17. January 2022
Changes in the obligation to notify the Transparency Register
Due to European legal requirements concerning the fight against money laundering, terrorist funding and other serious crimes, there have been significant changes regarding the Transparency Register. Due to the transformation of the Transparency Register into a “full register”, almost all German companies will be obliged to notify the Transparency Register of their beneficial owners in the future.
What is the Transparency Register?
The purpose of the Transparency Register is to identify the natural persons at the end of corporate structures of companies or groups (so-called beneficial owners) and to record them in the register. This is to prevent money laundering and terrorist funding.
Which companies are obliged to register?
The notification obligations of companies have been intensified and significantly expanded by the changed legislation. While many companies were still exempt from the obligation to register, from now on almost all corporate legal entities are obliged to notify the Transparency Register of the beneficial owner.
Who is the beneficial owner?
Beneficial owners are natural persons who are either shareholders or exercise other significant control over the company. In the case of corporate legal entities (like GmbH) the beneficial owners include any natural person who directly or indirectly
- holds more than 25% of the capital shares or
- controls more than 25% of the voting rights or
- exercises control in a comparable manner.
If no beneficial owner can be identified in the case of a GmbH, the management has to be entered in the Transparency Register as so-called fictitious beneficial owners.
Until which date should the notification be made?
For corporate legal entities and registered partnerships whose obligation to notify the Transparency Register was previously regarded as fulfilled due to the former legislation, the following transitional periods apply with regard to notification:
- Stock corporation, SE, partnership limited by shares: March 31, 2022
- Limited liability company (GmbH), cooperative, European cooperative or partnership: June 30, 2022
- in all other cases (in particular foundations and registered partnerships): December 31, 2022
The transitional periods do not apply to companies that were already obliged to register in the Transparency Register prior to the legal changes, nor in cases where registration is explicitly required (e.g. bridging aid). In these cases, the beneficial owner has to be notified to the Transparency Register without delay. Also, any companies that have been established after August 1, 2021 do not benefit from the before mentioned transitional arrangements and must notify their beneficial owners to the Transparency Register immediately.
What are the risks if no notification is made to the Transparency Register?
According to the legal requirements, the non-fulfillment of the notification obligation is an administrative offense. For breaches of the regulations, a fine up to EUR 150,000.00 (!) can be imposed. In addition, all companies that receive a fine of more than EUR 200.00 in this context could be listed on the website of the Federal Office of Administration and can consequently be found by business partners. Currently, more than 700 companies are already listed.
What do I have to do now?
In light of the expiring transitional periods, you should check the obligation to register your company in the Transparency Register and, if necessary, update existing entries.
No worries thanks to our service
We support you in the identification and registration of the beneficial owner as well as in other questions concerning the Transparency Register and relieve you of time-consuming bureaucracy. We offer our service as a plannable lump sump. If you are interested, please contact our representative for the Transparency Register, Mr. Marc Mandelkow, attorney-at-law, at: Marc.Mandelkow@kbht.de. He will be pleased to answer your queries and provide you with an explanation of all further steps.