Current Reporting Requirements for the Transparency Register5 August 2021
"According to the TraFinG, all legal entities must report their beneficial owners to the German Transparency Register. Failure to comply with this reporting obligation may result in administrative fines of up to several hundred thousand euros."
- companies in the pre-foundation stage (which may have begun operating before signing their articles of association (so called “Vorgründungsgesellschaften”);
- listed companies and their subsidiaries; and
- companies for which the necessary information can be obtained from other registers, such as the commercial register (Handelsregister).
The Transparency Register will develop into a complete register for all companies. The reporting obligation, which is based on the regulations of the German Money Laundering Act (Geldwäschegesetz, “GwG”), exists in principle for every company. There is no simplified reporting method for corporate groups. Each company is responsible for determining its beneficial owner and satisfying its reporting obligations.
Extension of the Reporting Requirements
According to the GwG (section 20 para. 1 sentence 1), legal entities under private law and registered partnerships are to:
- obtain, retain and keep up to date the information on their beneficial owner(s); and
- provide this information electronically to the Transparency Register without undue delay.
A beneficial owner is a natural person, the owner or controller of the relevant company or one who can authorise financial transactions or found new partnerships on its behalf. According to the GwG, beneficial owners include any natural person who (directly or indirectly):
- holds more than 25% of a company’s capital;
- controls more than 25% of the voting rights in a company; or
- exercises control over a company in a comparable manner.
If no natural person in a stock corporation (Aktiengesellschaft) or limited liability company (Gesellschaft mit beschränkter Haftung) can be identified, the members of the executive board or managing directors will be regarded as the beneficial owners (so-called “fictitious beneficial owners”).
Content of the Reporting Obligation and the Right to Access
The following data on the beneficial owner(s) is to be collated and reported to the Transparency Register:
- first name and surname;
- date of birth;
- place of residence;
- the nature and extent of their economic interests in said company;
- all nationalities they hold (previously, listing one was sufficient).
Access to information in the Transparency Register varies depending on the function of the requesting party. In principle, a legitimate interest in accessing the information is required. Certain public authorities are granted full access within the scope of their duties. Companies, however, are only granted access to the Transparency Register for research of data relating to other companies in specific instances and within the scope of their due diligence obligations.
"Companies are required to immediately report their beneficial owner(s) to the Transparency Register. Likewise, any change of beneficial owners must be reported by the company without undue delay."
Exceptions to the Reporting Requirements Deleted
Due to the so-called “reporting fiction” in Section 20 para. 2 of the GwG (corresponding to Section 1 No. 18c TraFinG), the reporting obligation was previously deemed to have been met if all information regarding beneficial owner(s) was available from other German publicly accessible registers (such as the commercial or partnership registers). Said reporting fiction (especially for companies with limited liability and listed stock corporations) and various previously existing exceptions (such as for certain GmbH & Co. KG structures) have now been abolished. Simplified reporting obligations now only exist for registered associations. This change has been introduced as a result of the national implementation of the requirements of EU Directive 2018/843 on the prevention of using the financial system for the purposes of money laundering or terrorist financing, as well as the EU Financial Information Directive 2019/1153 on facilitating the use of financial and other information for the prevention, detection, investigation or prosecution of certain criminal offences.
Companies are required to immediately report their beneficial owner(s) to the Transparency Register. Likewise, any change of beneficial owner(s) must be reported by the company without undue delay. It should be noted that all beneficial owners must be identified in the most recent report to the Transparency Register. As a result, even if only one beneficial owner changes at a legal entity with several beneficial owners, all beneficial owners must be specified, again if necessary, in the notification of said change. As a result of the new regulation, many companies that were previously subject to the reporting fiction are now themselves required to report on their beneficial owners. The following transition periods apply to them:
- stock companies (Aktiengesellschaften), Societas Europaea (SE), KGaA: will need to file by 30 March 2022 at the latest;
- GmbH, Cooperatives (Genossenschaften), European Cooperatives or Partnership Companies (Partnerschaftsgesellschaften): will need to file by 30 June 2022 at the latest; and
- in all other cases (e.g. General Partnerships (oHG), limited partnerships (KG): will need to file by no later than 31 December 2022.
If an official inspection reveals a discrepancy between the reported data and the beneficial owner(s), the obligated company is obliged to submit a so-called “discrepancy report” in accordance with Section 23a of the GwG. The Federal Office of Administration (Bundesverwaltungsamt) is the authority empowered to pursue offenses in relation to the Transparency Register under Section 56 of the GwG.