New German Company Register for Companies under Civil Law (GbR)

The introduction of the "Company Register" as of 01 January 2024.

With the entry into force of the German Act on the Modernisation of Company Law (MoPeG) on 01 January 2024, a new register will be created, the company register. This register will be an independent addition to the Commercial Register and the Transparency Register and will record civil law companies (GbR) and their partners. Although the registration of the GbR is conceived by the legislator as fundamentally "voluntary", for most of the civil law companies appearing in legal transactions the registration will be anything but voluntary. Companies can and should already prepare for this.

Relevance of the Company Register

So far, the GbR and its partners are not entered in a register. This means that it is often difficult for participants in legal transactions to find out who is a partner in the GbR and thus liable for its obligations. In the case of other types of companies, such as general partnerships (Offene Handelsgesellschaft, OHG), limited partnerships (Kommanditgesellschaft, KG) and partnerships (Partnerschaftsgesellschaft), there are corresponding public registers that provide certainty about the essential circumstances of the company, such as its name, registered office, and partners. The company register is intended to increase the publicity of the GbR (with the corresponding will of its partners) to make its participation in legal transactions more secure.

Registrability of the External Partnership under Civil Law

Not all GbRs can be entered in the register. This option is only to exist for the external GbR according to section 707 (1) German Civil Code Draft (Bürgerliches Gesetzbuch Entwurf, BGB-E) (BGB according to the draft of the MoPeG). The differentiation between external and internal GbR in the new MoPeG follows the relevant case law of the Federal Supreme Court.

According to section 705 (2) alt. 1 BGB-E, an external GbR exists if the company is to partici-pate in legal transactions according to the joint will of the partners. Pursuant to section 705 (2) BGB-E, it can be the bearer of rights and obligations and forms its own corporate assets pursuant to section 713 BGB-E. External GbRs are, for instance, professional-practice firms (Berufsausübungsgesellschaften), small-scale traders (Kleingewerbetreibende) or otherwise entrepreneurially active companies, such as real estate companies. Basically, a GbR is an external GbR whenever the partners (intend to) appear in legal transactions under the name of the GbR. According to section 719 (1) BGB-E, such a company comes into existence in relation to third parties as soon as it participates in legal transactions with the consent of all partners, but at the latest with its entry in the newly created company register.

According to section 705 (2) alt. 2 BGB-E, an internal GbR is only to serve the purpose of structuring the legal relationship between its partners. The internal GbR has no legal capacity and, pursuant to section 740 (1) BGB-E, no corporate assets. This makes the internal GbR eligible for regulating voting and pooling agreements, sub-participations in company shares and similar relationships. Yet it may never be registered. An internal GbR that is accidentally entered in the company register would be regarded as an external GbR, at least in terms of its legal appearance - with all the resulting consequences.

Content of Entry

The content of the entry in the future company register is largely based on the previous regula-tions for the commercial register. Pursuant to section 707 (2) BGB-E, the name, registered office and address of the company, the names, place of residence or registered office of each partner and their power of representation are to be entered, among other things. After registration, the GbR is obliged under section 707a (2) BGB-E to use the suffix "eingetragene Gesellschaft bürgerlichen Rechts" or "eGbR". Pursuant to section 707a (3) BGB-E, the protection of good faith of section 15 German Commercial Code (HGB) is to be applied accordingly to the registra-tions. Every outsider can thus rely on the correctness of the entries. This register publicity allows a more reliable assessment for legal transactions as to who is available to the company's creditors as a personally liable partner.
Furthermore, section 707c BGB-E provides for the possibility of a change of status from the company register to the commercial register if a GbR wishes to change its legal form to another type of partnership. This applies in particular to registered, small trade GbRs that wish to change to the legal form of OHG on an optional basis, as well as those whose activities exceed the threshold for commercial business operations according to section 1 (2) HGB. In turn, small commercial partnerships (OHG) that have been registered in the commercial register up to now can change their status to a company under civil law (GbR) in accordance with sections 106 and 107 HGB Draft (HGB-E).

The entry of the external GbR in the company register is not mandatory and not required for its legal capacity. It retains all its previous rights even after the introduction of the company register and also remains registered in other registers, e.g., in the land register. However, section 47 (2) Draft German Land Register Act (Entwurf Grundbuchordnung, GBO-E) provides in future that a GbR may only be entered in the land register if it is also entered in the company register. In the event of the acquisition or amendment of rights to real property or rights equivalent to real property, a GbR must therefore always be pre-registered in the company register before it can make the entry of the acquisition or amendment in the land register.

For practical purposes, all GbRs that are registered in the land register or wish to register rights in the land register in the future are thus advised to make such an entry in the company register promptly after the law comes into force.

Problems after the Introduction

Immediately upon entry into force of the MoPeG, several new regulations will require the affected GbR to be pre-registered in the company register. Therefore, a large part of the existing external GbRs in Germany will have to be registered, irrespective of the envisaged voluntary nature, to remain capable of acting with regard to these rights. Otherwise, they risk considerable delays in carrying out legal transactions regarding the rights registered for them. This applies to all legal transactions concerning real property and rights equivalent to real property (transfer of ownership, priority notice, mortgages, land charges), the participation of the GbR in other registered companies (GmbH, OHG, KG, and other eGbR) and intellectual property rights (trademarks, patents).

The law shall come into force on 01 January 2024. Companies do not have the opportunity to apply for registration in advance. Hence, there will probably be a great rush on the newly created company register in January 2024. The responsible states had therefore already asked for a further delay in the introduction of the company register after 2024, but this was rejected by the German Federal Parliament. For this reason, companies should be prepared for considerable delays in the requested registration. Since other registers will not be active for the company until the company is registered (e.g., not registering the sale of a property in the land register), considerable delays may occur, some of which may jeopardise the company's existence.

Recommended Courses of Action

The expected problems should already be addressed by the partners. First, it should be checked whether there is an indirect registration obligation, i.e., whether the external partnership holds registered rights or participates in registered companies or would like to acquire such rights in 2024.
If this is the case, acquisition procedures should already be carried out and concluded in the current year 2023. If acquisitions are planned for 2024 or later, they should be advanced if possible. Pre-registration or the lack thereof will not affect legal positions existing on 01 January 2024. Foreseeable changes in the number of partners in the GbR, participation in other companies, land ownership and other registered rights should thus already be anticipated in 2023. The GbR and its partners can then react more relaxed to the problems and the expected delays in the implementation of the company register.

Dr Barbara Mayer
Daniel Rombach