A core element of the new German Anti-Money Laundering Act (Geldwäschegesetz), which came into force on 26 June 2017, is the implementation of a transparency register in which beneficial owners of almost all companies, trusts and trust-similar structures must be registered. As of 1 October 2017, various new transparency obligations are in effect and must be observed.
Who Is Obligated?
The new transparency obligations apply to all private law legal entities (limited liability companies, stock corporations, SEs and partnerships limited by shares) and registered partnerships (general and limited partnerships), and to trust managers and trustees of self-serving foundations without legal capacity and similar structures.
What Are the Obligations?
Entities affected by the new transparency obligations must obtain, keep and update information regarding their beneficial owners, and must electronically notify that information to the competent body keeping the transparency register. The notification to the competent body must comprise the following information regarding beneficial owners:
First and last name
Date of birth
Nature and extent of economic interest
Who Is a “Beneficial Owner”?
Every individual who owns or controls a company, trust or trust-similar structure is a beneficial owner.
For legal entities (excluding foundations with legal capacity, trust-similar structures and listed companies), beneficial owners are individuals who directly or indirectly hold more than 25 per cent of the share capital, control more than 25 per cent of the voting rights, or exercise control in a comparable way.
The notification obligations are always deemed fulfilled for listed companies, so there is no definition of the term “beneficial owner” for listed companies. Notification obligations may arise under certain circumstances, however. In those cases, the transparency provisions of the German Securities Trading Act (Wertpapierhandelsgesetz) provide guidance.
How Are Typical Limited Liability Companies Affected?
A limited liability company’s obligation to notify the transparency register is fulfilled if the required beneficial owner information is shown in the list of shareholders filed with the commercial register.
If the nature and extent of economic interest cannot be derived from the list of shareholders, a separate notification to the transparency register is necessary. For example, a separate notification must be filed in the case of special or multiple voting rights, special or multiple veto rights, or voting or pooling agreements.
A special notification must also be filed if access to foreign registers is necessary to determine the beneficial owners, e.g., in the case of foreign intermediate holdings.
What Are the Legal Consequences for Violations?
Violations are considered regulatory offences and are penalised with fines up to EUR 100,000 for simple violations and up to EUR 1 million for severe, repeated or systematic violations.