The company with asset lock (Gesellschaft mit gebundenem Vermögen)

The company with asset lock (hereinafter “GmgV”) is a potential new corporate form based on an initial academic draft from 2020. At the core of the GmgV is the asset lock: profits may not be distributed to the members but must remain within the company (so-called “asset lock”). Membership is intended to be personal and neither freely transferable nor inheritable; members thus assume a kind of fiduciary position.

In 2020, a group of legal scholars, with the support of the Responsibility Ownership Foundation (Stiftung Verantwortungseigentum), published an initial draft bill for a “limited liability company with responsibility ownership,” which was revised in 2021 and subsequently titled the “Draft Bill for the Limited Liability Company with Restricted Assets.”

The coalition of the SPD, Greens, and FDP had already announced in its 2021 coalition agreement that it would create the legal framework for a GmgV, but failed to implement this.

The GmgV has finally found its way into the current coalition agreement between the CDU and SPD for the 21st legislative period. It states in lines 2816 ff.: “We […] want to introduce a new, independent legal form, the ‘limited liability company with tied-up assets.’ Characteristics of this legal form are the irrevocable asset commitment and participation based on a membership-based logic without tax privileges or discrimination.”

In early March 2026, the Federal Ministry of Justice and Consumer Protection and the Federal Ministry of Finance published a framework concept for the GmgV as a proposal for discussion. This is not a draft bill agreed upon within the federal government, but rather a concept for a potential draft bill.

1. Basic Structure

The GmgV is intended to be a unique legal form (sui generis), but will incorporate features – particularly from cooperative law – to enable membership-based participation. Membership is intended to be personal – that is, neither freely transferable nor inheritable. This is intended to ensure that individuals connected to the company can contribute within a community structure based on shared values, regardless of their economic situation. Employees are to be granted a significant role in co-determination, thereby strengthening corporate governance and facilitating company succession in a manner consistent with the principles of “ .” To prevent the formation of administrative or self-serving companies, the articles of association may also include additional provisions regarding the pursuit of corporate purposes. In addition to a prohibition on the exclusive management of the company’s own assets (no pure holding companies), sustainable or public-benefit purposes may also be mandatorily stipulated.

2. Asset Retention as a Defining Feature

The central feature of the GmgV is the capital tie-in: the company’s profits must be retained and may therefore not be distributed to the members. The purpose of the capital tie-in is to shift incentives. Decisions within the company should not be influenced by how they affect the profit interests of the stakeholders.

This is intended to help strengthen the long-term development of the company.

The capital retention requirement is intended to be irrevocable and cannot be lifted either by amending the articles of association or by converting the company. A conversion to another legal form within Germany is therefore precluded; a conversion to another EU country is only permissible into legal forms with comparable capital retention requirements.

The capital commitment must be absolute: profits and assets may not be paid out, either directly or indirectly, to members, members of governing bodies, or third parties. Performance-related components in compensation or financing agreements – such as in executive and consulting agreements, profit participation rights, silent partnerships, and profit-sharing loans – shall be excluded. Accordingly, a board member may only receive a fixed salary and no performance-based compensation. Interest on loans granted to the company and compensation for board and consulting activities should also not exceed the market rate.

To ensure effective enforcement of the asset retention requirement, the GmgV should be mandatorily integrated into the cooperative audit system, which, thanks to existing structures, represents a low-bureaucracy solution and can also be simplified for very small companies.

Even in the event of the company’s liquidation or insolvency, the company’s assets shall remain subject to the restriction on disposal. Upon withdrawal, members shall receive back no more than their contributions. If, following liquidation – after creditors have been fully satisfied and withdrawing members have been compensated – any assets remain, these shall be transferred to another cooperative or to the tax authorities.

3. Fundamental Principles of Cooperative Law

In addition to the asset commitment, the planned GmgV shall be governed by the central fundamental principles of cooperative law:

• Legal Form & Liability: Upon registration, the GmgV becomes a legal entity and a registered business; members are not personally liable;
• Open membership: Members can join or leave easily – without amending the articles of association or going through the registry court. Joining requires the GmgV’s consent; transferring or selling membership is prohibited, which prevents an investor from buying up shares;
• Strictness of the Articles of Association: The articles of association may only deviate from the law if the law permits it;
• Incorporation and compliance audits: An auditing association verifies upon incorporation whether the articles of association comply with legal requirements, provides incorporation consulting, and subsequently conducts regular audits (annually or every two years);
• Governing bodies: Generally, a board of directors (at least 2 members) and a supervisory board (at least 3 members). Small GmgVs (≤ 20 members) may dispense with the supervisory board and appoint a single-member board of directors. The principle of self-governance applies: the board of directors and the supervisory board must consist of members of the GmgV;
• Voting rights: Resolutions are passed according to the “one member, one vote” principle – regardless of capital shares.
  

