The Digitalisation Directive has made it an option to establish (cash) GmbHs and UGs (haftungsbeschränkt) online since 1 August 2022.
Possibility of online formation through the Digitalisation Directive
Until now, anyone wishing to establish a GmbH in Germany had to visit a notary in person. However, in times when video conferences have become indispensable to businesses, why should it not be possible to meet with a notary online? The so-called Digitalisation Directive (EU Directive 2019/1151) required all EU member states to allow for the online formation of corporations by 1 August 2022. The corresponding German implementation act was already passed in 2021 ("DiRUG") and has now entered into force.
Accordingly, companies and founders can establish a limited liability company (GmbH) or the entrepreneurial company with limited liability (Unternehmergesellschaft (UG (haf-tungsbeschränkt))), popular among start-ups, conveniently from their offices or home since 1 August 2022. The first online foundation occurred on 1 August 2022 (Bundesnotarkammer erste Onlinegründung).
Virtual involvement of the notary
Nonetheless, it is still not possible to protect the founders and legal transactions from identity fraud and money laundering without involving a notary. However, notarisation can now take place virtually, using a specially secured video communication system provided by the Federal Chamber of Notaries. All necessary declarations of intent can be notarised via this video communication system.
To identify involved individuals, the notary first reads out the data from an electronic means of identification using the notary app. For German citizens, this is the ID card with the so-called eID function (all ID cards issued since 2017 have this online ID card function, which must, however, be activated once beforehand by the holder of the ID card). This satisfies the requirement of the signature of all shareholders under section 2 (1) sentence 2 of the German Limited Liability Companies Act (GmbHG). Subsequently, the notary compares the photo with the video image of the persons involved, advises the founders – as before – on the drafting of the articles of association, and checks their legal capacity or powers of representation. Finally, all involved persons sign the contract with a qualified electronic signature. For this purpose, all involved individuals receive an SMS-TAN to confirm their signature. Following the notarization of the electronic signature, the notary electronically sends the document to the registry court for registration. As soon as the entry in the register has been made and checked by the notary, all will immediately be informed about the successful completion of the procedure.
Consequently, an online formation requires (1) a PC or tablet with internet access and webcam/microphone, (2) a smartphone with the notary app, and (3) an identity card with an eID function. An explanatory video by the Federal Chamber of Notaries can be found here: Onlineverfahren Notar.
Incidentally, the founders are not free to choose their "online notary" but must choose a notary in whose official sphere, for instance, the future registered office or the (residential) seat of a partner is located.
Prospects and classification
The implementation act DiRUG currently only permits the online formation of a GmbH as a cash formation. The DiREG (Act Supplementing the Regulations for the Implementation of the Digitalisation Directive and Amending Other Provisions of 15 July 2022) will extend this option to non-cash formations as of 1 August 2023. Exceptionally, non-cash for-mations involving the contribution of objects whose transfer is itself subject to notarisa-tion (e.g. real property or shares in a limited liability company) will continue to be excluded from this online procedure.
Accordingly, shareholder resolutions amending the articles of association, including capital measures (increase and reduction of the share capital), can be made by way of online communication with a notary, provided they are unanimous (due to section 53 (3) sentence 2 GmbHG) starting 1 August 2023.
Since 1 August 2022, the notarial certification of register applications using video communication has also been possible online in the same way for sole traders and corporations. DiREG extends this possibility to all legal entities. Moreover, applications to the register of partnerships, cooperatives, and associations can also be established online with a notary.
This article was already published in Haufe Wirtschaftsrechtsnewsletter.