DEFINITION of 'AG (Aktiengesellschaft)'

AG is an abbreviation of Aktiengesellschaft, which is a German term for a public limited company; this is a company whose shares are offered to the general public and traded on a public stock exchange, and whose shareholders' liability is limited to their investment. The shareholders are not responsible for the company's debts, and their personal assets are protected in case the company becomes insolvent. The suffix AG, an equivalent of the English PLC, is used after names of companies in Germany, Austria, Switzerland and Luxembourg.

BREAKING DOWN 'AG (Aktiengesellschaft)'

Setting up an AG requires five or more members. Because an AG is subject to the Stock Corporation Act, the required share capital is approximately $56,000. At least half is paid at registration. Shares of the joint stock company may be listed on stock exchanges.

Setting Up an AG

The business owner enlists an attorney’s or bank’s assistance in preparing documentation for registration. The AG’s name comes from the enterprise’s purpose and has Aktiengesellschaft in the title. The articles of association contain the corporation’s name, registered office, share capital, each shareholder’s contribution and details regarding the shares. A court or notary authenticates the articles. When the required capital is deposited in the bank and the notarized documents and signed application are submitted to the Commercial Registry Office, the AG becomes a legal entity within seven days. The Office issues a certificate of registration, and news of the establishment is published in the Swiss Official Gazette of Commerce.

Leadership in an AG

An AG has a managing board of one or more members appointed by and reporting to the supervisory board of three or more members. An AG with a share capital of $3 million or more has two or more managing board members. An AG employing over 500 workers has employee representatives occupying one-third of the supervisory board; if the employee number exceeds 2,000, employee representatives occupy half the board. In addition, member numbers may be limited by the articles of association.

Shareholders exercise power over controlling policies at regularly scheduled general meetings. The managing board decides on all operational matters, and the supervisory board carries them out.

Auditing an AG

Auditors check the corporation’s financial documents. Meeting three or more of the following conditions for two or more years in a row requires an ordinary company audit: the company has more than 50 full-time employees; revenues exceed $2 million; or the balance sheet exceeds $100,000.

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