Entry in the Commercial Register
I. General
With the exception of persons engaged in very small trades or businesses and the partnership under the German Civil Code (BGB Gesellschaft), companies of all legal forms must be entered in the Commercial Register.
The Commercial register is kept by the local courts (Amtsgericht) and ensures legal certainty in trade since all actual and legal relationships are completely and reliably recorded there.
The Commercial Register is kept in two departments:
With the exception of persons engaged in very small trades or businesses and the partnership under the German Civil Code (BGB Gesellschaft), companies of all legal forms must be entered in the Commercial Register.
The Commercial register is kept by the local courts (Amtsgericht) and ensures legal certainty in trade since all actual and legal relationships are completely and reliably recorded there.
The Commercial Register is kept in two departments:
- Department A for registered sole traders (e.K. or e.Kfm./e.Kfr.) and partnerships (OHG [general partnership], KG [limited partnership]) and
- Department B for corporations (GmbH [limited liability company], AG, [joint stock corporation]).
All legal relationships of a company are notified through a notary for entry in the Commercial Register, checked by the registration court, entered in the Commercial Register and published in the daily press.
II. Significance of the Commercial Register
The Commercial Register provides information on all legally relevant facts which might be important for a business partner of the businessman or trader. This includes, for instance, the company name, the name of the owner and/or of the personally liable partners of a partnership, the liability of the limited partners, the share capital of the GmbH, the granting and withdrawal of general powers of attorney (Prokura), the institution of bankruptcy proceedings and the extinction of the company.
The Commercial Register is a public register and hence it provides all interested parties with an opportunity to examine the documents submitted free of charge.
It is also possible to request copies - against payment of a corresponding fee. The Commercial Register enjoys - similar to the Land Register - public faith, - i.e. it protects, to a certain extent, legal relations in good faith by relying on the accuracy of the entries and announcements.
If, for instance a Prokurist (person with power to represent the company) enters into a contract with a client on behalf of the owner of the business after his dismissal but before extinction in the Commercial Register and if the client is not aware of the dismissal of the Prokurist, the contract is nevertheless fully valid.
Of course any amendments to registered facts must be entered in the Commercial Register, too. This applies, for instance, to a change in the address of the branch office of a businessman or trader or to a relocation of the registered office of the company. The dismissal of a Prokurist or of a managing director should be notified without delay to the Commercial Register for entry, because this is - as shown above - in the company's best interest.
If a businessman or trader relocates, for instance, his registered office, he may be sued under his old address until the change has been entered in the Commercial Register. Hence, he can suffer considerable disadvantages if the Commercial Register entries do not correspond to the factual status. In the same way the dissolution and liquidation of a company must be notified in order to be entered into the Commercial Register, as must the extinction of the company. Any composition or bankruptcy proceedings (from 1 January 1999: insolvency proceedings) which have been initiated in respect of the assets of a company are entered into the Commercial Register ex officio by the local court.
III. Entries in the Commercial Register
Except for limited partnerships and corporations which exist only through the entry in the Commercial Register, sole traders and partnerships under the Civil Code often do not attach any importance to the entry.
The "businessman or trader" is, however, obliged by law to apply for an entry in the Commercial Register.
The Commercial Code (HGB) considers, as a matter of principle, each company engaged in a trade or business as Handelsgewerbe (business) or Kaufmann (businessman or trader), unless the company does not require business operations on a commercial basis with regard to its type and scope. This provision is independent of the specific trade or business in which the company is engaged. Companies which do not literally purchase or sell products or goods are likewise businessmen or traders which means that industry, craftsmen and other "service providers" are included.
The decisive criteria to establish whether business operations on a commercial basis are required are above all:
- annual sales revenues
- amount of capital used
- type and number of business transactions
- availment and granting of loans
- size and equipment of the business premises
- number of employed
- type of accounting.
If the business operations of a sole trader or a partnership (oHG/ KG) are to be considered as commercial in terms of their type and scope, there is a legal obligation to apply for entry of the company in the Commercial Register. If these prerequisites are not met, the company does not have to be entered in the Commercial Register and only has to register its trade or business. If a company fails to apply for an entry in the Commercial Register although it is obliged to apply for such entry by virtue of the scope of its business operations, the local court may enforce the entry in the Commercial Register - if necessary by imposing administrative fines.