4. Differences from a Cooperative

The GmgV is intended to differ from a registered cooperative in particular through the following characteristics: There is no promotional purpose. Unlike a cooperative, the GmgV is not required to pursue the purpose of promoting its members.

• No minimum number of members: It should be possible for a single person to establish the GmgV; additional members may join later;
• Flexible voting rights: Founders should be able to retain multiple votes or veto rights, particularly if they contribute their business;
• Unalterable provisions in the articles of association: The articles of association should allow the founders to establish permanently binding rules that cannot be changed subsequently (e.g., the company’s object);
• Different audit requirements: Instead of an audit of the promotional purpose, compliance with the asset commitment is reviewed. If assets or profits are very low, the audit requirement may be suspended;
• Notarization under discussion: It remains unclear whether the articles of association must be notarized, particularly to ensure that the permanent asset commitment is properly communicated;
• Low capital requirements: It should be possible to establish the company with little capital investment; whether a minimum capital requirement should be specified remains to be clarified.
  

5. Taxes

The GmgV should neither be favored nor disadvantaged for tax purposes. In line with the model based on cooperative law, the tax rules applicable to cooperatives should generally apply. With corporate income tax and trade tax, a tax burden on profits of around 30% is currently to be expected. Since no profits are distributed and members do not benefit from increases in value, there is no taxation at the member level.

The GmgV is particularly suitable for family businesses whose owners wish to secure their “life’s work,” arrange for orderly succession, and prevent the company from being broken up. The absolute capital commitment in particular reinforces the long-term orientation, as profits must remain within the company. The ability to irrevocably establish certain provisions in the articles of association – such as those regarding the company’s object – can also preserve the company’s core essence for future generations.

A key practical advantage is that current corporate law already allows many of the effects intended by the GmgV to be achieved through legal workarounds.

However, creating such structures requires extensive legal consultation and is costly, often making it too burdensome for small and medium-sized enterprises. The GmgV is intended to change that.

According to the ministerial framework concept, the GmgV is also intended to be open to startups. It enables incorporation with minimal capital investment as well as a membership-based governance model (“one member - one vote”), supplemented by the option of veto or multiple voting rights for founders. This helps safeguard the company’s mission and values vis-à-vis other members.

In practice, however, the benefits for highly growth- and exit-oriented startups are limited: the asset lock and the non-transferability of membership regularly make traditional VC financing and exit scenarios unattractive.

The GmgV is also unsuitable for private equity structures. While debt financing is generally possible, performance-based instruments are prohibited, and interest or remuneration agreements may not exceed market rates. Investors with clear expectations regarding returns and upside potential will therefore typically not participate in a GmgV.

Consequently, it seems questionable whether the GmgV will be utilized to any significant extent in the future, as the effects sought through this corporate form – particularly with regard to “freezing” certain structures and the corporate purpose – can already be achieved today through the establishment of (family) foundations. Moreover, particularly in light of the asset lock, it is not to be expected that this corporate form will gain traction among companies with capital-intensive business models.

Whether a law on the company with asset lock will ultimately be enacted remains to be seen. However, the framework concept presented by the Federal Ministry of Justice and the Federal Ministry of Finance indicates that the federal government is seriously considering the introduction of this new legal form.

The legal structure is also still open: From a legal perspective, a standalone law on the GmgV is conceivable, which would either make a concise reference to cooperative law or fully incorporate all regulations applicable to the GmgV. At the same time, consideration is being given to making selective amendments to the Cooperatives Act to allow registered cooperatives to stipulate an asset restriction in a “ ” clause of their bylaws without having to convert into a GmgV.

First, the framework concept will be discussed with the states and associations. Based on the feedback, a draft bill could then be developed; a concrete timeline depends on the course of stakeholder engagement and further inter-ministerial coordination. We will keep you informed about the progress of the legislative process.