Recognition of the notarization of a merger by a Swiss notary

The Berlin Court of Appeal recognizes the notarization of a merger of two German GmbHs (limited liability companies) by a Swiss notary with his office in the canton of Basel-Stadt. The notarization by a Swiss notary is to be recognized as equivalent if the minutes were read to the participants in the presence of the notary, approved by them and personally signed.

The facts of the decision

Two GmbHs were to be merged in accordance with the German Transformation Act (UmwG). The required notarization of the merger resolutions of the shareholders' meeting and of the merger agreement was carried out in each case by a notary public domiciled in the canton of Basel-Stadt. The District Court Berlin-Charlottenburg as the competent registry court rejected the registration of the merger on the grounds that the notarization by a Swiss notary does not satisfy the requirement of notarization as per German law.

The order of the Berlin Court of Appeal of July 26, 2018, file no. 22 W 2/18

The appeal against the decision by which the registry court refused to register the merger in the commercial register was successful. The Berlin Court of Appeal referred the matter back to the registry court so that the registration and entry procedure for the commercial register could be carried out.

According to settled case-law, it is recognized that processes affecting the basic structure of the company (e.g. formation, conversion, amendments to the articles of association, conclusion of company agreements) which are notarized abroad must comply with German formal requirements. It is not sufficient that the foreign formal requirements applicable at the place of notarization abroad are complied with. However, notarization by a notary abroad can fulfill the formal requirements under German law if the foreign notarization procedure is equivalent.

Notarization abroad is recognized as equivalent if the foreign notary performs a function comparable to that of a German notary in terms of previous training and position in legal life and the notarization procedure essentially corresponds to German notarization law. The foreign notarization law must provide for a review of the document and an instruction of the parties by the notary and ensure material correctness, i.e. that the notarization is correct and effective in terms of content.

Even if notarization by a German notary suggests the correctness of the notarization, this is - according to the Berlin Court of Appeal - not necessarily a prerequisite for the registration  of the merger with the commercial register. At least if the minutes had been read to the participants in the presence of the notary, approved by them and personally signed, the notarization by a Swiss notary was equivalent and not objectionable.

The registry court was therefore not permitted to reject the registration of the merger on the grounds that notarization by a notary with office in the Canton of Basel-Stadt does not comply with the formal requirements of notarization.

Comment

In a decision dated January 24, 2018 (Case No. 22 W 25/16), the Berlin Court of Appeal was the first Higher Regional Court to recognize the notarization of the formation of a GmbH (limited liability company) by a Swiss notary based in the Canton of Bern as equivalent. With the decision on the notarization of a merger another important decision now follows this path, which, however, does not yet generally mean "green light" for going to the Swiss notary.

The formal validity of foreign notarizations in company law has still not been clarified by the highest courts. So far, the Federal Supreme Court („BGH“) has only ruled on the question of the submission of the list of shareholders of a GmbH (BGH, judgment of December 17, 2013, Case No. II ZV 6/13) and the certification of the general meeting of a stock corporation (BGH, judgment of October 21, 2014, Case No. II ZR 330/13).

The practice of the registry courts in the recognition of foreign notarizations is inconsistent and regionally different. The registry courts are not bound by the decision of the Berlin Court of Appeal. Since the notary fees in Switzerland are often lower, it is generally worthwhile continuing to consider notarization by a Swiss notary. However, it should always be agreed in advance with all registry courts involved in the registration of the merger whether the notarization of merger resolutions and merger agreement by a Swiss notary is accepted. A residual risk remains. Information provided by the registry court is not binding in the registration procedure. It should also be noted that since a reform of the procedural regulations in 2017 in accordance with Art. 378 Paragraph 1 phrase 2 of the German Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction (FamFG) a German notary must file the application for registration in the commercial register and check whether it is correct.

In the case of a merger of several companies it should be taken into account that the merger as a whole will not be registered if one of the involved registry courts refuses to register the merger.

Caution is required as long as the recognition of a foreign notarization has not been finally decided by the Federal Supreme Court (BGH) and legal certainty is therefore not granted.