If a company does not require any business operations on a commercial basis, it has no obligation but the right to apply for an entry in the Commercial Register. If such a company applies for an entry in the Commercial Register on a voluntary basis, the qualification as a businessman or trader is acquired upon the entry. A partnership under the Civil Code then becomes an oHG (general partnership).
The Chamber of Commerce and Industry (IHK) is obliged by law to support the courts in respect of the entries in the Commercial Register and the keeping of the Commercial Register.
Please contact the Chamber of Commerce and Industry (IHK) for in-depth advisory services on entries in the Commercial Register.
If a company does not require any business operations on a commercial basis, it has no obligation but the right to apply for an entry in the Commercial Register. If such a company applies for an entry in the Commercial Register on a voluntary basis, the qualification as a businessman or trader is acquired upon the entry. A partnership under the Civil Code then becomes an oHG (general partnership).
The Chamber of Commerce and Industry (IHK) is obliged by law to support the courts in respect of the entries in the Commercial Register and the keeping of the Commercial Register.
Please contact the Chamber of Commerce and Industry (IHK) for in-depth advisory services on entries in the Commercial Register.
1. The company name
Many people refer in their daily business operations to a company, including smaller ones (small businessman or traders), as a "Firma", e.g. "Firma Maier". This is not a correct description in legal terms. In accordance with the Commercial Code the Firma is only the name with which the company is entered in the Commercial Register and under which it conducts its business or trade. Since small businessmen or traders are not entered in the Commercial Register, they do not have a Firma.
Only companies which are entered in the Commercial Register can have a company name in the legal sense of the term which - together with the business operations - can be sold, inherited and let or leased. This is particularly relevant for well established companies because the use of the old company name can be continued in the event of a change in ownership and the generally known name can be used as a basis for the future business operations.
2. The creation of the company name
The company name must lend itself to a characteristic description of the company and have a distinctive character.
Traditionally the family name of the businessman or trader can be used as company name. Names derived from the object of the company or made-up names can also be used for the creation of the company name. Mixed company names consisting of the family name, a name derived from the object of the company and/or a made-up name are admissible, too.
In the company name derived from the object of the company the sector or the field of activity of the company is described by referring to categories, e.g. "ARTOS EDV-Service GmbH“.
The company name based on a family name contains the family name of the owner "Josef Kleinschmidt e.K. or of one or more partners "Müller & Schmidt oHG.
A made-up company name can be created through invented designations such as "PHÖNIX AG, "AVALON e.Kfr., "Flying Kangaroos e.Kfm., "KUKURUMBA KG or the like or combinations of letters.
Moreover, the company name must be true altogether and in respect of its individual components; it must not misrepresent the type and scope of the business operations or the status of the owner. This is determined by the risk of confusion in the trade circles addressed, i.e. competitors, customers, suppliers or banks.
Moreover, the company name must include an addition on the legal form which provides information on the liability relationship of the company. It is possible to use generally understandable abbreviations. Sole traders bear the designation "eingetragener Kaufmann or „eingetragene Kauffrau (registered sole trader) or an abbreviation like "e. K., eK, "e. Kfm. or e. Kfr.. An offene Handelsgesellschaft (general partnership) may use the abbreviation "oHG, a Kommanditgesellschaft (limited partnership) "KG, a Gesellschaft mit beschränkter Haftung (limited liability company) the designation "GmbH, an Aktiengesellschaft (joint stock corporatiion) the abbreviation "AG. If no natural person is personally liable in the case of a general or limited partnership, the limitation of liability must be discernible in the company name by adding, e.g. "GmbH & Co. KG or "GmbH & Co. oHG.
3. Effect of the entry in the Commercial Register
As a result of the entry in the Commercial Register the company name is protected from identical or similar company names because every company name must be clearly different from all companies already entered in the Commercial Register of the same municipality (§ 30 Commercial Code - HGB).
In order to exclude any risk of confusion or possible concerns with regard to the veracity of the company name and the clarity of the company name, it is recommended to contact the competent Chamber of Commerce and Industry (IHK) prior to the application for an entry in the Commercial Register.
