The life of German Limited Liability Companies (GmbH) becomes digital. It is now possible to set up GmbHs online and hold shareholders' meetings virtually. This will save time.

What's new?

Establishing GmbHs online

• So far, new GmbHs with a maximum of three shareholders and one managing director could be founded in a simplified procedure at the notary's office (Section 2 (1a) German Act on Limited Liability Companies, GmbHG).
• Provided no contributions in kind are made (i.e. cash formation), GmbHs may be founded online (Section 2 (3) Sentence 1 GmbHG).
• The corresponding application to the German Commercial Register may be processed with the notary by video (Section 12 (1) Sentence 2 German Commercial Code, HGB). The same applies to the registration of new managing directors or a new business address.
• From 1 August 2023 on, online formations against contributions in kind will also be possible.
• For online communication with the notary, you will need a notary app on your smartphone (with NFC functionality), a notebook, a suitable identification document with eID and an internet connection (see https://online-verfahren.notar.de/ov/ for more information).

Virtual shareholders' meeting

• Shareholders' meetings may be held by telephone or video communication. As a prerequisite, all shareholders must have consented to such procedure in text form (Section 48 (1) Sentence 2 GmbHG, Section 126b German Civil Code, BGB).
• From 1 August 2023 on, (unanimous) shareholder resolutions on amendments of the articles of association may be notarized online (Section 48 (1) Sentence 2 and Section 53 GmbHG as amended).

Recommendations

With the latest amendment to the law, the legislator only helps those who are in accord: Provided all shareholders have agreed in text form, they may meet virtually and pass resolutions.

In the event of a conflict, however, they will rarely be able to agree on this. Those who want to block resolutions will look for justification in the articles of association. Every formal requirement for a shareholder’s meeting (convening, deadlines, forms) will be used to delay or avoid the passing of resolutions.

In order to be able to use virtual shareholder meetings even when the shareholders are in dispute, many GmbHs will have to amend their articles of association. The articles of association can permit virtual shareholder’s meetings and resolutions in principle. If so, the prior consent of all shareholders will no longer be required. Where the articles do not allow for this already, it will be recommendable to amend the articles of association unanimously.

The following questions should be answered beforehand:

• Should the virtual shareholder’s meeting have the same status as the face-to-face meeting?
• Should the virtual shareholders' meeting be the standard procedure?
• What compelling reasons stand in the way of a virtual shareholder’s meeting?
• What arguments may shareholders use to object to the virtual meeting?
• Should the virtual shareholders' meeting be limited to certain means of communication (e.g. Zoom, Teams)?
• What are the deciding factors for the choice of the means of communication (simplicity, availability, data protection)?
• Do you need technical support in addition to the chairperson of the meeting?
• Who could provide it?
• What should happen in case of technical difficulties?
• How should virtual shareholder’s meetings be documented?

In answering these questions, the interests of all shareholders need to be taken into account.

Conclusion

The amendment to the law gives reason to take a critical look at the articles of association. Anyone who generally wants to allow for virtual shareholder’s meetings will have to amend the articles of association (unless provided for already). The legal foundation should be laid at an early stage, since in the event of a conflict it will be too late.

NOTE: If non-German persons are involved as shareholders, special rules apply when a notary is required. Shareholders concerned will need to prove their identity and authorization based on non-German sources. There are plans by the EU Commission to simplify the identification by introducing unique digital identities throughout Europe („EU Digital Identity Wallet“). Until then, prove of identity may involve additional steps.