Extended notification duties to the Transparency Register
- The vast majority of companies must be notified to the transparency register. This in particular applies to legal entities under private law (e.g. GmbH, AG, eG, SE), many of which have been exempt if structured in a simple manner.
- This now applies mostly independently of the existing content in the commercial register and similar registers. However, simplifications apply to registered associations.
- The representatives of the company can carry out the registration themselves via the transparency register website.
What is it about?
The transparency register shows the beneficial owners for registered companies. This serves to detect and prevent money laundering.
Beneficial owners are, in simplified terms, persons who control an entity or initiate a transaction (explanation follows, where relevant, in the instructions for action). In certain cases, the representative bodies (e.g. management/board of directors) act as so-called fictitious beneficial owners.
Previously, notification was only required if the beneficial owners were not evident from other registers such as the commercial register (so-called fictional notification). This was changed at the beginning of August 2021, now according to sec. 20 German Money Laundering Act (Geldwäschegesetz, GWG), all legal entities under private law (e.g. GmbH, AG, eG, the e.V., whereby the law provides special rules for the latter) and registered partnerships (e.g. OHG, KG) must notify who their beneficial owners are. Since many have not yet had to report due to the fictional notification, there is often a need for action.
Where to find further information?
The supervisory authority, the Bundesverwaltungsamt (Federal Office of Administration) provides questions and answers and further information on the transparency register. Many chambers of commerce also provide condensed information to their members, but we recommend that you check whether this information is up-to-date and complete (we have come across some outdated information). The legal basis can be found in German Money Laundering Act. Should there still be a need after the information, we (fingolex member law firm Baltasar Cevc) can of course also provide legal advice.
What to do?
The official body of the entity (e.g., management, board of directors) is the primary body required to take action. First, this requires to identify who is the beneficial owner (these are, in somewhat simplified terms persons who hold more than 25% capital shares or voting rights, directly or indirectly, e.g. via a holding company; for details see § 3 GWG), if necessary the management needs to ask the entity's shareholders. The beneficial owners must be checked and reported into the transparency register separately for each company (consequently, in the case of a "hybrid legal structure" such as a GmbH & Co. KG, two legal entities have to be considered: the KG and the GmbH).
The registration takes place via the Transparency Register Portal of the Bundesanzeiger-Verlag, this must be submitted within the legal obligations (if missed: do it promptly to reduce the risk of fines!). The portal takes some getting used to, but there are also step-by-step instructions hidden on the page (e.g. a short introduction, here in German).
What else should I know?
The amendment came into force on August 1, 2021, but transition periods apply (see sec. 59, esp. para. 8, GWG).
Beware: there are, once again similar to other register topics, fraud attempts. Competent bodies are (only) Bundesanzeiger Verlag and Bundesverwaltungsamt. Offers from other private bodies are not required and usually not recommended (we have, for example, noticed a letter from "Transparenzregister e.V., Plauen"—you can ignore this).
How to judge this development?
My personal opinion is that with the overall setup of the transparency register, Germany misses opportunities of digitalization. Instead of using uniform linked data sets coupled with access control, new data sets are created that have to be laboriously filled manually, thus activities are prone to errors and, consequently, data quality decreases. Access is restricted to such an extent that administration is cumbersome and the benefits are significantly limited. The overall impression is that concerns, such as those expressed by Transparency International, are only addressed partially, not in a comprehensive manner. At the same time the current implementation setup induces additional administrative burden to commercial enterprises. This is a missed opportunity.
This article does not replace legal advice in individual cases. It presents the situation from a German legal perspective — the situation in other jurisdictions may differ.