# What Is AG (Aktiengesellschaft)? Definition, Meaning, and Example

## What Is Aktiengesellschaft (AG)?

AG is an abbreviation of Aktiengesellschaft, which is a German term for a [public limited company](https://www.investopedia.com/terms/p/plc.asp). This type of company shares are offered to the general public and traded on a public stock exchange. Shareholders' liability is [limited](https://www.investopedia.com/terms/l/limited_company.asp) to their investment. The shareholders are not responsible for the company's debts, and their assets are protected in case the company becomes insolvent. 

### Key Takeaways

*   Aktiengesellschaft is a German term used for publicly traded corporations on German stock exchanges.
*   Abbreviated as "AG", these letters follow the name of such public limited liability companies.
*   Companies that are designated as AG fall under increased regulatory oversight and must satisfy several initial and ongoing requirements to maintain its status as such.

## Understanding Aktiengesellschaft

Aktiengesellschaft is a German term made up of words meaning share and corporation. An AG is a business owned by shareholders which may be traded on a stock marketplace. 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.

German companies that are publicly traded are designated as such by the letters 'AG' after the company name. 'AG' is an abbreviation for the German word _Aktiengesellschaft_, which literally translates to 'stock corporation' or 'shares corporation' in English. AG companies trade publicly on stock exchanges with the majority of companies trading on the DAX.

Some of the largest German AG corporations include its automotive manufacturers:

*   [Volkswagen AG](https://www.investopedia.com/articles/company-insights/090816/top-7-companies-owned-volkswagen-vw.asp)
*   Mercedes-Benz Group AG
*   BMW AG

## Establishing an AG

Setting up an AG requires five or more members. An Aktiengesellschaft (AG) is subject to the Stock Corporation Act. This act involves [share capital](https://www.investopedia.com/terms/s/sharecapital.asp) of approximately 50,000 euros, with at least one-quarter paid at registration. The business owner will enlist the services of an attorney or bank in preparing documentation for registration.

The Aktiengesellschaft's name will come from the enterprise’s purpose and contains the word Aktiengesellschaft in its title. The [articles of association](https://www.investopedia.com/terms/a/articles-of-association.asp) include the corporation’s name, registered office, share capital, each [shareholder](https://www.investopedia.com/terms/s/shareholder.asp)’s contribution, and details regarding the shares. A court or [notary](https://www.investopedia.com/terms/n/notary.asp) will authenticate the articles of association. 

The required capital is deposited into a banking account, and the notarized documents and signed application are submitted to the Commercial Registry Office. The AG will become a legal entity within seven days if all materials are in order. The Office will issue a certificate of registration, and publish news of the establishment in the Official Gazette.

## AG Oversight

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 Aktiengesellschaft (AG) with a share capital of 3 million euros or more has two or more managing board members. An AG employing over 500 workers will have employee representatives occupying one-third of the supervisory board. If the employee number exceeds 2,000, employee representatives will fill half of the board. Also, the articles of association may limit the number of members.

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](https://www.investopedia.com/terms/b/balancesheet.asp) exceeds $100,000.

## GMbH vs. AG

GmbH is another common business extension primarily known for its use in Germany. Like most countries, Germany has two distinct classifications for companies: publicly traded and [privately held](https://www.investopedia.com/terms/p/privatecompany.asp). While AG refers to public companies, the acronym '[GmbH](https://www.investopedia.com/terms/g/gmbh.asp)' is used to designate certain private entities and is written after a company’s name. The letters stand for _**G**esellschaft **m**it **b**eschränkter **H**aftung_ which translated literally, means a 'company with limited liability.'

> **Article Sources**
>
> 1.  Federal Ministry of Justice. “[Commercial Code](https://www.gesetze-im-internet.de/englisch_hgb/englisch_hgb.html).” Sections 7, 31, 36a.
>     
> 2.  firma.de. “[How To Set Up an Aktiengesellschaft (AG): Your Guide to Starting a Stock Company in Germany](https://www.firma.de/en/company-formation/how-to-start-an-aktiengesellschaft-ag-your-guide-to-starting-a-stock-company-in-germany/).”
>     
> 3.  FasterCapital. “[Understanding the Basics: AG Aktiengesellschaft Explained](https://fastercapital.com/content/Understanding-the-Basics--AG-Aktiengesellschaft-Explained.html).”
>     
> 4.  Federal Ministry of Justice. “[Stock Corporation Act](https://www.gesetze-im-internet.de/englisch_aktg/englisch_aktg.html).” Sections 76, 393a.
>     
> 5.  Deloitte Legal. “[Doing Business in Germany: A Comparative Guide](https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Legal/dttl-legal-doing-business-in-germany.pdf).” Page 3.