Corporate law: Notarizing measures regarding a German GmbH abroad remain risky

A number of measures regarding German entities need to be notarized before a notary public – including the establishment of the company. Having these measures notarized before a notary abroad often seems a cheaper option – but short of a Supreme Court ruling sanctioning notarizations abroad, this remains risky.

Whether an act requiring notarization under German law can be performed before a notary abroad is an age-old question. Over the decades, German courts have handled this question differently in the past. While some foreign notaries have been cleared by some, others deny the possibility of a foreign notary substituting a German notary entirely. So as of yet, this uncertainty trumps any alleged financial benefit.

A new ruling of the Berlin High Court now approved the establishment of a German GmbH before a notary in Bern, Switzerland. The court argued that the Bernese notary had effectively imitated a German notary by reading out the entire deed, even though the applicable Swiss laws did not contain a corresponding duty to do so.

The argument is tempting: As long as the notary abroad does essentially the same a German notary would, the foreign colleague effectively substitutes his German counterpart. However, this is not exactly in line with the established jurisdiction of the German Supreme Court. The Bundesgerichtshof argues that a foreign notary can only fill in for the German original if he compares by education and status and has to follow a notarization procedure resembling the bearing principles of the German law. Today, no Swiss Canton requires its notaries to read the deed in its entity. And the Supreme Court has not yet decided whether it considers the duty to read out the entire deed as such a bearing principle.

With its argument, the Berlin High Court sidesteps this question. Therefore, it is to be applied with caution. As long as the Supreme Court has not clarified the issue, notarizing measures with regard to a German GmbH abroad remain a risky business.