Transparency Register: Broad notification obligations for German and foreign all companies in the future

Since 2017, German companies and foreign companies acquiring real estate have to report their beneficial owners, i.e. the natural persons who hold more than 25% of the capital shares or voting rights or control them in a comparable way (e.g. via a trustee relationship), to the electronic transparency register. For German companies listed in other public registers (e.g. the commercial or company register) so far there has been a relevant exception from these notification obligations: If the information on the beneficial owner can already be derived from this other public register it had not been necessary to make an additional notification towards the transparency register (so called “notification fiction” (Mitteilungsfiktion)). The notification fiction in particular benefited limited liability companies with electronic shareholder lists while limited partnerships and stock corporations, foundations and companies with a foreign shareholder structure usually had to make notifications to the transparency register.

The recently passed Transparency Register and Financial Information Act (TraFinG) will significantly tighten the notification requirements for German companies of nearly all legal forms (i.e. in particular limited liability companies, limited partnerships, stock corporations), associations and foundations on the one hand and foreign companies on the other hand.

The notification fiction will no longer apply in the future. Therefore, nearly all German companies must in the future notify the transparency register of their beneficial owners even if this information is (also) available in other public registers. There is therefore a particular need for action for the companies that previously relied on the notification fiction – they must now actively identify their beneficial owners and report them to the transparency register. Depending on the legal form, they have time until March 31, June 30 or December 31, 2022. Apart from that all companies that cannot rely on the notification fiction so far and have nevertheless not reported their beneficial owners to the transparency register should make up the outstanding notifications as soon as possible anyway.

For foreign companies as well the notification obligations will be relevantly broadened: They will not only be subject to the notification requirements if they acquire real estate (Asset Deal), but also when they acquire shares in companies with real estate in Germany (Share Deal).

Infringements of the notification obligations are punishable by fines for the company, association or foundation itself as well as for its management bodies, shareholders and beneficial owners. As the fines depend inter alia on the respective company’s turnover they may reach relevant amounts. Furthermore, the violation of the notification obligations may be published on the website of the Federal Administrative Office. The reporting obligations towards the transparency register should therefore be taken seriously to avoid any such measures.