3.1. Advantages and obligations of the entry for a businessman or trader
The benefits of an entry in the Commercial Register are not, however, limited to the already mentioned information and administrative functions.
The entry also constitutes in many respects an advantage for the businessman or trader because he benefits from advance confidence. The entry gives contractual partners and public authorities a first impression of the company. The entry in the Commercial Register also documents to third parties that the company complies with standard business rules and practices and subjects itself, more particularly, to the Commercial Code (HGB).
Since by now every businessman or trader is entitled to have himself entered in the Commercial Register on a voluntary basis, the entry does not allow any conclusions as to the size of the company. And of course it does not provide any information on the solvency and good standing of the company.
Many banks and trading companies make the establishment of a business relationship dependent on the entry in the Commercial Register. Membership in many trade associations also requires the entry in the Commercial Register.
Only companies entered in the Commercial Register are entitled to appoint a Prokurist (person entitled to represent the company) (§ 48 HGB); only such companies have the right to set up one or more branch offices. Only those persons who are or were entered in the Commercial Register as businessman or trader, as member of the Board of Management of a joint stock corporation, as managing director of a limited liability company or as senior executive of any other legal entity and have completed their 30th year of age may assume the honorary office of a commercial judge in a commercial division set up by a regional court.
The businessman or trader also has duties and obligations. These include the obligation to keep books which show his business operations and his assets.
At the beginning of his business or trading activity and at the end of each business year the businessman or trader also has to prepare an inventory and a balance sheet. Account books, inventories and balance sheets must be kept for a period of 10 years; any copies of business letters received and sent for 6 years.
The businessman or trader is, moreover, subject to the special provisions of the Commercial Code (HGB). This means, more particularly, that the businessman or trader entered in the Commercial Register can no longer invoke certain formal requirements. He is, for instance, bound by any guarantee assumed orally; in the case of an installment purchase, protection under the consumer credit law and the door-to-door revocation law no longer apply for him. Business transactions between two businessmen or traders are governed by a stricter liability for defects.
There are also special provisions governing the information stated on business letters. As a matter of principle the company name entered in the Commercial Register and the addition of the legal form must be given correctly and completely. Moreover, the place of the branch office or the registered office as well as the registration court and the Commercial Register number must be stated. The GmbH must also give the full family name and at least one first name of all managing directors.
The similar applies to the AG and the GmbH & Co. KG , which apart from its own data must also mention the personally liable GmbH on business letters.
3.2. Functions of the Chamber of Commerce and Industry
At the request of the local courts - registration courts - the Chambers must issue an expert opinion on the admissibility of the company name and support the court in the keeping of the Commercial Register. In order to avoid a rejection of the application for an entry by the registration court, it is recommended to seek the advice of the local Chamber of Commerce and Industry before making the application.
The chamber checks in particular whether companies located or registered in the same municipality have a company name which might lead to confusion.
In order to rule out that there are supra-regional companies which might assert claims for discontinuation under competition law, an additional supra-regional verification of the risk of confusion might be appropriate. This can be done by using the services of a commercial information service provider.
In the case of pure trading companies only the Chambers of Commerce and Industry are asked by the local courts to submit an expert opinion. In the case of craft businesses which apply for an entry in the Commercial Register, the competent local chambers of handicrafts are likewise involved in the expert opinions.
3.3. The fees
The local court charges fees for entry in the Commercial Register. Since the applications for entry require notarisation, it is necessary to use the services of a notary. The notary, too, charges fees for the notarisation. The amount of the fees charged by the court and the notary depends on the so-called value of the subject-matter which, in turn, is dependent on the business assets. In the event of higher business assets, the value of the subject-matter also increases.
The fee schedules are published in the Law on the costs in matters of non-contentious jurisdiction (Cost Regulation (KostO)).
Since the fees can vary, depending on the value of the subject-matter, the costs of a GmbH formation are stated below by way of example. The costs of the notary and the registration court are of course determined by the value of the subject-matter - here the amount of the share capital.
This means that the formation of a GmbH with a higher share capital costs more. When using the advisory services of a lawyer before the drafting of the memorandum and articles of association, additional lawyer fees must be paid (1/2 or 1/1 fee for a value of the subject-matter of Euro 25,000; the full fee amounts to Euro 686).
