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8. October 2020 | Pay 25 instead of 50% tax when taxing a GmbH!

August 6, 2021 | Loss of deposit at a GmbH: Tax treatment § 17 EStG

7 October 2021 | The GmbH with tied assets as a new legal form?

20. January 2022 | Tax optimizations at the GmbH: Incongruent profit distributions are not misuse of design

20. May 2022 | List of shareholders at the GmbH and their legitimacy (§ 16 GmbHG) (this contribution)

§ 16 (1) sentence 1 GmbHG establishes the legitimacy effect of the list of shareholders. The legitimacy effect concerns the question of who is considered a shareholder in relation to the GmbH. The list of shareholders is decisive. This is the list of shareholders of the GmbH, which is submitted to the commercial register for the establishment of the GmbH. We explain what the legitimacy effect has for consequences.

§ 16 GmbH does not only affect the legitimacy of the shareholder list. Rather, the standard contains three control areas. This also includes the legitimacy effect of the shareholder list. This concerns paragraph 1 of § 16 GmbHG. Paragraph 1 regulates who is considered a shareholder in relation to the GmbH if there is a change in the person of a shareholder or in relation to the extent of the participation.

In addition, § 16 GmbHG makes further provisions in its other paragraphs. Paragraph 2 shall impose additional liability on the acquirer of the share in respect of arrears. Paragraph 3 shall also enable the bona fide acquisition of shares.

All provisions of § 16 GmbHG are mandatory and can therefore not be waived by the statutes of the GmbH. Consequently, the legitimacy effect of the list of companies cannot be changed. However, statutory regulations are possible which establish formal requirements for the notification or proof of the shareholder for inclusion in the list of shareholders. These then also indirectly use the legal effects of the legitimacy effect of the list of shareholders.

The legitimation effect has the consequence that the person listed in the list of shareholders as a shareholder is a shareholder in relation to the company. What extent the legitimacy effect has, when the shareholder list does not legitimize and what consequences it has for the shareholder, we explain below.

The purpose of the list of shareholders is first of all to create more transparency and legal certainty with regard to the persons of the shareholders and their participation. Accordingly, the relationship of the GmbH to its shareholders should be clear. The aim is to reduce transaction costs for company purchases and to combat money laundering. Accordingly, there is an obligation pursuant to § 40 (1), (2) to draw up a new list of shareholders and submit them to the commercial register immediately after each change takes effect with regard to the shareholders. The submitted list of shareholders receives legitimacy effect via § 16 paragraph 1 GmbHG.

Only the entry in the list of shareholders included in the commercial register creates member rights vis-à-vis the GmbH. Accordingly, only the registered person is legitimized vis-à-vis the GmbH as the owner of the business share. Therefore, only the registered person bears all member obligations towards the GmbH. Consequently, the registration applies both to the benefit and to the detriment of the registered person. This legitimacy effect is decoupled from the material legal situation. For the substantive legal situation, the entry in the list of shareholders has no significance. In particular, registration is not a validity requirement for the establishment of the position of shareholder. Conversely, it does not heal any substantive defects in the justification of the creation of the shareholder.

3.2.1. In principle, no effects

In external relations vis-à-vis third parties, only the materially entitled person holds the share. Accordingly, only he can effectively assign or pledge the share. In addition, only his creditors can seize him. Therefore, the substantive beneficiary is entitled to third-party proceedings if a creditor of the registered party seizes the share. On the other hand, the registered person cannot assert such a right against attachment by a creditor of the materially entitled person. In relation to third parties, therefore, only the materially entitled partner is.

3.2.2. But nevertheless indirect protection of third parties

Nevertheless, third parties are indirectly protected. On the one hand, a creditor who does not know that the registration was made incorrectly can acquire the share in good faith. On the other hand, third parties are protected reflexively. For example, decisions taken by the vote of the registered person may not be challenged on the grounds that the registered person is not a member. This is based on the fact that the registered person is considered a shareholder in relation to the company. Conversely, the vote by a materially entitled but not registered shareholder constitutes a ground for contest. The legitimacy effect also applies if the membership in the GmbH is a prerequisite for procedural acts, such as applications to the register court.

In the case of a merger, § 16 (1) sentence 1 GmbHG also applies to the assuming legal entity. Therefore, anyone who is not listed in the list of shareholders of the transferring GmbH at the time of the effective date of the merger is not entitled to initiate court proceedings.

§ 16 paragraph 1 GmbHG covers all changes in the persons of the shareholders or the extent of their participation. This means any deviation from the information in the list of founding partners and the respective new amended list of shareholders. Consequently, any change in the circle of shareholders or in the extent of the respective participation should be visible from the list of shareholders. The list of founding shareholders is submitted in accordance with § 8 (1) no. 3 GmbHG together with the founding statutes when registering the GmbH for registration in the commercial register. The legitimacy effect of § 16 paragraph 1 GmbHG also includes this list of founding shareholders or – in the case of simplified formation – the model protocol replacing the list of shareholders.

