The "Offene Handelsgesellschaft" under German Law

May 3, 2024

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For ambitious entrepreneurs looking to embark on a joint business venture, the Open Commercial Partnership (OHG) presents an attractive option. This type of partnership is characterized by the unlimited liability of all partners, meaning each member is personally liable for the company's debts with their entire private assets. This strong bond among partners fosters dedicated collaboration and can enhance the trust of business partners and clients.

Starting an OHG: Step by Step


Initiating an OHG begins with drafting a partnership agreement. Although the law does not prescribe a specific form, it is advisable to put the agreement in writing to avoid misunderstandings and establish clear regulations. The contract should cover essential points such as the contributions of the partners, distribution of profits and losses, and management rights.

The next step involves registering in the commercial register. While this registration is not mandatory for the creation of the OHG, it does make the company legally effective towards third parties. With registration, the OHG is recognized as a merchant under the HGB (Commercial Code), essential for starting and operating the commercial business.

Dynamics through Change of Partners


The composition of an OHG is not set in stone. Partners can leave or join the company. An exit can occur through death, bankruptcy, or resignation of a partner, while new partners can join through an admission agreement and the consent of all existing partners. Such changes allow the OHG to flexibly adapt to new business requirements and to expand or alter the entrepreneurial team as needed.

Dissolution and Settlement of an OHG


An OHG can be terminated in various ways, such as by the expiration of time, resolution of the partners, insolvency, or judicial decision. Following dissolution is the settlement phase, where the company's assets are liquidated to satisfy creditors and any remaining assets are distributed among the partners. This phase is crucial for ensuring a fair and orderly winding up of the company.

Conclusion


The formation and management of an OHG offer entrepreneurs a platform for collective and liability-intensive commerce. This legal form promotes direct collaboration and requires a high level of mutual trust. The ability to dynamically adjust the partner structure allows OHGs to evolve effectively and respond to the changing demands of the market. However, potential partners should not underestimate the comprehensive liability and should seek extensive legal advice beforehand to make an informed decision.

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