MoPeG: New law for GbRs and other partnerships from 1 January 2024

The legal regulations governing partnerships have become outdated. Many new court rulings have rendered the current regulations obsolete. This has made legal transactions with partnerships unnecessarily complicated in some cases and has made the GbR in particular non-transparent, combined with a certain loss of trust in the legal form itself.

The legislator has now tackled these problems: above all with amendments to Sections 705 et seq. BGB and §§ 105 ff. HGB, the law on partnerships will be comprehensively reformed by the ‘Act on the Modernisation of Partnership Law’ (MoPeG) on 1 January 2024.

Focus on the GbR: the long-awaited amendment to GbR law

The GbR is one of the most popular legal forms in Germany. It is easy to set up, there is no formal requirement, no share capital is required and the GbR is largely exempt from the obligation to keep accounts. However, it has been regulated rather rudimentarily by law to date. Even the legal capacity of the GbR has not yet been standardised by law, but merely recognised by supreme court rulings.

But what will change for the GbR as a result of the MoPeG?

1. The GbR becomes officially legally capable

Since the beginning of the 2000s, the GbR has been considered to have legal capacity, as the Federal Court of Justice (BGH) has established in several judgements. The GbR is therefore able to acquire and exercise rights itself, i.e. the GbR can, for example, acquire property or conclude contracts. However, this was not previously regulated by law in the provisions on the GbR (Sections 705 et seq. BGB), but this will now change as a result of the reform.

2. Society in focus

Overall, the MoPeG places more focus on the company as such, even if the unlimited personal liability of the shareholders does not change.

On the one hand, the so-called ‘joint and several principle’ will be abandoned in future: This means that the assets of the GbR will be allocated to the company, not – as previously – jointly to all partners. On the other hand, profit and loss sharing as well as voting rights will in future be based on the amount of the shareholding and no longer on ‘heads’. However, the articles of association can make exceptions to this rule.

3. The GbR company register comes

Companies under civil law did not previously have to register themselves in a public register, such as the commercial register. This point is now also being amended by the MoPeG. It introduces the so-called company register, in which companies under civil law can register themselves.

In principle, registration is voluntary for the GbR. In some cases, however, companies are de facto forced to register: If a GbR wishes to acquire property, shares in a GmbH or AG or registrable IP rights (trade marks, patents, etc.), it is essential that the GbR is entered in the company register. Otherwise, changes to these rights are no longer possible, e.g. no sale of a property, sale of shares in a corporation, etc. This results in an indirect registration obligation in these cases. At the same time, however, companies benefit from registration: the company register has a good faith effect with regard to the registered powers of representation.

4. GbR becomes convertible

Unlike other companies, the GbR cannot currently change its legal form – i.e. it cannot be converted into a GmbH in accordance with the provisions of the German Reorganisation Act, for example.

The MoPeG will also change this on 01.01.2024: In future, the GbR will be included in the Transformation Act among the companies eligible for transformation. This will enable a seamless transition to a different legal form, e.g. to a GmbH, especially if small companies start out as a GbR, have outgrown their infancy and want to adapt their legal structure to their new size. However, a restriction also applies here: only companies that are entered in the company register will be able to change their legal form or participate in mergers etc. in future.

5. GbR no longer dissolves upon the death of a partner

According to the law, the death of a partner also meant the end of the GbR. Only if there was a corresponding continuation clause in the GbR contract did the GbR not cease to exist. This principle, which already applied to OHGs and KGs by law, will also apply to GbRs from next year.

Changes for commercial partnerships

But it is not only the GbR that is being modernised by the MoPeG. There will also be some changes for the commercial partnerships OHG, KG and GmbH & Co. KG will also see some changes.

1. New resolution deficiency law

In future, the law on defective resolutions for commercial partnerships will be more similar to corporations. In future, OHG, KG and GmbH & Co. KG will therefore have ‘contestable’ and ‘void’ resolutions. Void resolutions suffer from such a serious defect that they are invalid per se. In the case of less serious errors in the resolution, the resolution must be challenged in court within a period of three months after 1 January 2024 in order to be declared invalid.

2. Commercial partnerships – now also for freelancers

An important innovation for doctors, lawyers, pharmacists, architects and the like: the MoPeG ensures that members of the liberal professions will also be able to organise themselves in commercial partnerships in future, as corporations and partnerships have always been open to the liberal professions.

This innovation is exciting in that the GmbH & Co. KG makes it possible to combine the limited liability of a corporation with the taxation advantages of a partnership.

3. Free choice of registered office

Currently, the registered office of a commercial partnership is determined by the actual place of administration. This means that if only the registered office changes, the registered office of the company ‘follows’. This can lead to annoying, time-consuming but necessary changes, especially in an international context. But this will also change from 01.01.2024: Companies that are registered in Germany will be free to choose the location of their administrative headquarters without it having any impact on the company’s registered office (and therefore tax obligations, for example).

This means that GbR, OHG, KG and GmbH & Co. KG will also be able to become fully active abroad with their registered office in Germany without having to change their legal form. At least in the EU, recognising the company abroad is also generally unproblematic.

Does the MoPeG have consequences for tax?

No. The MoPeG will have no impact on how the income of partners in a (commercial) partnership is taxed in future. The previous principle of transparent taxation, i.e. that the partnership is not the taxable entity and the profit is distributed to the individual partners, will be retained.

What to do now? Check the need for customisation!

Many of the changes brought about by the MoPeG are not mandatory regulations. It is therefore possible to deviate from these regulations in the articles of association.

In this respect, it makes sense to take the MoPeG as an opportunity to scrutinise existing articles of association: Do the articles of association regulate everything or are there gaps? In the latter case, the MoPeG will apply from 1 January 2024. Do you agree with the statutory regulations or do you want to deviate from them by contract?