When setting up a GmbH with a share capital of Euro 25,000, the following charges are to be expected:
Many people refer in their daily business operations to a company, including smaller ones (small businessman or traders), as a "Firma", e.g. "Firma Maier". This is not a correct description in legal terms. In accordance with the Commercial Code the Firma is only the name with which the company is entered in the Commercial Register and under which it conducts its business or trade. Since small businessmen or traders are not entered in the Commercial Register, they do not have a Firma.
Only companies which are entered in the Commercial Register can have a company name in the legal sense of the term which - together with the business operations - can be sold, inherited and let or leased. This is particularly relevant for well established companies because the use of the old company name can be continued in the event of a change in ownership and the generally known name can be used as a basis for the future business operations.
2. The creation of the company name
The company name must lend itself to a characteristic description of the company and have a distinctive character.
Traditionally the family name of the businessman or trader can be used as company name. Names derived from the object of the company or made-up names can also be used for the creation of the company name. Mixed company names consisting of the family name, a name derived from the object of the company and/or a made-up name are admissible, too.
In the company name derived from the object of the company the sector or the field of activity of the company is described by referring to categories, e.g. "ARTOS EDV-Service GmbH“.
The company name based on a family name contains the family name of the owner "Josef Kleinschmidt e.K. or of one or more partners "Müller & Schmidt oHG.
A made-up company name can be created through invented designations such as "PHÖNIX AG, "AVALON e.Kfr., "Flying Kangaroos e.Kfm., "KUKURUMBA KG or the like or combinations of letters.
Moreover, the company name must be true altogether and in respect of its individual components; it must not misrepresent the type and scope of the business operations or the status of the owner. This is determined by the risk of confusion in the trade circles addressed, i.e. competitors, customers, suppliers or banks.
Moreover, the company name must include an addition on the legal form which provides information on the liability relationship of the company. It is possible to use generally understandable abbreviations. Sole traders bear the designation "eingetragener Kaufmann or „eingetragene Kauffrau (registered sole trader) or an abbreviation like "e. K., eK, "e. Kfm. or e. Kfr.. An offene Handelsgesellschaft (general partnership) may use the abbreviation "oHG, a Kommanditgesellschaft (limited partnership) "KG, a Gesellschaft mit beschränkter Haftung (limited liability company) the designation "GmbH, an Aktiengesellschaft (joint stock corporatiion) the abbreviation "AG. If no natural person is personally liable in the case of a general or limited partnership, the limitation of liability must be discernible in the company name by adding, e.g. "GmbH & Co. KG or "GmbH & Co. oHG.
3. Effect of the entry in the Commercial Register
As a result of the entry in the Commercial Register the company name is protected from identical or similar company names because every company name must be clearly different from all companies already entered in the Commercial Register of the same municipality (§ 30 Commercial Code - HGB).
In order to exclude any risk of confusion or possible concerns with regard to the veracity of the company name and the clarity of the company name, it is recommended to contact the competent Chamber of Commerce and Industry (IHK) prior to the application for an entry in the Commercial Register.
3.1. Advantages and obligations of the entry for a businessman or trader
The benefits of an entry in the Commercial Register are not, however, limited to the already mentioned information and administrative functions.
The entry also constitutes in many respects an advantage for the businessman or trader because he benefits from advance confidence. The entry gives contractual partners and public authorities a first impression of the company. The entry in the Commercial Register also documents to third parties that the company complies with standard business rules and practices and subjects itself, more particularly, to the Commercial Code (HGB).
Since by now every businessman or trader is entitled to have himself entered in the Commercial Register on a voluntary basis, the entry does not allow any conclusions as to the size of the company. And of course it does not provide any information on the solvency and good standing of the company.
Many banks and trading companies make the establishment of a business relationship dependent on the entry in the Commercial Register. Membership in many trade associations also requires the entry in the Commercial Register.
