Compliance

The core task of proper corporate management is to ensure compliance with legal requirements within the company. This duty in its entirety is understood as compliance. In addition to complying with legal obligations, it is also important to ensure compliance and to be able to demonstrate compliance. Company management is only relieved if it can demonstrate that it has adequately organized compliance as well as observance of compliance. Compliance is thus essentially a question of avoiding liability of the company and also the personal liability of the company management.

Such a task can be successfully completed with the help of an effective compliance management system that regulates, structures and monitors the company's internal processes. In the foreground, we see not only the contesting of material or non-material damage due to liability, damages claims, administrative investigative procedures or sanctions, but also the creation of a value-oriented and transparent corporate management, which is perceived externally as the company's added value.

With experienced lawyers, also qualified as Compliance Officers (TÜV), we support you in developing an effective compliance structure, and by establishing internal compliance guidelines, codes of conduct, audit and reporting systems, employee training, etc., in acting in accordance with your company. We test, adapt or optimize already existing systems for their effectiveness.

Our compliance consultancy also includes individual advice on particularly relevant areas of law, such as labor law, data protection law, company law, including M & A, intellectual property rights and economic criminal law.

The focus is always on individual consulting, tailored to the needs of your company.

Our compliance services in detail:

  • Building, testing and optimization of compliance systems
  • Creation and optimization of codes of conduct and compliance guidelines
  • Conducting compliance risk analyses
  • Conception and implementation of employee training and communication activities
  • Acquisition of compliance officer functions in your company
  • Conducting compliance due diligence in M & A
  • Legal advice and representation for compliance violations
  • In-house investigations (Private Investigation) for preliminary reconnaissance as well as legal disputes

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Current Issues

09 Okt
2017

Transparency register

A transparency register was created with the purpose of recording the beneficial owners of legal persons and partnerships, as well as of trusts.

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The 4th European Money Laundering Directive (EU) 2015/849 was implemented in Germany on June 24th, 2017 amending the German Money Laundering Act (MLA). A transparency register was created with the purpose of recording the beneficial owners of legal persons and partnerships, as well as of trusts.

Legal persons of German private law (e.g. AG, GmbH, UG, e.V.) and registered partnerships (e.g. OHG, KG, PartG) are now obliged to collect information about their beneficial owners and to inform the register about them without delay (§ 20 para. 1 sentence 1 MLA). According to § 21 MLA the same obligations also apply to the trustees of trusts and of foundations without legal capacity or similar legal formations domiciled in Germany. The obligations to collect data and to notify the transparency register are accompanied by the obligation of the beneficial owner to provide the necessary information to the concerned companies.

A beneficial owner is any natural person holding directly or indirectly more than 25% of the share capital or controlling more than 25% of the voting rights or controlling the company in a comparable manner (§ 3 MLA). Such indirect control is in particular the case when the shares are held by another company which is controlled by a natural person. This also includes shares nominally held by a trustee for the beneficial owner. Relevant is the natural person standing at the end of a chain of participations.

Under § 19 para. 1 MLA the transparency register shall receive the following information about the beneficial owner: first and last name, possibly nationality, date of birth, place of residence as well as the nature and scope of the economic interest. The information about the nature and scope of the economic interest shall illustrate what makes the person a beneficial owner. This includes, in particular, the size of the shares or of the voting rights, but also a possible function of the beneficial owner as a legal representative, managing director, shareholder or similar functions, which allow the owner to control the company in other ways.

If the relevant information is already published in electronically retrievable documents and records in German public registers then the companies is exempt from this obligation to provide information about the beneficial owner again. That concerns registrations in the commercial register or partnership register or associations register. I.e. companies which shareholders are natural persons do not have to provide information to the transparency register.

However, if the shareholder is another legal person or a trust, the company is affected by the reporting requirement. This applies, in particular, if the shareholder is a foreign legal person because information about its ownership structure is generally not available in German registers.

Violations of the reporting obligations could be sanctioned with a regulatory fine up to EUR 100,000.00.

In case of doubts about the fulfillment of reporting obligations by the published information in other German registers the company should report the necessary data to the transparency register. The company also has to notify about any subsequent changes of the beneficial owners without a special request of the register. It is advisable to install a monitoring system for continuous updating.

The transparency register is run by Bundesanzeiger Verlag under the following link: https://www.transparenzregister.de.

Please do not hesitate to contact our lawyers if you have any questions regarding the reporting requirements and rights of access to the data of the transparency register.

Rechtsanwalt Alexander Shmagin

dmp@derra-b.de

10/2017

The 4th European Money Laundering Directive (EU) 2015/849 was implemented in Germany on June 24th, 2017 amending the German Money Laundering Act (MLA). A transparency register was created with the purpose of recording the beneficial owners of legal persons and partnerships, as well as of trusts.

Legal persons of German private law (e.g. AG, GmbH, UG, e.V.) and registered partnerships (e.g. OHG, KG, PartG) are now obliged to collect information about their beneficial owners and to inform the register about them without delay (§ 20 para. 1 sentence 1 MLA). According to § 21 MLA the same obligations also apply to the trustees of trusts and of foundations without legal capacity or similar legal formations domiciled in Germany. The obligations to collect data and to notify the transparency register are accompanied by the obligation of the beneficial owner to provide the necessary information to the concerned companies.

A beneficial owner is any natural person holding directly or indirectly more than 25% of the share capital or controlling more than 25% of the voting rights or controlling the company in a comparable manner (§ 3 MLA). Such indirect control is in particular the case when the shares are held by another company which is controlled by a natural person. This also includes shares nominally held by a trustee for the beneficial owner. Relevant is the natural person standing at the end of a chain of participations.

Under § 19 para. 1 MLA the transparency register shall receive the following information about the beneficial owner: first and last name, possibly nationality, date of birth, place of residence as well as the nature and scope of the economic interest. The information about the nature and scope of the economic interest shall illustrate what makes the person a beneficial owner. This includes, in particular, the size of the shares or of the voting rights, but also a possible function of the beneficial owner as a legal representative, managing director, shareholder or similar functions, which allow the owner to control the company in other ways.

If the relevant information is already published in electronically retrievable documents and records in German public registers then the companies is exempt from this obligation to provide information about the beneficial owner again. That concerns registrations in the commercial register or partnership register or associations register. I.e. companies which shareholders are natural persons do not have to provide information to the transparency register.

However, if the shareholder is another legal person or a trust, the company is affected by the reporting requirement. This applies, in particular, if the shareholder is a foreign legal person because information about its ownership structure is generally not available in German registers.

Violations of the reporting obligations could be sanctioned with a regulatory fine up to EUR 100,000.00.

In case of doubts about the fulfillment of reporting obligations by the published information in other German registers the company should report the necessary data to the transparency register. The company also has to notify about any subsequent changes of the beneficial owners without a special request of the register. It is advisable to install a monitoring system for continuous updating.

The transparency register is run by Bundesanzeiger Verlag under the following link: https://www.transparenzregister.de.

Please do not hesitate to contact our lawyers if you have any questions regarding the reporting requirements and rights of access to the data of the transparency register.

Rechtsanwalt Alexander Shmagin

dmp@derra-b.de

10/2017