Entry in the commercial register

With the exception of a petty trade which is not entered and the civil-law partnership (GbR), enterprises of all legal forms must be entered into the Register of Commerce.

It is kept at Local Courts and serves legal security in business dealings, as all factual and legal situations are completely and reliably proven here.

The Register of Commerce is kept in two sections:

Section A for registered merchants (sole merchants) and business partnerships (OHG, KG) and

Section B for capital companies (GmbH, UG (haftungsbeschränkt), AG)

All the legal relationships of a company are notified for entry in the Register of Commerce via a Notary Public, examined by the register court and taken on in the Register of Commerce.

Similar to the Land Register, the Register of Commerce enjoys public belief, i.e. it protects bona fide legal dealings to a certain scope through trust in the correctness of the entries and publications.

The Register of Commerce gives information about all facts essential for law which can be important for a merchant’s business partner. This includes, for example, the corporate name, the proprietor’s name or that of the personally liable partner of a business partnership, the limited partners’ liability, the share capital of an LLC, granting and withdrawal of signing powers, opening of insolvency proceedings and deletion of the company.

The Register of Commerce is public and therefore offers all interested parties the possibility of insight into the documents submitted, also via the Internet .

For example, if a holder of a limited commercial power of attorney concludes a contract with a customer on the proprietor’s behalf after his dismissal, but before deletion in the Register of Commerce, and the dismissal is not known to the business partner, the contract is nevertheless completely effective.

Naturally, alterations of entered facts are also subject to entry, for example the change of the address of a merchant’s branch establishment or the move of the company’s headquarters. Recall of a holder of a limited commercial power of attorney or a managing director should be notified for entry without delay, because this is in the company’s own interest - as already stated.

For example, if a merchant moves the headquarters, he can be sued under the old address until the change has been entered in the Register of Commerce. So he could suffer considerable detriments if the Register of Commerce does not reflect the current state of affairs. Likewise, dissolution and liquidation of a company must be reported for entry in the Register of Commerce, as must the deletion of the company. Composition proceedings or insolvency proceedings which have been opened against the company’s assets are likewise entered by the Local Court ex officio.

III. Entry in the Register of Commerce

Sole traders and civil-law partnerships need not be entered in the Register of Commerce as a matter of principle. If a company’s business operation demands a business operation set up in a commercial way with a view to its nature and scope, the enterprise is always deemed a trading company subject to entry in the Register of Commerce, § 1 sub-section 2 German Commercial Code (HGB). This is determined regardless of the commercial activity which the enterprise particularly exercises. Even enterprises which in the literal sense do not sell or buy goods or commodities are merchants, i.e. also industry, craftsmen or miscellaneous service providers.

The decisive criteria for the assessment whether a business operation set up in a commercial way is necessary are above all:

- annual turnover (s. below)

- amount of the capital used

- nature and quantity of business processes

- use and granting of loans

- size and properties of the business premises

- number of people employed

- nature of accountancy.

One of the criteria that is seen as an indicator in the overall assessment is the level of annual turnover. As a rule, for example, an annual turnover of € 250,000 in retail and € 400,000 to € 500,000 in wholesale and production is at least an indicator of the need for a commercially organized business operation. However, as it is always a matter of an individual overall consideration of the individual case, the amounts mentioned are only to be understood as rough guidelines and by no means as binding turnover limits. The complexity of the business transactions and the company organization must also be weighted. As a result, depending on the individual case, the necessity of a commercially organized business operation can be assumed even if the annual turnover is lower, while in another overall constellation, necessity would only be assumed if the turnover is higher. For this reason, courts have not yet set any general turnover limits. At the latest when the company is required to keep accounts (since 2024 with regard to annual turnover: from EUR 800,000), it should be urgently checked whether there is an obligation to register.

1. Benefits and duties of an entry for the merchant

Benefits
However, the sense of an entry in the Register of Commerce is not exhausted by the information and organisation functions already described.

In many cases, the entry also proves to be a benefit for the merchant, he is given advance trust. The entry gives business partners and authorities a first impression of the enterprise. The entry in the Register of Commerce means that the fact that the company subjects itself to the application of commercial regulations and mores (in particular the German Commercial Code (HGB)) becomes obvious to the outside.

As every trader has in the meantime become entitled to voluntary entry in the Register of Commerce, the entry does not permit any conclusions concerning the size of the enterprise. Naturally, it also does not portray a statement on the creditworthiness or the soundness of an enterprise.

Only the company entered in the commercial register can have a "Firma" (company name) in the legal sense, because according to the German Commercial Code, a "Firma" is only the name with which the company is entered in the commercial register and under which it appears in legal transactions. (Further information on the legal framework for company formation can be found here).

Only an enterprise entered in the Register of Commerce can appoint holders of a limited commercial power of attorney (§ 48 HGB); only such a company is entitled to found one or more independent branch establishment(s). Only anyone who is or was registered in the Register of Commerce as a merchant, as a member of the Board of Directors of a joint-stock corporation, as a managing director of a limited liability company or any other legal entity and has turned 30 can exercise the honorary office of a commercial judge in a chamber formed for commercial matters at a Regional Court.

Duties
However, merchants also have duties. This includes keeping books from which their trade transactions and asset situation can be seen.

As a rule, the merchant has to produce an inventory and a balance sheet at the start of the commercial trade and at the close of each fiscal year. Trade books, inventories and balance sheets must be archived for 10 years, received trade letters and copies of dispatched ones for 6 years.

Sole traders not exceeding certain threshold figures (800,000.-- Euro turnover and 80,000.-- Euro profits per fiscal year) are exempted from the obligation to accountancy, inventory and production of balance sheets according to the commercial law directives.

In addition, the specific directives of the German Commercial Code (HGB) apply to merchants. This in particular means that a merchant entered in the Register of Commerce can no longer make reference to various formal directives. For example, he is bound by a surety taken on orally; if he purchases in instalments, protection of the Consumer Credit Act and the Act concerning revocation of house-door transactions and similar transactions do not apply to him. Increased liability of defects applies to transactions between merchants.

There are also specific regulations with a view to information on letterheads:

As a matter of principle, the corporate name entered in the Register of Commerce (corporate designation) must be stated completely and correctly, including the suffix for the legal form.

The location of the branch establishment or the headquarters as well as the register court and the number in the Register of Commerce must be stated. In addition, the LLC must also state the complete surname and at least one first name of all managing directors.

Similar things apply to the AG and the GmbH & Co. KG, which has to give the matching information on the personally liable LLC on the letterheads in addition to its own information.

2. Tasks of the Chamber of Commerce and Industry

The CCIs have the statutory task of supporting the courts in avoiding incorrect entries. In cases of doubt, the registry courts can ask the local CCI for an opinion on the admissibility of a company name. As a service, we offer the option of a preliminary company inquiry, in which you can request our assessment of the company's registrability in advance.

The costs of publication are exclusively charged by the Local Court. Often, offers for entries in branch directories, made to look like invoices, are sent and can be confused with invoices from the Local Courts.