Obligation to register in the transparency register

Since August 1, 2021, many companies and associations are required to register in the Transparency Register.

The Money Laundering Act established the Transparency Register on October 1, 2017, which records the persons who own the company or exercise significant control over the respective organization for all companies, cooperatives, foundations and associations. When it was introduced, the transparency register was still designed as a catch-all register in which a separate entry was only necessary if the information on beneficial owners did not result from existing entries in other registers, such as the commercial register or the register of associations. Such existing entries in other registers were subject to a notification fiction to the transparency register.

With the Transparency Register and Financial Information Act, which came into force on August 1, 2021, this notification fiction has been abolished without replacement. As a result, the transparency register has become a full register - all legal entities under private law and registered partnerships are now obliged to notify the transparency register. Only sole proprietorships and civil law partnerships (GbR) are thus not affected by the obligation to register in the Transparency Register. Companies and organizations whose obligation to notify the transparency register was previously deemed to have been fulfilled by the notification fiction must make up for the entry of the beneficial owner(s) within a transitional period:

• Stock corporation, SE or KGaA until March 31, 2022

• GmbH, (European) cooperative or partnership until June 30, 2022

• in all other cases (commercial partnership, associations, etc.) until December 31, 2022

For registered associations, an entry is automatically created in the transparency register based on the data in the register of associations, in which all members of the management board are recorded as beneficial owners. An association therefore only has to make an additional manual entry in the transparency register if a change in the board of directors was not immediately reported to the register of associations, there is a beneficial owner who is not a member of the board of directors, or a board member does not reside in Germany or does not have German citizenship or other citizenships.

The transitional periods do not apply to those who were already required to register in the transparency register prior to the statutory changes, nor in cases where registration is expressly required, e.g. in the case of bridging assistance. If the notification fiction applied previously, it is sufficient to provide the current beneficial owner(s) when registering, otherwise this information must be provided retroactively as of October 1, 2017.

Beneficial owners include any natural person who directly or indirectly holds more than 25 % of the capital shares, controls more than 25 % of the voting rights or exercises control in a comparable manner (e.g. veto rights). Of these persons, the first and last name, date of birth, place of residence, type and scope of economic interest and all nationalities must be entered in the transparency register.

Entries in the transparency register are available online at https://www.transparenzregister.de possible. Although the registration and entry itself is free of charge; the mere number and frequency of changes therefore has no cost implications, the Bundesanzeiger Verlag, which maintains the transparency register on behalf of the state, charges all organizations subject to registration an annual fee of 4.80 euros plus VAT. Non-profit associations and organizations can be exempted from the fee.

Violations of the registration and transparency obligations are considered an administrative offense that can be punished with a fine of up to 150,000 euros. In the case of particularly serious or repeated violations, the fine can also be significantly higher. There is no reminder or warning prior to the fine proceedings.

Every company and organization required to register should therefore do so as soon as possible. Please note that initial registration is not the end of the story. If there are any changes in the beneficial owners, the information in the transparency register must be updated accordingly.