New German Money Laundering Act Establishes Additional Transparency Requirements for Certain Listed Companies, <i>European Capital Markets Update</i>

New German Money Laundering Act Establishes Additional Transparency Requirements for Certain Listed Companies, European Capital Markets Update

On 25 June 2017, the new German Money Laundering Act came into force, which primarily implements the 4th European Anti-Money-Laundering Directive (EU 2015/849) into German law. Among others, the Act establishes a new "Transparency Register", where the (ultimate) beneficial owners of corporate and other legal entities incorporated within Germany will be registered.

In relation to corporate and other legal entities, a beneficial owner is deemed to be a natural person (private individual):

  • Holding more than 25 percent of the shares or ownership interests,
  • Holding more than 25 percent of the voting rights, or
  • Exercising control via other means (in a similar manner).

Companies have to obtain and maintain information about their respective beneficial owners and keep this information available for inspection by authorities and have to notify the identities (including full name, date of birth and place of residence) of the beneficial owners and their interests to the new Transparency Register (Transparenzregister), which will be set up as an electronically searchable register in a similar fashion as the already existing enterprise register (Unternehmensregister). The Transparency Register has been open for filings since 5 July 2017 but will not be accessible for information requests until 27 December 2017.

Companies listed on a regulated market are generally exempt from the notification requirement as their shareholders have to submit voting right notifications in line with the European transparency regime (when reaching, exceeding or falling below a threshold of 3 percent, in Germany).

While the Transparency Register is primarily targeted at privately held companies, it also remains relevant for stock corporations listed on a non-regulated market, like the Open Market of the Frankfurt Stock Exchange (including the Scale Segment) or the m:access market of the Munich Stock Exchange. If these stock corporations are held in free float with no shareholder holding more than 25 percent, no filing is required. If these stock corporations have a shareholder holding more than 25 percent and even have complied with the notifications requirements under the Stock Corporation Act (§ 20), this may be sufficient, but often it is not since the Stock Corporation Act requires only voting right notifications of direct and indirect business enterprises, but not of private individuals. In all cases where the (ultimate) beneficial owner (as defined above) is a private individual, a stock corporation not listed on a regulated market has to facilitate a notification to the Transparency Register until 1 October 2017.

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