What has the German Act on Modernization of Partnership Law (MoPeG) changed?

The German Act on Modernization of Partnership Law (MoPeG) contains a large number of changes to laws and regulations. It brings along significant changes to German commercial and company law for all partnerships.

One of the most important changes is the legal capacity of the partnership under the German Civil Code (GbR). The GbR is particularly attractive for freelancers, small businesses and start-ups because, unlike a corporation, the GbR does not require a minimum capital from the partners.

That the GbR can be the bearer of rights and obligations had been established in legal practice and was generally accepted, but there was no explicit regulation on this in the German Civil Code. GbRs are now recognized as having legal capacity under the MoPeG, which removes years of legal uncertainty. This legal capacity can be regsitered in a newly created company register, which is kept by the local courts. A registered civil law partnership then receives the additional name: eGbR. However, there is no obligation to register.

However, the eGbR receives a number of advantages through its registration. Accordingly, it can be converted according to Article 3 I Nr. 1 German Law Regulating Transformation of Companies (UmwG), which makes changing the legal form much easier. It also has the option of determining a centre of contract that differs from the centre of administration, which can have a positive effect on trade tax.

But the MoPeG has also brought changes for freelancers. Freelancers were previously denied the choice of partnerships. In future, a free choice between the “General Partnership” (OHG), “Limited Partnership” (KG) and “Limited Partnership with a Limited Liability Company as General Partner” (GmbH & Co. KG) will be possible for freelancers, provided that the respective professional law provides for these legal forms.

In summary, the MoPeG brings a lot of simplifications and reliefs for partnerships by aligning written law with legal practice. This improves legal certainty and promotes flexibility and scope for design.

Autor: Senem Kathrin Güçlüer