Only companies entered in the Commercial Register are entitled to appoint a Prokurist (person entitled to represent the company) (§ 48 HGB); only such companies have the right to set up one or more branch offices. Only those persons who are or were entered in the Commercial Register as businessman or trader, as member of the Board of Management of a joint stock corporation, as managing director of a limited liability company or as senior executive of any other legal entity and have completed their 30th year of age may assume the honorary office of a commercial judge in a commercial division set up by a regional court.
The businessman or trader also has duties and obligations. These include the obligation to keep books which show his business operations and his assets.
At the beginning of his business or trading activity and at the end of each business year the businessman or trader also has to prepare an inventory and a balance sheet. Account books, inventories and balance sheets must be kept for a period of 10 years; any copies of business letters received and sent for 6 years.
The businessman or trader is, moreover, subject to the special provisions of the Commercial Code (HGB). This means, more particularly, that the businessman or trader entered in the Commercial Register can no longer invoke certain formal requirements. He is, for instance, bound by any guarantee assumed orally; in the case of an installment purchase, protection under the consumer credit law and the door-to-door revocation law no longer apply for him. Business transactions between two businessmen or traders are governed by a stricter liability for defects.
There are also special provisions governing the information stated on business letters. As a matter of principle the company name entered in the Commercial Register and the addition of the legal form must be given correctly and completely. Moreover, the place of the branch office or the registered office as well as the registration court and the Commercial Register number must be stated. The GmbH must also give the full family name and at least one first name of all managing directors.
The similar applies to the AG and the GmbH & Co. KG , which apart from its own data must also mention the personally liable GmbH on business letters.
3.2. Functions of the Chamber of Commerce and Industry
At the request of the local courts - registration courts - the Chambers must issue an expert opinion on the admissibility of the company name and support the court in the keeping of the Commercial Register. In order to avoid a rejection of the application for an entry by the registration court, it is recommended to seek the advice of the local Chamber of Commerce and Industry before making the application.
The chamber checks in particular whether companies located or registered in the same municipality have a company name which might lead to confusion.
In order to rule out that there are supra-regional companies which might assert claims for discontinuation under competition law, an additional supra-regional verification of the risk of confusion might be appropriate. This can be done by using the services of a commercial information service provider.
In the case of pure trading companies only the Chambers of Commerce and Industry are asked by the local courts to submit an expert opinion. In the case of craft businesses which apply for an entry in the Commercial Register, the competent local chambers of handicrafts are likewise involved in the expert opinions.
3.3. The fees
The local court charges fees for entry in the Commercial Register. Since the applications for entry require notarisation, it is necessary to use the services of a notary. The notary, too, charges fees for the notarisation. The amount of the fees charged by the court and the notary depends on the so-called value of the subject-matter which, in turn, is dependent on the business assets. In the event of higher business assets, the value of the subject-matter also increases.
The fee schedules are published in the Law on the costs in matters of non-contentious jurisdiction (Cost Regulation (KostO)).
Since the fees can vary, depending on the value of the subject-matter, the costs of a GmbH formation are stated below by way of example. The costs of the notary and the registration court are of course determined by the value of the subject-matter - here the amount of the share capital.
This means that the formation of a GmbH with a higher share capital costs more. When using the advisory services of a lawyer before the drafting of the memorandum and articles of association, additional lawyer fees must be paid (1/2 or 1/1 fee for a value of the subject-matter of Euro 25,000; the full fee amounts to Euro 686).
When setting up a GmbH with a share capital of Euro 25,000, the following charges are to be expected:
For the notary:
Notarisation of the memorandum and articles of association (§ 36 KostO):
1. Single Shareholder GmbH (§ 36 I) (one fee)approx. Euro 100
2. GmbH formation with two or more shareholders (§ 36 II) (two fees) approx. Euro 180
Preparation of the draft and notarisation of the application for the entry in the Commercial Register (§ 38 II no. 7) approx. Euro 50
For the registration court:
Entry in the Commercial Register approx. Euro 100
For the announcement:
The announcement must be made in the daily newspapers and in the Bundesanzeiger (Federal
Gazette).
The costs depend on the extent of the information to be communicated: approx. Euro 100 to Euro 250
The costs should not, however, deter a businessman or trader from applying for an entry in the Commercial Register, because when compared to the described benefits and advantages they are a relatively negligible amount.
Ansprechpartner
Christine Seitz
Recht und Steuern
