Corporate Information Goes Online

Introduction

Although German engineering is known throughout the world for cutting-edge technology, German corporate law, in particular its procedures with regard to the publication of corporate information, is increasingly perceived as outdated and burdensome, particularly for foreign investors. Therefore, the German legislature is taking steps to modernize German corporate law.

The Law on Electronic Commercial Registers and the Company Register, the latest in a series of reform statutes, was issued on October 13 2006 and came into force on January 1 2007. The new law implements major changes with regard to the publication of corporate data; it is designed to improve access to such data and speed up registration and publication procedures for companies doing business in Germany by:

• introducing entirely electronic commercial registers;
• establishing a new central electronic company register with direct access to a plethora of information that was previously scattered across various sources; and
• modifying the rules and methods regarding the publication of annual accounts.

Electronic Commercial Registers

German companies and German branch offices of foreign companies are registered with the commercial registers held at the court local to the company or branch. Thus, traditionally commercial register information was held only at this local level and all information requests had to be directed to the respective court. As only some of the commercial registers had been made electronic over the past few years, a substantial part of the information had to be submitted in paper form and could be requested only by such traditional means.

However, from January 1 2007 all commercial registers must be held electronically. This will change the processes for submitting and retrieving commercial register information.

Filing, Publication and Retrieval

From January 1 2007 filings to the registers, which must still be in certified form, are to be effected in electronic form through two IT solutions known as RegisSTAR and AUREG. This electronic data transfer will lead to more standardized filings and should shorten the time necessary to enter filings in the registers. All documents that must be filed (eg, the company's articles of association and lists of shareholders) must also be filed electronically.

Commercial register entries must be published. At present, such publication is carried out through local and/or national newspapers. This costly and inefficient system will remain in force for another two years as a concession to the German newspaper industry, but will then be replaced by special electronic publication platforms to be set up by the state ministries of justice.

Retrieving information

The principal right of access to commercial register data remains unchanged. Anyone can request such information without the need to prove special interest. However, it will be much easier to obtain data from commercial registers as a central website (http://www.handelsregister.de/) is available, providing access to all the commercial registers throughout Germany.

No special registration is required for this online portal. Users' details are requested only with regard to the fees for the available services. A charge of €4.50 per document requested is made. Therefore, a standard request, which would consist of the company's general commercial register excerpt, articles of association and list of shareholders, will cost €13.50.

Central Company Register

The second pillar of the reform is the introduction of a central electronic company register (available at http://www.unternehmensregister.de/). This register is designed to make centrally available all the information published by the company under corporate law and capital market requirements, which was previously scattered across different registers and media. The newly established company register should overcome this fragmentation and centralize the data in a central register. It contains data from:

• the commercial registers;
• the electronic Federal Gazette;
• the insolvency courts; and
• companies.

Therefore, particularly in the case of listed companies, this one-stop shop will provide a wealth of information on:

• the members of the management board and the supervisory board;
• the articles of association;
• invitations to and protocols of annual general meetings;
• the annual financial report;
• insider trading news;
• publications; and
• major shareholdings.

Retrieving data from the company register is free of charge, except for information that is also published in a commercial register.

Annual Financial Statements

The third major area of reform is the law pertaining to the publication of annual financial statements. Annual financial statements and, if applicable, consolidated financial statements of all corporations (irrespective of the size of the company) need to be submitted only to the electronic Federal Gazette. Additional filings to the commercial register are no longer required. Corporations that do not comply with this requirement will be fined up to a maximum of €25,000.

Comment

Going online is not only a major financial and technical commitment for the commercial registers, but also a significant step towards making German corporate information more readily available to investors, as well as quicker to file. It remains to be seen whether the improved transparency leads to further changes to the strict rules of creditor protection, seen by many as overly cautious, as a creditor which has permanent and quick access to the relevant corporate data may be seen to require less protection.

Globe Business Publishing Ltd