Almost all German companies are Ags

Almost all German companies are Ags (Aktiengesellschaften – public limited
companies) or GmbHs (Gesellschaften mit beschränkter Haftung – private
limited companies).

Originally, the AG was intended as the appropriate form for
entities owned by a large number of shareholders and under the day-to-day
control of employed managers, whilst the GmbH was designed to suit the
circumstances of an owner-managed business with its own legal personality.
Historically, the two corporate forms were widely different, but many of the
differences have since disappeared, mostly with the ascendancy of legal
provisions on accounting, auditing, publication requirements and employee
supervision of management that apply to both types of company. The major
remaining distinction is that the shares of an AG may be publicly traded on
a stock exchange, whereas those of a GmbH may not. In consequence, the
AG’s formation and shareholders’ meeting procedures are considerably more
cumbersome.

Foreign investors wishing to form a German subsidiary therefore
tend to opt for the AG if any form of public offering is contemplated now or
later, whilst the GmbH will usually be chosen for simplicity where it is intended
that the German entity remain entirely in group ownership.