Law on limited liability companies: On the change of the business year

 The business year of a Limited Liability Company ("GmbH") cannot be changed retroactively. The change must be registered with the commercial register before the start of the new business year and before the end of the short business year that has formed.

The facts of the case

The decision of the Jena Higher Regional Court ("OLG Jena") is based on the following facts: A GmbH had specified the calendar year as the business year in its articles of association. In August 2020, the shareholders decided to change the business year to the period from October 1st to September 30th. The managing director filed this amendment with the commercial register in January 2021. However, the court rejected this change. The court's reasoning was that the duration of the short business year was unclear and, moreover, a retroactive change to the business year was not permissible.

The company's appeal against the decision of the court was successful.

The decision of the OLG Jena of July 21, 2021 (Case No. 2 W 244/21)

In the opinion of the OLG Jena, there was neither an impermissible retroactive effect nor any unclarities with regard to the short business year. The OLG Jena stated that it was sufficient if the amendment occurred (i) during the new short business year (here: until September 30th) and (ii) before the beginning of the new whole business year (here: before October 1st 2021). Public is also sufficiently protected, since the validity of the amendment can be ascertained from the commercial register by the date of the registration (see Sec. 54 (4) of the German Limited Liability Companies Act (GmbHG)).

Practical advice

The law does not mandatorily specify the period for the business year of a company. Therefore, the shareholders are free to determine this in the articles of association. Although a business year must in any case have 12 months. However, it is not mandatory that the shareholders include provisions on the business year in the articles of association. If the articles of association do not contain any provisions, the business year is automatically from January 1st to December 31st. But if the shareholders wants a business year that deviates from the calendar year, they must expressly specify this in the articles of association. In business life, individual business year periods that deviate from the calendar year are often affected by industry-specific circumstances (for example, due to vacations in the hotel and restaurant business and in manufacturing business). The business year is also often regulated individually when the company is integrated into a group structure.

The OLG Jena confirms that a change to a business year specified in the articles of association is an amendment to it and must be registered in the commercial register. For practice, the decision means:

• A retroactive change to the business year after its expiry is inadmissible.
• Consequence: If a short business year is formed by the amendment, the new business year must be registered in the commercial register before the end of the short business year.
• Also important: Checking of tax aspects before the decision to change the business year.

Even after the decision, the special case remains undecided as to whether a change in the business year also requires an amendment to the articles of association (and a registration) if the articles of association did not previously contain any provision on the business year and therefore the calendar year applies. In a very old judgement from 1925, the Berlin District Court decided that no amendment is required. However, the main opinion in the legal literature assumes in this case an amendment to the articles of association.