The change of the person of the shareholder without legal succession, such as the mere change of name or the transfer of residence, does not lead to the loss of legitimacy of the list of shareholders if there is no doubt about the identity of the shareholder and the extent of his participation. The latter must therefore continue to be recognised as a shareholder in relation to the company.

With regard to such changes that bring legal consequences, however, the legitimizing effect takes effect. In relation to the company therefore applies what is in the shareholder list. However, in order for the legitimacy effect to be triggered, it is not sufficient that the change has been notified and proven within the meaning of § 40 (1) sentence 2 GmbHG. Rather, the registration of the change in the list of shareholders included in the commercial register is also necessary.

The legitimation effect of § 16 (1) sentence 1 GmbHG includes all member rights and obligations. Accordingly, the GmbH may only treat the registered person as a shareholder and therefore only pay to him. Only the registered person is entitled to assert all administrative and property rights. Profit distributions must therefore be made to him.

However, only the registered person can be held liable for all services due from the time of the occurrence of the legitimacy effect – i.e. the entry. Therefore, only the registered person is obliged to file for insolvency. In addition, only the registered person can be used by the GmbH for member obligations.

Prerequisite for the legitimacy of the list of shareholders is that the change of the list of shareholders and the submission to the commercial register took place in a proper registration procedure. The far-reaching legitimacy effect is legally acceptable only if the registration was formally correct. The legitimacy effect therefore does not apply to the creation and submission of an amended list of shareholders by a non-competent person. The same applies to manipulations or collusive actions to the detriment of a person.

The lack of incorrect and therefore invalid registration of a material beneficiary is, however, cured as soon as he has exercised his member rights. If it is actually not clear whether the change in the list of shareholders was made correctly, the GmbH bears the burden of proof. For the protection of the GmbH, it may therefore be useful to specify formal requirements for the notification in the articles of association. Thus, the proof for the GmbH is easier.

A change in the list of shareholders can be made both by the managing director and by a notary.

The managing director has the right to correct at any time a list of shareholders which he considers to be incorrect. Accordingly, there is usually no problem that the managing director was not authorized to create a list. If the managing director makes the list correction without first hearing the affected list shareholder or the newly registered person, this is therefore not a problem of responsibility, but of allocation. If the sole shareholder managing director dies, no managing director can make the list change and file it with the registry court. We therefore recommend appointing a second emergency managing director in advance or empowering the heirs to appoint one or to arrange an inheritance at the probate court.

The notary is only authorized to change and submit a list in accordance with § 40 paragraph 2 GmbHG. If the notary carries out the list change, although this would actually be carried out by the managing director, this is contrary to the legitimacy effect.

Entry in the list of shareholders therefore entails the legal appearance that the registered shareholder is a shareholder. The person at whose expense the registration takes effect must have caused the appearance to be imputable. If the filing is not made on the basis of a notification of the person or against his objection, the list change is insignificant, since the legal appearance was caused not attributable. The necessary communication must therefore be made by an authorized person.

Both the real shareholder and the materially wrongly registered person have a claim against the GmbH to correct an incorrect list of shareholders. The person who has been irregularly deleted from the list of shareholders cannot be argued by the GmbH that he lacks legitimacy.

The seller is liable from the time of listing of the new shareholder for all outstanding liabilities only as a legal predecessor in accordance with § 22 GmbHG. Otherwise, he is no longer liable, i.e. not for improper capital withdrawals by the acquirer. The GmbH cannot prevent this either.

The legal successor not yet registered must generally allow legal acts of the registered legal predecessor against himself. This also applies, for example, with regard to the payment of dividends and in particular with regard to the exercise of voting rights by the registered party.

The acquirer has a practical need to take legal action regarding the company relationship even before the amended list of shareholders is included in the commercial register. This includes, for example, the decision to amend the statutes or the removal and new appointment of managing directors.

Therefore § 16 (1) sentence 2 GmbHG stipulates that the effective but only on the basis of the legal effects of § 16 (1) sentence 1 GmbHG initially pending ineffective measure of the acquirer ex tunc, i.e. from the outset is considered effective if the amended list of shareholders is included in the commercial register immediately after the performance of the legal act. If no immediate inclusion takes place, the legal act becomes definitively invalid. Immediately in this sense means without guilty hesitation. A culpable delay by the Registry Judge would also be harmful. It is also decisive whether the change of the shareholder list and its forwarding to the commercial register took place immediately. Accordingly, a culpable hesitation of the responsible managing director or notary leads to the final ineffectiveness of the legal act.

Regularly the transfer of the share takes place under a suspensive condition, for example the full purchase price payment. If the acquirer already performs a legal act before the conditional occurrence, the inclusion of the amended list of shareholders is generally not immediate, since the conditional occurrence must always be awaited.