The German Act on the Modernization of Partnership Law (MoPeG) symbolizes a reform in partnership law, striving to establish a contemporary and legally secure regulatory framework for partnerships in Germany. It has been labeled as “the work of the century” in the German Bundestag, as it fundamentally and extensively overhauls the pertinent laws for the first time since their inception.
The extensive modifications to the law will take effect on January 1, 2024. It is therefore prudent to examine the relevant articles of association to determine if amendments are necessary.
Increased transparency and legal capacity for the “eGbR”
The transformation of the GbR (Gesellschaft bürgerlichen Rechts) from a mere occasional company to a partnership with legal capacity (now legally enshrined) with its own rights and obligations is of utmost importance. The corporate law reform thus includes the introduction of a publicly accessible company register. For the first time, GbR partners have the chance to register the GbR in the company register; however, registration is not mandatory for legal recognition.
Nonetheless, registration may be beneficial for GbRs that are extensively involved in business activities. For instance, business partners can gain an insight into the shareholder structure and hence the liability and representation relationships of the GbR. Furthermore, registration is now a requirement for conducting certain legal transactions (e.g., property transactions or participation as a shareholder in other companies), implying a de facto registration obligation.
Upon registry entry, the GbR operates under the name “eingetragene Gesellschaft bürgerlichen Rechts” or “eGbR” for short.
Virtual decision-making enabled
Another significant legal innovation is the provision for shareholders to make their decisions virtually or via conference call, in addition to in-person meetings. This was previously feasible if stipulated in the articles of association, but the law now provides a solid foundation for it according to the explanatory memorandum.
How freelancers can limit their liability
In the future, freelancers will have the option to organize themselves in the legal form of an OHG, KG or a GmbH & Co. KG – assuming that the relevant professional law explicitly allows such registration.
The primary benefit of extending commercial partnerships to liberal professions is that members of liberal professions can now structure their corporate liability relationships with great flexibility. Particularly when selecting the legal form of a GmbH & Co. KG, it is possible to limit general liability (e.g., for liabilities arising from employment or rental contracts), in addition to liability for damages due to incorrect professional practice.
Codified shareholder action facilitates claim enforcement
Another innovation brought by the MoPeG is the so-called shareholder action. Previously, this legal concept was only recognized by jurisprudence, but is now explicitly standardized. The law now enables each individual shareholder to assert company claims in their own name. This is a case of legal representative action, where the shareholder can sue for direct payment to the company.
WINHELLER aids with the adaptation of articles of association
Do you have questions about whether you or your company are affected by the legal change, or do you require assistance with contract amendments? We are here to help and support you in implementing a tailored and practical solution in light of the new MoPeG.
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Company Registration in Germany
