Corporations, partnerships and foundations are obliged to report their “beneficial owners” – for associations there are facilitations.
What is changing?
Until now, corporations, partnerships, foundations and associations whose beneficial owners could already be retrieved electronically from another register (commercial, partnership, cooperative or association register) were exempt from registration in the Transparency Register.
This notification fiction is abolished by the Transparency Register and Financial Information Act (TraFinG). In the future, all legal entities will be required to identify their beneficial owners and enter them in the Transparency Register.
What facilitations apply to associations?
It has been decided to make things easier for associations. Unlike other types of companies, associations do not have to ensure that they are entered in the Transparency Register themselves. Instead, their data records are transferred from the register of associations to the Transparency Register and the board members are recorded as beneficial owners. The data should therefore be checked for accuracy and completeness.
When does the new regulation apply?
The law comes into force on August 1st, 2021. However, the law provides for a staggered reporting requirement, which depends on the legal form of the person required to report.
The notification of the beneficial owner(s) must be made as follows at the latest:
- AG, SE or KGaA by 03/31/2022,
- GmbH, cooperative, European cooperative or partnership by 06/30/2022;
- and in all other cases by 12/31/2022.
However, we recommend to act soon.
What information must be provided?
Companies are required to disclose the beneficial owner. The beneficial owner is the natural person who exercises control.
The latter is assumed in the case of an interest of 25% or more of the capital or voting shares. If, in exceptional cases, a beneficial owner cannot be determined or if such a beneficial owner does not exist due to the structure of the legal entity (e.g. in the case of associations), the members of the representative body must be declared as so-called fictitious beneficial owners.
In addition to the one-time registration, there is also an obligation to monitor future changes in the beneficial owner and to apply for registration.
What happens if I do nothing?
Violations of the reporting requirements constitute an administrative offense that can be punished with severe fines. Even in simple cases, this can amount to up to EUR 100,000.
In addition, notices of fines are published on the website of the Supervisory Authority and are accessible to everyone (see BVA – decisions on fines).
What should I do now?
Every company, with the exception of associations, should check whether it is already entered in the transparency register and whether the information is complete and accurate. If this is not the case, there is need for action. Associations should check their details in the register of associations.
We will be happy to correct information or register them in the Transparency Register for you.
Your contact persons
Attorney Dr. Dirk Schwenn
Specialist lawyer for corporate law