or licence to do business. These areas include banking, insurance, real estate distribution, drugs and pharmaceuticals, public (air and rail) transport as well as weapons and defence material production.


9. Can a JV be established with any purpose?

As German law does not provide for a specific legal framework for JVs, contractual as well as corporate JVs can be established with any purpose as long as the purpose is not illegal.

Share capital and participation

10. What possible forms of participation are there in a JV's share capital? How can a JV member contribute and are there statutory limits on the possibility to make contributions in kind?

Forms of participation

Generally, contributions can be made in cash or in kind (including goods, assets and claims against the contributing shareholder and/or third parties). Traditionally, JV members contribute in cash, or via a shareholder loan to the JV.


Whether there are any statutory limits to the possibility of contributions in-kind depends on the specific legal form chosen as the corporate JV structure.

As civil law partnerships (Offene Handelsgesellschaft) (oHG) silent participations and sub-participations do not require a minimum stated (and registered) capital, the JV partners are totally free to make all or part of their contributions in-kind. The difference between the contribution in cash or in-kind will only be visible by looking at the bookkeeping entry in the JV company's balance sheet.

For joint stock corporations (AGs) and limited liability companies (GmbH), there are strict rules regulating contributions in kind at formation and for capital increases, all aimed at preserving the stated share capital of the respective companies. Although the rules contained in the Stock Corporation Act (Aktiengesetz) (AktG) and the Act on Limited Liability Companies (Gesetz über die Gesellschaften mit beschränkter Haftung) (GmbHG) differ slightly, the following general principles apply (among others):

  • Contributions in-kind in formation or capital increases are only valid if the company proves by submitting an independent expert's statement that the contribution in-kind has at least the value of the nominal share capital issued by the company in exchange for the contribution in-kind.

  • Contributions made in violation or circumvention of the strict statutory rules are invalid and may lead to the respective shareholder being asked by the company (or more often the insolvency receiver over its bankrupt estate) to make the contribution in-kind a second time (in cash).

  • Shareholders should be extremely careful not to make "hidden contributions in-kind" (verdeckte Sacheinlagen), that is, contributions where the shareholder makes his contribution in cash to circumvent the strict statutory rules for contributions in-kind, only to get his cash contribution back by way of an upstream loan from the company immediately (pay back and forth, Hin-und Herzahlen). These hidden contributions in kind make the contribution invalid and may lead to a rejection of the registration of the capital contribution or capital increase in the commercial register. This, in turn, means that the formation or the capital increase does not become valid.

The limited partnership (Kommanditgesellschaft) (KG) does not require a stated minimum capital. However, the limited partners have the possibility to register the amount of their partnership contribution (Kommanditeinlage) in the commercial register (Handelsregister), thereby limiting their personal liability to third parties in relation to their registered partnership contribution. Contributions in-kind during formation or capital increases are possible at any time and will not be examined by the commercial register before registering the increase of the partnership contribution. However, for insolvencies of KGs, the insolvency receiver regularly checks whether or not the contribution in-kind was done and least at par value (that is, had at least the value of the nominal amount of the partnership share issued to the respective shareholder in exchange for the contribution in-kind). If this is not the case, the receiver will always bring a claim against the KG partner asking him to fulfil his contribution commitment in cash.

11. Can a corporate JV's share capital be indicated by making reference to a foreign currency?

The share capital of a corporate JV can only be indicated by making reference to a foreign currency if the JV company's legal form does not require registration with the commercial register (Handelsregister). Therefore, such a reference is only possible for the civil law partnership, the silent partnership, the sub-participation and the partnership JVs (Offene Handelsgesellschaft) (oHG). It is not possible for the legal form of JV corporation (Aktiengesellschaft) (AG), the limited liability company (Gesellschaft mit beschränkter Haftung) (GmbH)) or the limited partnership (Kommanditgesellschaft) (KG).

Duration and limits on membership

12. Are there statutory limits on a JV's duration?

From a corporate law perspective, there are no legal limits to the duration of a JV. Normally, however, cautious JV partners provide for a limited duration in the JV's articles of association, either by prescribing a fixed end date or by giving each of the JV partners the possibility to terminate the JV once its purpose is achieved.

13. Are there statutory limits on the number of members participating in a JV?

There is no maximum number for the membership in a German JV. The minimum number for all corporate legal forms available for JVs is one, except for civil law partnership, silent partnership and sub-participation, which all require at least two partners.

Public sector bodies

14. Can a public sector body enter into a JV agreement? Subject to what conditions? In particular, do public private partnerships (PPP) laws and regulations apply?

Generally, public sector bodies can enter into JV agreements, provided that the purpose of the JV and the liabilities incurred comply with the relevant public (that is, local, regional or national) laws. In general, it is fair to say that this will be the case if the purpose of the JV is to set up or operate a company that provides public services and that does not expose the public body to unlimited liabilities. Therefore, public bodies will normally not enter into JVs organised as a civil law partnership (Gesellschaft bürgerlichen Rechts) or assume the role of a general partner in a limited partnership (Kommanditgesellschaft) (KG), because both positions go along with unlimited liability.

