Reform of partnership law –
Act on the Modernization of Partnership Law (MoPeG) and Company Register
The Act on the Modernization of Partnership Law (MoPeG) comes into force on 01.01.2024. This will result in important changes to the entire law of partnerships (i.e. in particular GbR, OHG, KG). The partnership under civil law (GbR), the basic form of partnership, will be affected first and foremost and will be confronted with the most far-reaching changes. For the GbR, it will be possible and in some cases essential to make an entry in the company register (see below). We would like to take this as an opportunity for this client newsletter and inform you about the main changes below:
Changes concerning the GbR
In future, the law will make an explicit distinction between a company without legal capacity and a company with legal capacity. Only the latter can itself acquire rights and enter into liabilities if it is to participate in legal transactions in accordance with the common will of the partners.In future, a company with legal capacity will have its own assets; these will no longer belong to the partners jointly, as was previously the case.In future, it can also be registered for entry in the company register by the shareholders at the court in whose district it has its registered office.This is the central element of the reform. Upon registration, the company is obliged to use the names “eingetragene Gesellschaft bürgerlichen Rechts” or “eGbR”. Registration is carried out by a notary of your choice. The register must contain details of the company and the shareholders, among other things. The power of representation must also be stated.
The registration option then becomes a de facto obligation if the GbR itself has to be entered in a (different) public register, wishes to be entered there or is already registered and changes occur. The following cases in particular are conceivable:
- The GbR is/should itself be a partner in another company, in particular a corporation.
- The GbR is/should be entered in the land register as the holder of rights to a property, e.g. as the owner. In future, it will no longer be necessary to enter the partners of the GbR in the land register.
- The GbR is already entered in the land register as the holder of rights and wishes to dispose of its rights.
The registration requirement is therefore particularly relevant for the first entry or changes to an existing entry in the land register or commercial register.
Furthermore, regulations on management and representation have been revised and the external liability of the partners has been expressly standardized: The partners of a GbR with legal capacity are personally liable to creditors as joint and several debtors for the liabilities of the company. Any agreement to the contrary is invalid vis-à-vis third parties, § 721 BGB new version.
Please also note that the registered GbR must in future submit notifications to the transparency register regarding its beneficial owners.
Changes concerning commercial partnerships
Commercial partnerships – i.e. the general partnership (OHG), the limited partnership (KG) and the GmbH & Co. KG, which is a form of KG – are also affected by some changes: In addition to the opening up of commercial partnerships to freelancers, subject to professional law, significant substantive changes relate in particular to the law on the passing of resolutions and defects in resolutions. In principle, the regulations in the concluded articles of association take precedence in this respect, but the law now contains various new regulations. These apply in particular if no contractual provisions have been agreed. § Section 109 HGB (new version) clarifies that shareholder resolutions are passed in meetings, which also includes virtual meetings. The law also sets out new requirements for the quorum of a meeting and now introduces a separate right to pass resolutions in §§110 – 115 HGB, as amended, based on the model of the German Stock Corporation Act. In future, a distinction will be made between void and contestable resolutions; a general nullity – as before – is ruled out.
The law also clarifies that in future, shareholders with management powers will be obliged to prepare the annual financial statements and the shareholders will decide on their adoption. According to the law, the distribution of profits and losses will in future depend firstly on the shareholding ratio and, in the absence of an agreement on this, secondly on the contribution ratio. If no such agreement has been made, all shareholders will have an equal share in the profit and loss.
Changes with regard to the GmbH & Co. KG relate in particular to the liability of limited partners for the payment of fictitious profits, the previously temporarily unlimited personal liability when acquiring a limited partner’s share and the limited partners’ right to information.
Recommendation for action
We strongly recommend that you take the changes coming into effect on January 1, 2024 as an opportunity to consider a (precautionary) entry of your GbR in the company register and, in particular, to have your articles of association reviewed for a possible need for amendment.
We will be happy to assist you in this regard.