Modernization of the Law on Partnerships: The New Company Register for GbRs

Introduction The civil law partnership (GbR) is one of the most frequently used forms of company in Germany. Their popularity is mainly due to their flexibility and ease of establishment. Young game developers, esport teams and startups in particular appreciate these features and use the GbR as a springboard to bring their innovative ideas to market. However, the GbR is not only used in the dynamic world of startups. It is also present in more traditional industries such as construction. Here, large GbRs are often formed between corporations to make joint projects more efficient and to share risks. Despite its popularity, the GbR has also received criticism in the past due to its lack of legal certainty and transparency. The Act on the Modernization of the Law on Partnerships (MoPeG) now provides for significant changes that are intended to address these weaknesses. A central point is the introduction of a company register for GbRs. This register is intended to help increase the legal certainty and transparency of the GbR and thus further increase its attractiveness as a form of company. The new company register for GbRs The Act on the Modernization of Partnership Law (MoPeG), which comes into force on 01.01.2024, will introduce a new company register. This register, which will stand alongside the commercial and transparency registers, is intended to increase transparency and legal certainty for civil law partnerships (GbRs). It is expected that in particular outside GbRs, which act as independent legal entities and conclude contracts, will register in order to preserve their rights. The external GbR can acquire property and other rights and is recognized as an independent entity in legal transactions. Without an entry in the new company register, outside civil law partnerships could risk significant delays in carrying out legal transactions, especially if they hold registered rights or are involved in registered companies. This contrasts with the Innen-GbR, which exists only in the internal relationship between the partners and has no legal personality. It does not appear externally and is often formed in the form of silent partnerships, communities of heirs or communities for the joint use of resources. Inner-GbRs are not required to be registered in the new company register. However, the distinction between external and internal GbR is not always clear and depends on the specific circumstances of the individual case. It is therefore advisable that GbRs and their partners prepare for the upcoming changes and check whether there is a duty to register. If they hold registered rights or have an interest in registered companies, or wish to acquire such rights in 2024, they should take appropriate steps to avoid potential delays and complications. This could include, for example, bringing forward acquisition transactions to 2023. It is also important to prepare for a large rush to the newly created Companies Registry in January 2024 and to be prepared for possible delays in the requested registration. If anything is unclear, legal advice should always be sought to ensure that all requirements are met and the rights of the GbR are safeguarded. Voluntary registration with incentives Registration in the new company register is generally voluntary. However, the legislator relies on positive incentives to encourage as many GbRs as possible to register. One such incentive is the ability to have a seat registered. In addition, registration in the company register offers further advantages. It increases the transparency and legal certainty of the GbR by providing third parties with a clear overview of the partners and their power of representation. This can strengthen the trust of business partners, customers and investors and make the GbR more attractive for business relationships. After registration, the GbR is obliged to use the name suffix “eingetragene Gesellschaft bürgerlichen Rechts”, or “eGbR”. This enables outsiders to have confidence in the accuracy of the entries and to assess with certainty who is available to the company’s creditors as a general partner. In addition, the law provides for the possibility of a change of status from the company register to the commercial register if a GbR wishes to change its legal form to another partnership. This concerns in particular the registered, small commercial GbR, which would like to change to the legal form of the OHG (or are this already factually – see in addition this contribution). It is important to note that registration of the external GbR in the company register is not mandatory and not required for its legal capacity. It retains all its previous rights even after the introduction of the company register and remains registered in other registers, e.g. in the land register. However, the law provides that the registration of a GbR, for example, in the land register may only take place if it is also registered in the company register. Despite the advantages offered by registration in the company register, GbRs should weigh the decision carefully. Registration involves costs and administrative effort and requires a thorough knowledge of the legal requirements. It is therefore advisable to seek advice from a lawyer before deciding to register. Conclusion The introduction of the company register for GbRs is an important step towards modernizing partnership law. It increases legal certainty and transparency and offers GbRs new opportunities. However, it remains to be seen how the new regulations will be accepted in practice.