Non-competition and anti-trust clauses

15. Are there statutory constraints on the use of non-competition or anti-trust clauses in a JV agreement?

During period of effectiveness

If the JV is concentrative in its nature, the non-competition clause will normally not violate Articles 101 and 106 of the Treaty on the Functioning of the European Union (TFEU) (2012/C 326/1) or section 1 of the Act against Restraints of Competition (ARC). In these cases, the non-competition clause is seen as proof that the JV partners have stopped doing business in the relevant market. If the JV is co-operative in its nature, non-competition clauses will normally violate both the cartel prohibition clauses of both the EU Treaty and ARC. To avoid such a violation, the JV partners would have to notify the EU and the German anti-trust authorities in order to avail themselves of one of the statutory exemptions granted by EU law and ARC.

Following termination

The same principles apply following termination (see above, During period of effectiveness).

De facto company/partnership

16. Must the contractual JV satisfy any conditions to avoid falling within the definition of de facto company/partnership?

The civil law partnership (Gesellschaft bürgerlichen Rechts) (GbR) is the simplest form of economic co-operation offered by German law. Under the Civil Code (Bürgerliches Gesetzbuch) (BGB), a GbR can be formed by mere oral agreement of two or more partners to pursue a common aim, provided that the oral agreement is sufficiently specific (sections 705 and following, BGB).

To distinguish this de facto partnership (Gelegenheitsgesellschaft) from a partnership JV (Offene Handelsgesellschaft) (oHG), German courts and literature look in particular at the duration of the partnership. While the de facto partnership is aimed only at a co-operation for one single project or transaction, the oHG is aimed at permanent co-operation at least for a certain period of time.

Limiting member liability

17. Can a JV agreement provide that a JV member can participate without incurring any risk, loss or reward?

To the extent the JV partners have chosen to form the JV as a partnership JV, that JV is subject to the general statutory provisions applicable to the civil law partnership contained in the Civil Code (Bürgerliches Gesetzbuch) (BGB), which provides the greatest flexibility (sections 705 and following, BGB). The JV agreement can therefore foresee that one JV member can participate without incurring any risk or loss or reward. However, a JV agreement clause shielding one JV member from any risk is not valid in relation to third parties, due to the fact that civil law partnerships (Gesellschaft bürgerlichen Rechts) (GbR) and partnership JVs (Offene Handelsgesellschaft) (oHG) are both based on the general principle of joint and several liability (gesamtschuldnerische Haftung) of all partners. In practice, this clause is interpreted to give the respective partner a claim against the other JV members to hold him harmless against any claims brought against him by third parties. Only the limited partnership (Kommanditgesellschaft) (KG) would give all limited partners the possibility to be shielded from any third party risks, provided they have fully paid in their partnership contribution (Hafteinlage) and such contribution has not been paid back to them.

Alternatively, the JV partners can enter into a silent partnership. This is a JV structure offered by the German Commercial Code (Handelsgesetzbuch) (HGB) where a passive investor, the silent partner, makes a contribution to a business venture anticipating adequate return from the profits of that business without having any responsibility for the day-to-day business or any control of the management (except for structural decisions fundamentally changing the business).

In this case, the JV agreement is made between the silent partner and the business (that is, the operating company, rather than with the shareholders or partners who own the company). Depending on the exact terms of the silent partnership agreement, the silent partner often does not participate in the profit and loss of the business but rather receives a fixed annual interest on his contribution. This type of silent partnership where the silent partner has a position similar to a lender is called the typical silent partnership (typische stille Gesellschaft) because it is the statutory model proposed by sections 235 and following, of the HGB.

However, the more frequently used version is the atypical silent partnership (atypische stille Gesellschaft) where the silent partner participates in both the profits and the losses of the business. If as a result of losses his account is reduced below the amount of his initial contribution, he is not entitled to a distribution of profits until the losses allocated to him are compensated by subsequent profits. Additionally, the atypical silent partner normally participates in any increase of hidden reserves during the term of the partnership.


18. Do any anti-trust rules, guidelines or policies apply to a JV agreement?

Any JV agreement must comply with both the (EU and German) Merger Regulations contained in EU Merger Regulation and the Merger Clearance Process under the Act against Restraints of Competition (ARC) and the (EU and German) prohibition of cartels contained in Articles 101 and 106 of the Treaty on the Functioning of the European Union (TFEU) (2012/C 326/1) and section 1 of ARC (see Question 6).

Generally, research and development JVs are not considered as a prohibited practice that would automatically be in violation of the EU and German cartel prohibition. However, where the JV partners have an elevated market share and/or are in industry sectors where the competition in the field of innovation is limited (for example, for certain technical factors such as patents held by one or both of the potential JV partners), the likelihood of a breach of the cartel prohibition rises.

On the other hand, a JV with the sole aim of bundling research work in the area of cancer research (for example, the work of two or more universities or other research institutions) benefit from a greater leniency than JV partners who are pharmaceutical conglomerates that are also active in the areas of drug development and distribution.

