The EPH Group of Czech entrepreneur Daniel Kretinsky has acquired all shares in SGL - Schienen Güter Logistik GmbH (SGL) from Knape Gruppe Holding GmbH (KGH) via its subsidiary EP Logistics International a.s.

As part of a related asset deal, another company from the EPH Group acquired all assets of KGH’s rail vehicle leasing sub-business (locomotives, traction units, railway wagons, etc.).

SGL is a licensed rail transport company based in Dachau with around 100 employees.

EPH was advised by DSC Legal throughout the entire transaction.

 

Smart and to the point.

DSC Legal is a notary's office and law firm at Brandenburg Gate in Berlin.

One of our core competencies is the legal advice and support of German and foreign clients in the acquisition and sale of companies. We regularly advise on domestic and cross-border acquisitions of companies in all economic sectors under German law.

Dr. Peter Diedrich/ Dr. Istvan Szabados

DSC Legal Rechtsanwaltsgesellschaft mbH, Berlin

26 October 2022

Developers and real estate investors had to deal with substantial supply chain problems in the aftermath of the global pandemic that not only delayed the realisation of residential building projects but also led to massively increased costs. The war in the Ukraine and particularly its huge impact on energy prices in Germany have made matters worse. Unsurprisingly, the number of newly constructed buildings as well as the number of building permits have noticeably dropped in recent months.

On the other hand, the financial leeway for potential homeowners is narrowing due to the extraordinarily high inflation: The German consumer price index has reached a level of 10% in October 2022 - a figure unseen in the past 70 years. In addition, the European Central Bank‘s attempt to fight inflation resulted in a steep mortgage rate hike that has made financing substantially more expensive. While a mortgage loan with a fixed interest rate for 10 years cost less than 1% per annum a year ago, the interest rate has now risen above 4% p.a. As residential real estate has become much less affordable in the past months, asking prices are currently stagnating and, in some areas, for the first time for 13 years even slightly declining. Potential buyers seem to turn to the rental market instead.

Unlike in many other countries, the residential rental market in Germany is, compared to the owner occupier market, very sizeable. In general, more than half of the German households are renters, and in Berlin, as one of the top seven German metropolitan areas, even more than 80%. Demand for housing in metropolitan areas continues to exceed the number of available homes by far. Given the increasing backlog of homes to be built and the additional pressure on the German rental market caused by refugees from Ukraine and other countries, a strong rise in the apartment rents can currently be observed. In Berlin, for example, the rents for newly built apartments have increased by approx. 10% within the last year. Due to exorbitant energy costs, the operating costs for less energy efficient buildings have recently, however, risen to new heights, so that landlords of older buildings may not be able to increase the net cold rent similarly. It can be assumed that, under the current market conditions, the quality of the asset (in terms of location, building standard, energy efficiency and maintenance level) will play an increasingly important role for its valuation and the price that sellers can achieve in case of an exit.

Even though many investors who financed their property in Germany with bank loans agreed in the past years on fixed interest periods of 10 to 20 years (or even longer), those who require a re-financing in the next couple of months and years will have to pay much higher interest rates. Particularly in cases where the purchase was highly leveraged and only little repayments were made, (re-)financing could become stressful. Taking into account the increased operating and maintenance costs, particularly for older, unrefurbished buildings, and the darkened exit prospects due to the higher financing costs, it may well be that purchasing opportunities will emerge on the market that have not been available for a long time in recent years.

Equity strong investors - particularly with a value add strategy such as energy efficient refurbishments - should therefore await buying opportunites on the German residential real estate market. That is especially true for US. dollar-based investors who can currently benefit from their historically strong currency: To the same extent the euro has depreciated against the US. dollar, German real properties have become cheeper on a US. dollar basis. The current strength of the US. dollar therefore presents an excellent window of opportunity for investments in German real estate.

 

Smart and to the point.

DSC Legal is a notary and law firm located at Pariser Platz in Berlin and a Gold Member of IR Global, Germany, Real Estate (www.dsc-legal.c0m).

Our experienced notaries and lawyers specialise in providing comprehensive legal advice and support to domestic and foreign clients and principals in connection with real estate transactions, project developments, the creation of residential property as well as the establishment, acquisition or sale and operation of companies. Advising on issues relating to real estate law and landlord and tenant law is one of the core areas of our legal practice.

The information in this article cannot and is not intended to replace in-depth legal advice under comprehensive examination of the respective individual case. Our experts will be happy to advise you on your legal options and represent you with outstanding professional competence and extensive experience in enforcing your claims in and out of court.

 

In June 2022, the Bundestag passed the Act Supplementing the Regulations Implementing the Digitalisation Directive and Amending Other Regulations (hereinafter abbreviated "DiRUG Supplementary Act"). The DiRUG Supplementary Act will lead to considerable extensions of the scope of application of the notarial procedures for online certifications and online notarisations already created by the Act Implementing the Digitalisation Directive (hereinafter abbreviated "DiRUG") last year, most of which will already come into force on 1 August 2022.

A brief overview of the new regulations is provided below.

