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Germany’s Beneficial Ownership Requirements: What You Need to Know
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As of October 1st, 2017, German companies have been required to report their beneficial owners to the electronic Transparency Register. But what exactly does this mean? And who is considered a beneficial owner?
What is a Beneficial Owner?
In simple terms, a beneficial owner is the individual (or natural person) who owns or controls a company, directly or indirectly. This includes individuals who hold shares in the company, as well as those who have significant influence over its operations.
Exceptions to the Requirements
The introduction of the Transparency Register and the threat of sanctions for non-compliance has created significant compliance obligations for German companies. However, there are practical exceptions to these requirements that businesses should be aware of:
- Civil law partnerships (Gesellschaft bürgerlichen Rechts): These entities are exempt from registration in the Transparency Register.
- Foreign companies with branch offices or legally dependent business establishments in Germany: These companies do not need to register with the Transparency Register.
- Listed corporations with shares traded on an organized market: These companies are considered to automatically fulfill their notification requirements, as they are subject to international transparency standards equivalent to EU law.
Additional Exceptions
In addition to the above exceptions, a company is exempt from registering with the Transparency Register if:
- All information about beneficial owners can be retrieved electronically from the Commercial Register, Partnership Register, Register of Cooperatives, Register of Associations or Company Register.
- The company has a complex group structure and the beneficial owner is discernible through an overall review of register entries. However, this does not apply to registers in other jurisdictions.
Determining Beneficial Owners
If a beneficial owner cannot be determined, the legal representative or managing partner is deemed to be the beneficial owner (so-called fictitious beneficial owner) and must be notified to the Transparency Register.
Registration Process
The registration process itself is relatively straightforward and free of charge. It can be carried out at www.transparenzregister.de.
Conclusion
To determine whether these exceptions apply to your company, it’s essential to review the relevant register entries and assess whether all necessary information about beneficial owners can be retrieved electronically. If there are doubts about the taking effect of exceptional or fictitious facts, it’s better to report too much than too little to the Transparency Register.