This general attitude of both the EU and the German anti-trust authorities is also expressed in the communication of the EU Commission concerning the assessment of co-operative JVs under Article 85 of the EU Treaty (93/C 43/02). This communication states that in exceptional cases research development joint ventures can restrict competition if they exclude the parent from activity in an area or if competition in the parent's market is restricted. This can occur where, for example, the joint venture exploits newly developed or improved products or processes.

Governance and limits on directors

19. Can the parties to a JV freely regulate the JV or are they subject to certain restrictions?

In a contractual JV the parties are totally free to regulate the JV as they wish, to the extent the provisions agreed on do not violate German public order.

In a corporate JV there are restrictions, the breadth of which depends on the legal form chosen by the JV partners. Generally, it is fair to say that the joint stock corporation (Aktiengesellschaft) is the most stringently regulated form. The Stock Corporation Act allows relatively few deviations from its general statutory principles. On the other end of the flexibility spectrum are JV partnerships such as partnership JVs (Offene Handelsgesellschaft) (oHG) and limited partnership (Kommanditgesellschaft) (KG), where the statutory framework is relatively basic and even the basic principles can be abrogated by the parties by unanimous decision.

20. Are there limits or restrictions on the eligibility of an individual as a member of the board of directors/statutory auditor?

There are no limits or restrictions to the eligibility of an individual as a member of the board of directors or as statutory auditor based on nationality. Foreigners are fully eligible to be members of the board of directors (Vorstand) of a joint stock corporation or as managing directors (Geschäftsführer) of a limited liability company as long as they fulfil the required criteria (for example, their reliability and have not been found guilty of certain crimes) (section 6(2), GmbHG).


21. What legal regime applies to a JV's termination? Can a JV be terminated for just cause on request of one party?

JV agreements can be concluded for an unlimited period of time, but this is normally not the case. Rather, it normally provides that the agreement will end automatically if one of the JV partners terminates the JV agreement. In addition, the JV agreement normally provides for a regular termination right for each of the JV partners. In such case, the agreement must stipulate that the JV is continued between the remaining JV partners. The right of each JV partner to terminate the agreement for (important) cause cannot be abrogated by mutual consent of the JV members (section 723(1), Civil Code (Bürgerliches Gesetzbuch) (BGB)).

22. Is the termination of a JV agreement subject to any public sector body's approval?

The termination of a JV in Germany does not require any public-sector body's approval.

Choice of law and jurisdiction

23. Are there constraints on the choice of the law and the jurisdiction applicable to a JV?

In contractual JVs the partners can choose to set up the JV vehicle under any other law than German, unless such a choice of law is considered to be fraudulent.

A corporate JV that needs to be registered with the German commercial register can only be governed by German law.


JVs with foreign members

Validity and authorisation

24. What are the rules relating to validity and authorisation of JVs with foreign parties?


JVs with foreign parties are generally permitted under German law and are not subject to any statutory approval.


There is no requirement for a minimum/maximum number of parties who must be local.


Sectors where prior public consent is required include:

  • Communication interception.

  • Nuclear power.

  • Defence.

  • Other military equipment.

Effect of foreign membership

25. Are any of the rules relating to domestic company JVs (see Questions 1 to 23) different for JVs with members incorporated under, or governed by, the laws of a foreign country?

There are sensitive industry sectors such as armament and weapons or nuclear power where the investment of a foreign entity requires prior public authority approval.

Economic or financial incentives

26. Are there economic or financial incentives for foreign direct investments in a JV?

There are no economic or financial incentives for direct foreign investment in a German JV.

Minimum investments/contributions

27. Are there mandatory minimum equity investments or contributions in kind thresholds for a foreign JV member?

There is no minimum equity investment and/or contributions in kind threshold required for a foreign JV member.


The regulatory authorities

Commercial register (Handelsregister)

Main activities. The Commercial register (Handelsregister) contains the main information of all registered companies in Germany.


Federal cartel office (Bundeskartellamt)

Main activities. The Federal Cartel Office (Bundeskartellamt) is responsible for the supervision of the German Act against Restraints of Competition.


Online resources

Federal Ministry of Justice (original language texts)


Description. Original language texts of relevant laws are available on this official website of the Federal Ministry of Justice.

Federal Ministry of Justice (English language translations)


Description. English language translations of relevant laws are available on the official website of the Federal Ministry of Justice.

Contributor profile

Andreas F Bauer, Partner

GSK Stockmann + Kollegen

T +49 89 2881 7474
F +49 89 2881 7444

Professional qualifications. Germany, Lawyer, 1994

Areas of practice. Private equity; mergers and acquisitions, in particular distressed M&A; restructuring and insolvency.

Recent transactions

  • Acting for a large US family-office in its acquisition of a portfolio of real estate companies in Germany.

  • Acting for a strategic investor in its acquisition of a private bank in Germany.

  • Acting for a savings and loans bank in its acquisition of a retail bank in Germany.

Languages. German, English, Italian, French

Professional associations/memberships. International Bar Association (IBA); INSOL Europe; German-Italian Lawyers' Association.

Publications. Private equity in Germany: market and regulatory overview, Private Equity Global Guide, co-author.

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