Registration of a limited branch after Brexit. law

Whether and under what circumstances a British limited company in Germany can enter a branch in the commercial register, currently after Brexit it is unclear whether it is actually managed from Germany and hence its administrative headquarters in Germany.

Background: Refusal to register a branch of British Limited

a British Limited Together Registered Office in United Kingdom There was already a registration in 2014 branch In German Commercial Register Registered. The registration was denied by the registry court as the registration did not specify the amount of share capital of the Limited. Furthermore, the managing director and sole shareholder had not fully assured that there were no circumstances that could prevent his appointment as managing director under German GmbH law. There was also no declaration in insurance that the managing director applying for admission was instructed by a German notary, a lawyer or a consular officer about his information obligations to the registry court. So the insurance was incomplete and Did not follow the rules about Registration Number of branches of foreign companies (Section 13G (2) HGB along with Section 8 (1) GmbH).

After the complaint was dismissed by OLG Frankfurt against registry court complaints, BGH had to decide on the legal complaint lodged against it. With the decision of May 14, 2019, the Federal Court of Justice initially suspended the proceedings and presented a question to the Court of European Union (ECJ) in Luxembourg to decide whether union law to enter a branch Obviates these requirements. In the commercial register. At that time Britain was still a member state of the European Union.

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BGH decision of February 14, 2021, Az. II ZB 25/16

The question presented to the ECJ has been resolved with the withdrawal of the United Kingdom from the European Union. In its decision, the BGH (again) stated that the UK is now a third country for which EU law is no longer relevant.

Therefore a British limited company can oppose the German registration court not anymore On EU company law directive appointed. Freedom of establishment, according to which companies from member states of the European Union are to be equated with domestic companies, and as a result the prohibition of discrimination against foreign companies no longer applies.

According to BGH, the current legal position is decisive at the time of the decision on the legal complaint. It is therefore irrelevant that an application for entry into the commercial register was made in 2014, when the UK was still a member state of the European Union.

BGH has not yet decided on the matter. The decision relates only to the repeal of the question referred to the ECJ.

Note: Brexit results for Limited with registered office in UK

A practically interesting question for all companies with a statutory seat in the UK and an administrative seat in Germany is: Under what conditions can a German branch be entered in the Commercial Register at present?

Answer to this question, which is not yet decided by BGH It depends on whether the SEAT principle is to be applied in the United Kingdom as a third party or whether the foundation principle is to continue to apply to British companies. After Founding principleWhich, according to the established case law of the European Court of Justice, is to apply to foreign companies of the European Union, under foreign law a company established in a member state of the European Union is to be recognized in Germany. It should not be denied legal capacity because it does not meet national regulations (such as minimum share capital for corporations). The fact that the UK is now a third party and companies located there can no longer rely on the freedom of establishment speaks against the application of the principle of formation of a limited company with its registered office in the UK. Instead, there are some arguments in favor of Limited – as with all other companies with a registered office in third place – Seat theory Applicable. It follows that a limited company that is actually managed from Germany and thus has its administrative headquarters in Germany, is not given its legal personality in Germany.

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Such a one Limited with only one “partner” Then as One person business To qualify with the personal liability of the “sole shareholder” / owner; If there are many “shareholders” / Holders will be limited because German OHG Qualified with personal liability of its shareholders / owners. The registration of a branch will then be based on the rules applicable to sole traders / OHGs. For this purpose, the branch should be a sustainable business with its own personnel and material resources, which in principle can be continued as an independent company. The business operations of the branch should be characterized by a certain organizational independence of the company’s share. Whether this requirement can be met, therefore, can be doubted, as “OHG” or a sole proprietorship company may have no organizationally independent branch, but is similar to the administrative headquarters of the main company.

Until these questions are decided by BGH, legal uncertainty persists. Its independently, a limited company with its administrative headquarters in Germany the option available for personal liability Limited Shareholders To Byway:

  1. management of Effective administrative seat In United Kingdom
  2. The transfer A UK capital company to conduct business German GmbH or U.G. (limited liability)
  3. Merger Company for limited liability legal entity

Which design is individually appropriate and avoids problems with the recognition and entry of a branch in the commercial register should be investigated in each individual case.

More news on the topic:

Brexit BRAO Reforms, Brexit Deals Meaning for LLP

The law helps limited companies with administrative headquarters in Germany in the event of Brexita

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About the Author: Forrest Morton

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