New GbR Company Register

The Act to Modernise the Partnership Law (Personengesellschaftsrechtsmodernisierungsgesetz - MoPeg) came into force on 1 January 2024. MoPeG contains extensive changes for partnerships; among other changes, the law on civil law partnerships (Gesellschaften bürgerlichen Rechts - GbRs) was reformed and adapted to the case law on the legal capacity of the so-called "external GbR" (Außen-GbR) (Sections 705 et seq. German Civil Code (Bürgerliches Gesetzbuch – BGB)). In addition, a separate company register, closely based on the commercial register, was introduced for registered GbRs (eGbRs) (Sections 707 et seq. BGB). Entry in the new company register is generally voluntary. However, in many cases, including the execution of property purchase contracts and financing, there is a de facto obligation to register the GbR. This is because changes in the land register and other registers are to be made dependent on the prior entry of the GbR in the company register (so-called "pre-registration requirement").

In our Insights article, we name the most important reasons for property owners and purchasers to register their GbR and how the registration is carried out.

Since 1 January 2024, partners may register their GbR with the court in whose district the GbR has its registered office for entry in the company register. The registration procedure is comparable to that for general partnerships and limited partnerships: a publicly (e.g. notarised) certified register application from all partners is required, which the notary then transmits electronically to the registry court. In addition to the company name, registered office and address of the partnership, the names, dates of birth and places of residence of the partners as well as the powers of representation must be stated. The partners must also confirm that the company is not yet registered in any other register. Subsequent changes to the details of the company, the powers of representation or the partners (i.e. leaving and joining of partners) must also be registered. Upon registration, the company must use the name affix "eingetragene Gesellschaft bürgerlichen Rechts" or "eGbR" in legal transactions. Moreover, if no individual is liable as a partner, the limitation of liability must be indicated in the name of the GbR. Registration in the company register also entails the obligation to have the beneficial owners of the eGbR registered in the transparency register. Once registered, the eGbR can only be cancelled in accordance with the general provisions (i.e. usually after the conclusion of liquidation proceedings); the partners' right of choice to register is therefore (also) restricted in this respect.

Entry in the company register has various advantages, including the partners' right to choose the registered office and the publicity effect with regard to the existence, identity and representation of the company.

For partners holding or wishing to acquire a property through their GbR, there are further, sometimes compelling reasons to have their GbR entered in the company register and the land register corrected at an early stage:

• Since 1 January 2024, changes to the land register (and other registers, e.g. the commercial register) affecting the rights of a GbR should only be made after the GbR has been entered in the company register. This means that, in particular, the legal acquisition (rechtsgeschäftlicher Erwerb) of land or land rights for and from a GbR is only possible after prior entry in the company register.
• Property owners holding a property through their GbR must also arrange for a correction of the land register following the entry of the GbR in the company register; this is because in future only the GbR will be recognised as such; its partners will not be registered. In addition to the consent of the eGbR, the correction requires the co-operation of all partners still entered in the land register at this time.

In the following cases, early registration of the GbR and, if necessary, land register correction are therefore particularly important:

• In the event of an intended legal sale or acquisition of a property or heritable building right by an existing GbR;
• In the event of intended financing, if the property of a GbR is to be encumbered with a mortgage or
• if an objection to the accuracy of the land register is to be entered in the land register and/or the land register is to be corrected for a GbR.

In addition, the registration of the GbR in the company register is also required for other dispositions of rights to real estate that require changes in the land register (e.g. the creation or assignment of easements and priority notices), as well as for corrections of such rights. It is yet unclear whether prior registration is also required for the cancellation of encumbrances.

The entries in the company register and - in the case of existing owners - the land register notification should, if possible, be made before the notarised purchase agreement or the legal transaction in question is concluded so that the identity of the disposing company and the registered company can be proven to the land registry with legal certainty.