UPDATE: FAQ of the Federal Administrative Office on reporting obligations to the transparency register

I. Background

The position taken by the BVA with respect to the transparency register reporting obligation pursuant to Section 20 (1) German Anti-Money Laundering Act ("GAMLA") for German limited partnerships and corresponding administrative practice applied by the BVA has been the subject of debate already since mid-2019. With reference to this administrative practice, our previous article published in July 2019) dealt with the BVA's interpretation of the reporting fiction pursuant to Section 20 (2) GAMLA for German limited partnerships (Kommanditgesellschaft or KG), including in the specific form of a GmbH & Co. KG (for more detail on the transparency register reporting obligations under the GAMLA for a KG or GmbH & Co. KG cf. the article).

In its updated FAQ dated January 3, 2020, the BVA now also for the first time commented on the reporting fiction applicable to a KG or GmbH & Co KG and confirmed the legal opinion presented in our previous article.

II. Reporting fiction pursuant to Section 20 (2) GAMLA for a KG or GmbH & Co. KG

As explained in detail in our previous article, the obligation to report to the Transparency Register pursuant to Section 20 (1) GAMLA always extends to the collection, storage, updating and immediate reporting of information on the beneficial owner of a corporation or partnership resident in Germany. A violation of this obligation is punishable by an administrative fine. Insofar as the information on the beneficial owner, which has to be reported to the transparency register pursuant to Section 19 (1) sentence 1 Nr. 1 to 4 GAMLA (name, date of birth, place of residence and type and scope of the economic interest in the company), is discernible from an electronically retrievable register, such as the commercial register, in accordance with Section 20 (2) GAMLA, a reporting fiction takes effect, according to which the notification obligation to the transparency register is considered to be fulfilled, so that no additional notification is required.

In its updated FAQ the BVA comments on the requirements for an application of the reporting fiction for a KG or GmbH & Co. KG as follows:

1. General partners as beneficial owners

Because of their status in the partnership, general partners, insofar as they are natural persons, are generally considered the beneficial owners of a KG or a GmbH & Co. KG, unless it is evident from the excerpt from the commercial register, that these general partners are excluded from representing the company by virtue of the shareholder agreement. Where this is not the case (i.e. where the exclusion from representation is not discernible from the commercial register), the reporting fiction pursuant to Section 20 (2) GAMLA takes effect for each general partner - irrespective of whether he is the only beneficial owner or beneficial owner alongside other general partners - provided that his name, place of residence and date of birth can be derived from the current excerpt from the commercial register.

If the general partner is a legal entity - such as in case of a GmbH & Co. KG, a GmbH -, the information on the beneficial owner of this legal entity pursuant to Section 19 (1) sentence 1 Nr. 1 to 4 GAMLA must be included in one of the registers mentioned in Section 20 (2) GAMLA (for example the commercial register) so that the reporting fiction for the KG or GmbH & Co. KG can take effect. In the case of a GmbH as a general partner, the reporting fiction for the benefit of the KG therefore only applies if the name, place of residence, date of birth and extent of the participation of the individual shareholders of the GmbH can be derived from a list of shareholders or the articles of association that can be viewed in the commercial register. It goes without saying that the legal entity holding the general partner position is itself subject to the transparency obligations of the GAMLA, so that in the case of a GmbH the aforesaid applies directly.

2. Limited partners as beneficial owners

If the beneficial owner (alone or alongside another general partner/ other general partners) is a limited partner, the reporting fiction pursuant to Section 20 (2) GAMLA does generally not apply because the amount of the liable contribution (Hafteinlage), which is entered in the commercial register for each limited partner, does not necessarily allow any conclusions to be drawn with respect to such limited partner's contribution and corresponding participation in the partnership. In case of a KG or GmbH & Co. KG, the participations held by the partners in the partnership are not discernible from the commercial register, so that additional information (nature and extent of the economic interest, Section 19 (1) sentence 1. Nr. 5 GAMLA) on such participation must be reported to the transparency register.

Nevertheless, there are exceptional cases in which a KG or GmbH & Co. KG can be subject to the reporting fiction pursuant to Section 20 (2) GAMLA despite having a limited partner as a beneficial owner. In essence, this can be the case where:

• The KG is structured as a one-person GmbH & Co. KG (i.e. a GmbH & Co. KG with only one individual acting as limited partner and also holding all of the shares in the GmbH that acts as the general partner).
• The KG is structured as a one-person unified GmbH & Co. KG (in German “Einheitgesellschaft”, i.e. a KG with only one individual acting as limited partner and one GmbH acting as sole general partner whose shares are held by the KG).

These constellations have in common, that in each case only one individual (or, in legal terms, a natural person), is involved and that it is therefore evident from the register, that this person is controlling the company/companies.

3. Neither a general partner nor a limited partner is the beneficial owner

In another constellation mentioned by the BVA, a reporting fiction applies if neither the general partner nor any of the general partner’s shareholders nor the limited partner is the beneficial owner. In these cases, the legal representative of the KG is considered to be the “fictive beneficial owner” pursuant to Section 3 (2) S. 5 GAMLA.

Since the KG is being represented by its general partner, the GmbH, the relevant person in these constellations is the managing director of the GmbH acting as the general partner. If this managing director or all managing directors are duly registered with the commercial register, the reporting fiction pursuant to Section 20 (2) GAMLA takes effect for the GmbH & Co. KG.

III. Conclusion

Since the updated FAQ of the BVA have confirmed the legal opinion on the reporting fiction presented in our previous article, we see no need for changing the recommendations previously made and pursuant to which companies in the legal form of a KG or GmbH & Co. KG, provided none of the above described cases of a reporting fiction applies, should report the participation quotas of all partners who are beneficial owners within the meaning of the GAMLA to the transparency register. Violations of the reporting obligations resulting from the GAMLA can be punished with fines of up to five million euros.