hendrik thies gesellschaftsrecht webh.jpgJonas Laudahn WebH

German Transformation Law: No strict Reporting Obligation for the GmbH & Co. KG

If managing directors and limited partners of a limited partnership with a private limited company as general partner (“GmbH & Co. KG”) are the same persons, the statutory reporting obligations under German transformation law do not apply. However, this fact does not lead to a general release from transformation law related reporting obligations for all GmbH & Co. KG's.

In principle, drafting a comprehensive transformation report is mandatory for each and every company involved in transformation processes (e.g. mergers or split-ups, spin-offs). Such reports are intended to comprehensively inform the shareholders of the companies concerned about the envisaged transformation in order to enable them to make an informed decision on whether or not to approve such transformation. Due to their complexity, these reports often account for the largest share of the costs of a transformation.

The easiest way to avoid the reporting obligation is that all shareholders waive their right to request such a report. However, due to the protective nature of the reporting obligation, such waiver requires notarization and is generally only feasible regarding companies with a manageable group of shareholders. By law, a report is not required if the acquiring company holds all shares in the transferring company (so-called "group privilege").

With regard to commercial partnerships (“Personenhandelsgesellschaften”), the reporting obligation does furthermore not apply if all shareholders of the company have management authority (this is generally the case with general partnerships, “offene Handelsgesellschaften/OHG”). If and to what extent this exception also applies to a GmbH & Co. KG has been disputed to date. The Rostock Higher Regional Court (Case No. 1 W 37/20) has now given an answer for a GmbH & Co. KG whose limited partners were also managing directors of the GmbH & Co. KG’s general partner (“Komplementär-GmbH”). In this particular case, the limited partners are at all times informed about all matters concerning the GmbH & Co. KG due to their position as managing directors of the general partner. As a result, the limited partner’s need for protection and information, which triggers the reporting obligation, does not exist.

The decision of the court is convincing: The reporting obligation under German transformation law is not an end in itself, but is rather intended to ensure that all shareholders of a company have access to comprehensive information. This purpose does not apply if the need for information does not exist, e.g. because all limited partners – though only indirectly via their capacity as managing directors of the general partner – have access to all information regarding the GmbH & Co. KG.

For the time being, the Rostock Higher Regional Court thus provides clarity with regard to a special constellation under transformation law (even though a supreme court ruling still does not exist). Irrespective of this, the reporting obligation under transformation law is and remains one of the most important aspects of transformation transactions. Every Company should therefore check at an early stage whether or not there are any reporting obligations under German transformation law for its envisaged projects. Although a transformation report usually leads to increased effort (and costs), the reporting obligation should only be disregarded following thorough legal examination.

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