The German transparency register established under the German money laundering act now applies to many international clients.
At the end of 2017, Germany established a transparency register (Transparenzregister) (TR) containing information on the natural person who are the ultimate beneficial owners (UBOs) of almost every legal entity incorporated in Germany. Germany was required to implement this measure under the EU money laundering directive 2015/849, which is binding for every >EU Member state, so all EU Member states will be implementing similar transparency regulations.
Since 1 October 2017 the UBOs of German legal entities, privately held corporations (e.g., GmbH, AG, KGaA, SE) and registered partnerships (i.e., OHG, KG) must be registered with the TR.
ULTIMATE BENEFICIAL OWNER
Generally, a UBO is any natural person owning or controlling the entity. In the case of privately held corporations and registered partnerships, the UBO is any person that, directly or indirectly,
- Holds more than 25 per cent of the share capital
- Controls more than 25 per cent of the voting rights, or
- Controls the entity some other way.
If a UBO does not exist or cannot be determined, the legal representatives of the entity are deemed to be its UBOs.
The affected entities are obliged to obtain, preserve, hold and report the following information on their respective UBOs to the TR:
- Forename and surname
- Date of birth
- Place of residence
- Type and extent of economic interest.
Correspondingly, a direct shareholder of an affected entity is obliged to inform the entity of the UBO if the direct shareholder is itself the UBO, or is directly controlled by the UBO.
If the direct shareholder is indirectly controlled by the UBO then, ultimately, the UBO is subject to the information obligation. This applies regardless of whether the direct shareholders and UBOs of a German entity are incorporated/ resident in Germany or elsewhere.
EXEMPTIONS FROM THE TRANSPARENCY OBLIGATIONS
The TR is deemed to have been informed/reported to if the information about the UBO can be derived from documents available within certain German public registers, such as the shareholders list of a GmbH. If the information can only be derived from other sources, e.g., in the case of multi- national group structures, the TR requires a separate report.
If the entity's reporting obligation does not apply, the corresponding obligation on the UBO does not apply either.
Since 27 December 2017, any person that has a legitimate interest, e.g., those under the obligation of the transparency rules, or journalists researching money laundering, have access to the information held in the TR.
Violations of the transparency obligations may result in fines of up to EUR 1 million. German entities and their direct and indirect shareholders should verify if the reporting or information obligations apply to them and should implement an adequate compliance structure.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.