The most common business enterprise form in Germany today is the Gesellschaft mit beschränkter Haftung (GmbH). The GmbH offers entrepreneurs the flexibility of a partnership combined with limited liability, capital lock-in, and other traits associated with corporations. Authorized in 1892, the GmbH appeared during a period of ferment in German enterprise law and was an early example of the private limited-liability company prevalent in many economies today. The new form reflected challenges created by the corporation reform of 1884, problems in German colonial companies, and the view that British company law had put German firms at a competitive disadvantage. Significant sections of the financial and legal community harbored strong reservations about this legal innovation.

Even though the GmbH is an established legal entity that has remained (largely) unchanged for over a century, recent abuses and the pressure of foreign competition has caused the German government to propose significant changes. While not opting for a fundamental and groundbreaking reform, it has put forward a number of smaller modifications that will change the face of the GmbH.