I. Previous legal situation under the DiRUG

In October 2021, we had already reported in a newsletter on the far-reaching changes due to the DiRUG, which made online formation of limited liability companies (GmbH, incl. its special form of the entrepreneurial company with limited liability) and certain online commercial register applications possible from 1 August 2022.

According to DiRUG, the online notarisation procedure was only open for the formation of a GmbH and was additionally restricted by the fact that it was only to cover so-called cash incorporations (Bargründungen). Foundations in kind (Sachgründungen), on the other hand, were expressly excluded from the scope of application of the notarial online formation procedure.

The scope of application of online certifications was limited to applications for entry in the commercial register, whereby only applications by sole traders (eingetragene Kaufleute), for domestic corporations (limited to GmbH, AG and KGaA) and for branches of domestic corporations (such as before) or of foreign corporations governed by the law of another EU member state or EEA signatory state were covered. Applications for registration in the commercial register for commercial partnerships (KG and oHG) were excluded from the possibility of notarial online certification under the DiRUG.

II. Future legal situation under the DiRUG Supplementary Act 

The DiRUG Supplementary Act extends the scope of application of the notarial procedure of online notarisation (Online-Beurkundung) to the following legal transactions requiring notarial recording:

• incorporations of GmbHs in kind (i.e. incorporations in which the nominal amounts of the shares of all founding shareholders are not to be provided exclusively in money),

• granting of powers of attorney for the formation of a GmbH (so-called formation powers of attorney),

• declarations of intent made jointly with the formation of the GmbH,

• unanimous resolutions to amend GmbH articles of association including capital measures (i.e. increase and reduction of the share capital).

The restriction of the procedure of online certification (Online-Beglaubigung) of commercial register applications to certain legal entities was abolished. In future, certification of commercial register applications by means of video communication with the notary will be permissible for all legal entities to be entered in the commercial register. Limited partnerships (especially in their frequent form of the GmbH & Co KG) and general partnerships (oHG) will also be covered.

Furthermore, applications to the register of cooperatives (Genossenschaften), partnerships (Partnerschaften) and associations (Vereine) will be included in the scope of the notarial procedure for online certifications.

With regard to the details and technical process of the notarial online procedures, we refer to our earlier newsletter on DiRUG in order to avoid repetition. 

III. Entry into force of the new regulations

The new regulations on the notarial online certification of applications to the commercial, partnership and cooperative registers are to come into force at the same time as DiRUG, as early as 1 August 2022. The same applies to the new regulations on the admissibility of the notarial online certification of powers of attorney for the formation of a GmbH and declarations of intent and shareholder resolutions made jointly with the formation.

In contrast, the new regulations on the extension of online procedures to applications to the register of associations, the formation of GmbHs in kind, shareholders' resolutions on the amendment of articles of association and declarations on the subscription to new GmbH shares on the occasion of capital increases will not enter into force until 1 August 2023, as these require considerably higher organisational and technical effort. 

IV. Video of the Federal Chamber of Notaries for better understanding

A video by the Federal Chamber of Notaries, which shows you in a simple and comprehensible manner how to carry out the online formation of limited liability companies and the online application for certain registrations in the commercial register in the future, can be accessed here (please switch to the English version of the website).

 

Smart and to the point.

DSC Legal is a notary’s office and law firm located at the Brandenburg Gate in Berlin.

Our experienced notaries and lawyers are specialised in providing comprehensive legal advice and support to domestic and foreign clients and principals in connection with real estate transactions, project developments, the creation of condominium property as well as the establishment, acquisition or sale and operation of companies.

Advising on issues relating to corporate law and tenancy law is one of the core areas of our legal practice.

 

 

 

Relatively unnoticed, the German Transparency Register and Financial Information Act ("TraFinG"), a further tightening of money laundering law, which is also likely to be of considerable relevance for a large number of German companies, has come into force on 1 August 2021. This concerns the duty to notify the beneficial owners (wirtschaftlich Berechtigte) to the registrar entity for entry into the transparency register. The transparency register, which is intended to facilitate the fight against money laundering and terrorist financing, is maintained by Bundesanzeiger Verlag GmbH (registrar entity) and is subject to the supervision by the Federal Office of Administration (Bundesverwaltungsamt - "BVA").

According to the German Money Laundering Act (Geldwäschegesetz - "GwG"), legal persons governed by private law (e.g. stock corporations, limited liability companies and registered cooperatives) and commercial partnerships (limited partnerships and general partnerships) are in principle obliged to have their beneficial owners entered in the transparency register. According to section 3 (2) GwG, the beneficial owners of such companies generally include all natural persons who, directly or indirectly, hold more than 25% of the capital stock or control more of 25% of the voting rights or exercise control in a comparable manner. If no beneficial owner can be identified according to these criteria, the legal representative, managing partner or partner of the company is deemed to be the beneficial owner (so-called fictitious beneficial owner).

