barbara mayer gesellschaftsrecht pz.jpg

Implementation of the Digitalization Directive: Establishment of a German Limited Liability Company (“GmbH”) will become Possible Online

Anyone wishing to establish a limited liability company ("GmbH") in Germany has to visit a notary in person. But at a time when video conferencing has become an indispensable part of the business world, why shouldn't it be possible to meet with a notary online? According to the so-called Digitalization Directive (EU Directive 2019/1151), EU member states must enable such online formation of corporations by August 1, 2022 at the latest. The German government recently presented draft legislation to implement the Digitalization Directive. If it becomes law, companies and founders will in future be able to set up a limited liability company (GmbH) or an entrepreneurial company (UG (haftungsbeschränkt)) popular with startups from the comfort of their office or home.

However, in order to protect the founders as well as the legal system from identity fraud and money laundering, it will still not be possible to do without a notary. In future, however, notarization can take place virtually using a specially secured video communication system provided by the Federal Chamber of Notaries. To identify the shareholders, the notary first reads out the data from an electronic means of identification. For German citizens, this is the ID card with the so-called eID function (all ID cards issued since 2017 have this online ID card function, which must, however, be activated once in advance by the holder of the ID card). In addition, during the video conference, the notary compares the photography on the ID with the video image of the persons involved, advises the founders as before on the drafting of the articles of association and checks their legal capacity or powers of representation. Finally, the deed of establishment is signed with a qualified electronic signature. The founders are not free to choose their "online notary", but must select a notary in whose jurisdiction, for example, the future registered office of the company or the domicile of a shareholder is located.

These new regulations are a start, but many wishes still remain open: for example, online formation is not provided for other legal forms, such as the stock corporation. In addition, the possibility of notarization by video communication only covers those resolutions that are closely connected with the formation. A capital increase to be notarized after the formation, other amendments to the articles of association or mergers and other transformation processes will therefore not be possible by video conference with the notary in the future either. So there is still room for improvement in terms of digitization in German corporate law.

1:1. This is how we work together. You decide upon a competent partner; he/she will then remain your point of contact. > more