Changes to commercial law in 2024

In particular, the law on partnerships has been amended, the Transparency Register for combating money laundering has been strengthened, the capital market is being modernized and the framework for employee share ownership are being improved. In addition, the scope of application of the Whistleblower Protection Act and the Supply Chain Due Diligence Act has been extended.

Modernization of the law on partnerships

Partnership law in Germany has been modernized with effect from 1 January 2024. The so-called Act on the Modernization of Partnership Law introduces structural changes, particularly for civil law partnerships.

The introduction of a public register is planned for civil law partnerships (GbR). The entry of a GbR in this register is not mandatory. However, if the GbR owns real estate or holds shares in other companies (e. g. GmbHs), the GbR must be entered in the company register from 1 January 2024.

Further tightening of the Transparency Register

The so-called Financial Crime Prevention Act provides additional query rights to improve data quality in the German Transparency Register from 1 April 2024.

To combat money laundering in Germany, the beneficial owners of all legal entities under private law, registered partnerships and other legal structures must be recorded in this register via http://www.transparenzregister.de/. Violations of the transparency obligations can result in fines of up to 150,000 euros.

The newly codified additional powers of investigation are intended to make it easier to detect false entries and initiate corrections. In addition, a real estate transaction register will be established to increase transparency in the real estate sector, which is susceptible to money laundering, and to improve, inter alia, the fight against money laundering and the enforcement of sanctions.

Modernization of the capital market and improvement of the framework conditions for employee share ownership

On 24 November 2023, the German legislator passed the so-called Financing for the Future Act to modernize the capital market and improve the framework conditions for employee share ownership. In addition to comprehensive measures under business and financial market law, tax regulations have been amended

From 1 November 2025, in addition to bearer bonds, it will also be possible to issue shares in Germany by entering them in an electronic securities register as central register shares or crypto shares. Since the law came into force, dual-class shares with multiple voting rights can also be authorized within certain legal limits.

Access to the capital market has been facilitated for start-ups and small and medium-sized enterprises. To this end, the minimum market capitalization for IPOs has been reduced from EUR 1.25 million to EUR 1 million.

So-called shell companies can now also be established in Germany as a counterpart to Special Purpose Acquisition Companies (SPACs) based on the American model. These are shell companies with no operating business of their own whose function is essentially focused on raising capital in order to take over an unlisted company and indirectly list it on the stock exchange.

The tax changes include, in particular, an improvement in the framework conditions for employee capital contributions with effect from 2024. One of the aims is to make it easier for young companies to recruit and retain employees. To this end, the tax-free allowance for asset contributions to the employee's company has been increased from EUR 1,440 to EUR 2,000. The allowance can also be used without restriction within the framework of deferred compensation. In addition, the personal and temporal scope of application of the deferral of control of the pecuniary advantage from asset holdings has been extended and it has been clarified that the deferral of control can also be applied to shares with a restriction on disposal (so-called transferable shares).

The Whistleblower Protection Act also affects SMEs

The Whistleblower Protection Act is intended to protect persons who, in the course of their professional activities, become aware of violations of legal requirements and report them to a competent authority. In order to protect employees, employers must implement a corresponding whistleblower system in their company. The obligation came into force on 2 July 2023 and was previously applied to companies with more than 249 employees.

As of 17 December 2023, employers with between 50 and 249 employees are also obliged to implement a whistleblower system and to comply with the obligations resulting from the law to clarify the suspicious activity report.

Supply Chain Due Diligence Act applies to companies with at least 1,000 employees

Since 1 January 2023, the German Supply Chain Due Diligence Act requires companies with at least 3,000 employees to systematically and continuously address human rights, environmental issues and corporate due diligence obligations and to comply with the resulting obligations.

From 1. January 2024, these obligations will also apply to companies with at least 1,000 employees.