Initially, there were considerable simplifications for the fulfilment of the notification obligations vis-à-vis the transparency register, which ceased to apply with the entry into force of the TraFinG on 1 August 2021. With this newsletter, we would like to inform you about the resulting tightening of the respective notification obligation and the transitional provisions for formerly privileged companies, which will expire in 2022. The serious legal consequences (administrative fines!) which the companies concerned face in the event of a breach of duty should prompt their owners and managers to check any transparency obligations which have not yet been fulfilled and, if necessary, to obtain complete information on the beneficial owners as well as to notify the registrar entity of this information in due time.       

I. Previous Legal Situation

According to the previous legal situation, companies whose beneficial owners had already been identified in a comprehensible manner from other publicly accessible and electronically retrievable registers (e.g. commercial register, register of cooperatives or register of associations) could invoke a so-called notification fiction, according to which the obligation to notify the transparency register was deemed to have been fulfilled and therefore no additional notification of the beneficial owner(s) had to be made. The notification fiction was of particular benefit to German limited liability companies (GmbH or UG [haftungsbeschränkt]), since the list of shareholders available in the commercial register could usually be used to determine their beneficial owners. Such a notification fiction also existed for companies listed on the stock exchange (AG, KGaA, SE), as these companies are already subject to comparable disclosure obligations under capital market law.

II. New legal situation as of 1 August 2021

The aforementioned notification fiction has been abolished without replacement by the TraFinG. Since then, all newly established legal entities under private law (e.g. AG, GmbH and eG) and registered partnerships (KG, oHG) are obliged to obtain, retain and update the legal details of their beneficial owners (i.e. first name and surname, date of birth, place of residence, nature and extent of the beneficial interest and all nationalities) as well as to notify them without undue delay to the registrar entity for entry into the transparency register.

It is noteworthy in this context that according to the administrative practice of the BVA, the notification fiction for listed companies is also no longer considered to exist, although the legal definition of beneficial owner for legal persons (sec. 3 para. 2 sent. 1 GwG) continues to contain an explicit exception for listed companies (i.e. companies listed on an organised market under sec. 2 para. 11 of the German Securities Trading Act). This exception was originally also to be abolished, but was reinserted by the Finance Committee of the Bundestag shortly before the law was passed. According to important voices in the legal literature, the aim of this intervention by the Finance Committee was to privilege listed companies in accordance with the underlying EU Money Laundering Directive, i.e. to continue to exempt them from the notification obligation. However, a clarifying enquiry by DSC Legal with the competent BVA confirmed that the authority now assumes a general notification obligation for listed companies. In the opinion of the BVA, the general catch-all provision of section 3 para. 1 GwG should be used for the specific determination of the beneficial owner. Insofar as a listed company that is listed on an organised market does not have an actual beneficial owner, the fictitious beneficial owner (e.g. the members of the management board of a German stock corporation) can also be referred to.

III. Transitional provisions for previously privileged existing companies 

The following statutory transitional periods are provided for reporting to the transparency register, which, however, only apply to those companies whose obligation to notify the transparency register was deemed to have been fulfilled until 1 August 2021 due to the notification fictions applicable until then:

• Stock corporations (AG, SE), KGaA by 31 March 2022,
• Limited liability companies (GmbH, UG) and eG by 30 June 2022,
• European cooperatives or partnerships by 30 June 2022,
• in all other cases (above all foundations and registered partnerships such as oHG and KG) by 31 December 2022 at the latest.

 

IV. Simplification for associations

With regard to the notification obligations for registered associations (eingetragene Vereine - e.V.) pursuant to section 21 of the German Civil Code (Bügerliches Gesetzbuch - BGB), the law provides for substantial simplifications. According to this, the registrar entity is in principle obliged, on the basis of the data in the register of associations, to make the entries for the association in the transparency register without the need for separate notification by the association. The data in the register of associations shall be deemed to be information of the association. The members of the association's executive board are entered as beneficial owners. Exceptionally, however, the association has its own obligation to notify if a change in the association's executive board was not applied for entry into the register of associations without undue delay or if the information in the register of associations is incorrect. An (automatic) entry in the transparency register will be made for the first time no later than 1 January 2023. Thereafter, automatic entry will be made on an ad hoc basis.

V. Legal consequences of contraventions        

A wilful or negligent violation of the statutory obligations to obtain, retain and update the information on the beneficial owners and/or the obligation to notify the registrar entity (completely, correctly and in due time) of this information without undue delay for entry into the transpareny register constitutes an administrative offence that may be punished with a fine of up to EUR 150,000.00 (in case of intent) or EUR 100,000.00 (in case of negligence). The fine may even be up to EUR 1,000,000.00 or up to twice the economic benefit derived from the contravention if it is a serious, repeated or systematic contravention. The economic benefit comprises profits gained and losses avoided and may be estimated.

 

Smart and to the point.

DSC Legal is a notary’s office and law firm located at the Brandenburg Gate in Berlin.

Our experienced notaries and lawyers are specialised in providing comprehensive legal advice and support to domestic and foreign clients and principals in connection with real estate transactions, project developments, the creation of condominium property as well as the establishment, acquisition or sale and operation of companies.

Advising on issues relating to corporate law is one of the core areas of our legal practice.