New Legal Form on the Horizon: The Special Purpose Entity under German law

In March 2026, the Federal Ministry of Justice and Consumer Protection (BMJV) and the Federal Ministry of Finance jointly unveiled a framework concept for a new type of business entity: the Special Purpose Entity (Gesellschaft mit gebundenem Vermögen, GmgV). But what exactly is behind this initiative — and what does it mean in practice?

The idea of introducing a new legal form has been gaining momentum for several years. The aim is to create a structuring option — beyond traditional cooperative and foundation models — for companies wishing to subject their assets to specific commitments. In this context, "asset commitment" means that profits may not be distributed to shareholders but must remain within the company, and that the underlying assets themselves may not be paid out.

The purpose of these rules is to ensure that corporate decision-making is no longer driven by shareholder interests — particularly the pursuit of profit maximization. Instead, profits are to be retained within the company and channeled toward its long-term development. The asset commitment is designed to be permanent: amendments to the articles of association, conversions to other legal forms, and similar measures would not be permitted. The concept is therefore idealistic in nature.

The framework concept now puts, for the first time, the legislature's initial thinking on the new legal form into writing and sets out proposed parameters. In addition to the asset commitment itself, the concept addresses voting rights ("one member, one vote"), taxation (standard corporate income tax, together with an inheritance substitute tax modeled on that applicable to family foundations), and oversight (by cooperative auditing associations). This is by no means a draft bill at this stage. The ministries involved have themselves noted in their FAQs that the framework concept is intended merely as the starting point for a "broad discussion process." Much is therefore likely to change or be refined as those discussions progress.

It will be interesting to see where this ultimately leads. As it stands, the Special Purpose Entity sounds like a "greatest hits" combination of a cooperative, a foundation, a limited liability company, and nonprofit law all rolled into one. Whether this will translate into a genuinely viable alternative in practice remains to be seen.