legalSometimes I see this acronym in names of companies based on Germany.
What does this acronym means? What are its characteristics?
Gesellschaft mit beschränkter Haftung (GmbH) is a type of legal entity very common in Germany (where it was created in 1892), Austria (adopted in 1906; legal abbreviations are GmbH, GesmbH, Ges.m.b.H.), Switzerland, and other Central European countries.
Literally translating as company with limited liability, the concept mit beschränkter Haftung inspired the legal establishment of the limited liability company form in other countries, although the concept of a limited liability company already existed in the United Kingdom.
The name of the GmbH form emphasizes the fact that the owners (Gesellschafter, also known as members) of the entity are not personally liable for the company’s debts. Other variations include mbH (used when the term Gesellschaft is part of the company name itself), and gGmbH (gemeinnützige GmbH) for non-profit companies.
The GmbH has become the most common corporation form in Germany, since the AG (Aktiengesellschaft), the other major company form corresponding to a stock corporation, was until recently much more complicated to form and operate.
GmbH is based on the idea of a fixed minimum capital, which is available at the sole discretion of the managers and may not be returned to the shareholders. And the shareholders are generally required to provide real funds, i.e. equity to the GmbH.
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