date | theme

21. February 2022 | The Transparency Register for Beneficiaries in Germany from 2022 (this contribution)

22. February 2022 | Insight into the Transparency Register: Who gets access to which data?

23. February 2022 | Reporting of inconsistencies in the Transparency Register

24. February 2022 | Transparency register: which fines threaten administrative offences?

Since the beginning of 2022, many companies and other legal entities have been obliged to register their legally entitled persons in the transparency register. For this purpose, the legislature has transferred the central collection and management of data on these natural persons to the Federal Gazette. In addition, legislators have reformed the Money Laundering Act to adapt it to the current EU Directive. Beneficiaries whose registration in the Transparency Register is now compulsory are natural persons who directly or indirectly participate in, or exercise control over, more than 25 % of, a private body or an association of persons. Various details are required. In particular, name and residence as well as the mode of economic eligibility belong to this. The purpose of this EU-based transparency register is to combat money laundering and terrorist financing.

From 2022, certain persons who are, for example, economically entitled to corporations or partnerships will be entered in a special transparency register. This commitment stems from the implementation of an EU initiative to combat both money laundering and terrorist financing. But what exactly is the transparency register and under what conditions is it obligatory to register in the transparency register? These two and many other questions about the transparency register should be answered in this article.

Before going into the details, we reinforce our further considerations of the Transparency Register by discussing the legal bases introduced for this purpose. This requires a look into the law on the detection of profits from serious crimes (Money Laundering Act – GwG). In particular, §§ 18 to 26a GwG are of interest for this, because they regulate the modalities for the establishment and entry in the transparency register. In addition, the legislation referred to in those rules also plays a role. This applies in particular to references to paragraphs that contain important definitions or other explanations. § 3 GwG in particular is important here.

In fact, the GwG has existed since 2017. Thus, the transparency register is anything but new. In the past, certain companies and other legal entities had to publish data on their beneficial owners in the transparency register. However, an entry in the existing registers (e.g. commercial register, association register) has often sufficed to meet the previous obligations of the legislature to publish the required data. For this reason, only relatively few companies and other legal entities have entered their data in the transparency register.

However, legislators have reformed the GwG 2021 to adapt it to the latest requirements. For now the transparency register is to be a full register, which generally serves for such data subject to publication. The original initiative to introduce transparency registers goes back to the EU Directive 2015/849 of 20 June 2015. The current EU Directive 2018/843 of 30.06.2018 led to this update of the German regulations, which will be applied for the first time on 01.01.2022 in the new legal guise.

At this level, we have several aspects to consider. We therefore now ask nine relevant questions in this context and answer them.

The Transparency Register is a public register containing those persons who are regarded as beneficial owners of corporations, associations of persons or other legal entities in Germany (§ 18 GwG). For this purpose, the leading Federal Ministry of Finance (BMF) has lent Bundesanzeiger Verlag GmbH the management of the transparency register. Accordingly, the management of the transparency register is a sovereign task of the Federation, which a private-law service provider performs on its behalf. The Federal Office of Administration is entrusted with the technical supervision.

The Transparency Register itself is a purely electronic register. In this function, it takes over the registers previously held at the local courts and the administrative tasks associated with them. For this reason, the transparency register now constitutes a full register. The registers previously responsible for such tasks, while remaining in parallel, lose priority in the performance of those tasks.

First of all, § 20 GwG requires that persons who are economically entitled to a legal person under private law or to an association of persons are entered in the transparency register. However, according to § 3 GwG, only natural persons are eligible as beneficial owners. Furthermore, this is only the case if a natural person has at least 25% of either a share in one of the said legal entities or combines voting rights to that extent. However, the law also adds at this point that this condition is also fulfilled if comparable control takes place in another way.

This also applies to indirect participation. For example, the shareholder of a company holding 25 % of the shares in a subsidiary can only be regarded as beneficial owner if he controls the parent company with a majority of the shares or voting rights.

In this way, the Transparency Register is intended to enable screening of all participation structures where the condition is a quota of at least 25 %.

Strictly speaking, the legal entities in which beneficial owners participate are obliged to enter the persons in which they are beneficial owners in the transparency register. Thus, companies and other associations have a direct obligation to collect this information from their beneficial owners and to enter it in the transparency register. Of course, this also indirectly requires that the economically entitled persons are cooperative here.

3.4.1. Legal persons governed by private law

Let’s go into more detail: The legal entities under private law primarily include all corporations (UG (haftungsbeschränkt), GmbH, AG and others). Furthermore, cooperatives also belong to this circle. However, foundations with legal capacity are also subject to this obligation.

Finally, associations are also obliged to register their beneficial owners. However, a prerequisite here is that either a change of management board has not yet led to an entry in the association register, another outside person who is not a member of the management board comes into consideration as a beneficial owner, a beneficial owner has his residence abroad or another or an additional citizenship. However, if none of these conditions are met, the registration of an association in the register of associations is sufficient; no entry into the transparency register is then required.

3.4.2. Groups of persons

The associations of persons are exclusively those registered in the commercial register. These include both those who are obliged to enter in the commercial register under the Commercial Code and those who voluntarily enter in the commercial register. Thus, all partnerships to which one of these conditions applies also belong to the legal entities affected by the registration obligation (for example OHG, KG).

Furthermore, partnership companies of all kinds belong to the associations of persons defined by the GwG.

Since silent partnerships do not register in the commercial register, they are excluded from the registration of their beneficial owners. The same currently applies to companies under civil law (GbR). However, since the law for the modernization of partnership law (Personngesellschaftsrechtmodernisierungsgesetz – MoPeG) adopted in 2021 will result in many changes to GbRs, among others, from 2024, a future obligation in this regard should also be examined.

For individual companies, of course, there is also no need to be entered in the transparency register.

3.4.3. Trusts, trust structures and similar entities

Finally, there are some other legal entities that have to be considered when entering the Transparency Register. These include trust structures and trusts. However, foundations in which the founder has determined a self-interested foundation purpose are also included. However, in order to take into account all other contingencies, all other structures which in one way or another resemble the aforementioned legal entities are also affected by the obligation to register their beneficial owners.

Since 2022, all legal entities within the meaning of the GwG have been obliged to enter information on the person of their beneficial owners in the transparency register. This shall include the following information: