Under German conflict-of-laws rules, the law applicable to the legal capacity and right of representation of a legal entity is determined by the “lex societatis”, i.e. the law which is applicable to the legal entity. As regards the latter, the German legislator has not laid down any statutory rules of international private law in view of the unification efforts in the European Union. In Germany, the seat theory (Sitztheorie) traditionally prevails, according to which the connecting factor for the statute of the company is its actual administrative seat.

However, since the CJEU's "Überseering" and "Inspire Art" rulings, it has been clear that the incorporation theory (Gründungstheorie) applies to a company formed under the law of another EU (or EEA) Member State whose registered office and administrative headquarters differ. The company law applicable to such a legal entity is thus the law of the incorporation state and the registered office.

In the other cases, in which neither the freedom of establishment nor a treaty agreement requires the application of the incorporation theory, the prevailing opinion in Germany assumes that the applicable law depends on the actual administrative seat. In principle, this also applies to legal entities established under German law.

For companies formed under the law of another EU (or EEA) Member State, the incorporation theory applies. This means, the applicable law shall be the law under which the company was incorporated.

The seat theory on the other hand is based exclusively on the actual administrative seat. This is the place of activity of the management and the representative bodies appointed for this purpose, i.e. the place where the fundamental decisions of the company management are translated into current management acts. The location of production sites is just as irrelevant as the location of the internal decision-making process. The place from which the members of the management body responsible for day-to-day business issue instructions and exercise control over the company is decisive.

The German-American Friendship, Trade and Shipping Treaty of 29 October 1954 (Federal Law Gazette 1956 II 487) is a treaty which takes precedence over the seat theory. According to the provisions of the agreement, companies established in the territory of one contracting party in accordance with the provisions of the latter shall be deemed to be companies of that contracting party; their legal status shall be recognised as such in the territory of the other contracting party. The statute of a corporation in relations between the Federal Republic of Germany and the United States of America is thus governed by the law in force at the place of its formation.

In addition, numerous bilateral capital protection agreements have conflict-of-laws significance. German companies are defined as those which have their (administrative) seat in the Federal Republic of Germany and exist under German law, while it is sufficient for the companies of the respective contractual partner that they are formed and established in accordance with the provisions there, and possibly also registered. It follows from this that the foreign company is to be recognised here according to its formation law if it has its administrative seat in the territory of the contracting partner or a third country.

Yes, the German-American Friendship, Trade and Shipping Treaty of 29 October 1954 as further outlined in question no. 3.

All corporations (Kapitalgesellschaften), that is especially the private limited liability company (GmbH) and the public limited liability company (Aktiengesellschaft), are registered in the commercial register. Registration is mandatory. The registration is constitutive for the formation of the corporation.

General partnerships (OHG) and limited liability partnerships (KG) are also registered in the commercial register. Registration is mandatory as well. Regarding the effects of registration of the general partnership and the limited liability partnership, it has to be differentiated as follows: If the company’s purpose is the operation of a commercial trade (see § 105 para 1 of the German Commercial Code (HGB)), registration has declaratory legal significance. It serves the publicity of the commercial register, but not the substantiation of material legal consequences. Up to the registration, however, the limited partner in the limited liability partnership is liable in principle over its contribution sum with its entire fortune, thus equal to a personally liable partner (§ 176 HGB). If, however, the company is not a commercial enterprise or only manages its own assets, registration has constitutive effect, since the company only arises with its entry.

The commercial register can be found under https://www.handelsregister.de/rp_web/welcome.do and is accessible to everyone.

In principle, there is no obligation to register foreign companies in the German commercial register. However, if the company establishes a branch in Germany, this branch must be registered in the commercial register.

A company is represented by its management bodies. In the case of a private limited liability company, the company is represented by its directors who are elected by the shareholders (§ 35 of the German Act on Private Limited Liability Companies (GmbHG)). The directors can either have the right to represent the company jointly or be authorized to act individually. This is determined by the articles of association of the company and/or a shareholders’ resolution.

A public limited liability company is represented by its board of directors, who are appointed by the supervisory board (§ 78 of the German Act on Public Limited Liability Companies (AktG)). The board of directors can act jointly or, as the case may be, individually, depending on the articles of association of the company and/or a shareholders’ resolution.

In a general partnership, each shareholder is authorized to represent the company solely unless he or she is excluded from representation by the articles of association (§ 125 German Commercial Code (HGB)). The articles of association may stipulate that all or several shareholders shall be authorized to represent the company jointly.

A limited liability partnership is represented by its general partner (§§125, 170 HGB).

Yes, the right of representation must be registered in the commercial register. Please see above the link to the commercial register.

The registration of the right of representation only has declaratory effects. However, the general principle of public faith in the commercial register applies, as laid down in § 15 of the German Commercial Code (HGB): As long as a change in the representative body is not entered in the register, it cannot be asserted by the company against a third party, unless the change was known to the third party (§ 15 para 1 HGB). If the change has been entered and publicised, a third party must allow it to be asserted against itself; this does not apply to legal transactions which are undertaken within fifteen days of the announcement, insofar as the third party proves that it neither knew nor could have known the fact (§ 15 para 2 HGB). If the right or representation is incorrectly disclosed, a third party may rely on the disclosed fact vis-à-vis the company, unless it was aware of the incorrectness (§ 15 para 3 HGB).

The legal representatives are obliged vis-à-vis the company to comply with the restrictions imposed on the extent of their authority to represent the company by the articles of association or, unless the articles of association provide otherwise, by the resolutions of the shareholders.

Insofar as the articles of association or the shareholders do not grant the director any exemption, he or she is not able to conclude transactions in the name of the represented company with himself or with him as a representative of a third party (§ 181 of the German Civil Code (BGB)).

In principle, a restriction on the authority of the director to represent the company has no legal effect against third parties (§ 37 para 2 GmbHG; § 126 para 2 German Commercial Code (HGB)). However, this does not apply in case of abusive cooperation between the director and the third party. If the third party and the director deliberately and intentionally collaborated to the disadvantage of the company or if the third party knows that the director has exceeded his/her internal powers, the director cannot legally represent the company.

The right of representation can be proven by an extract from the commercial register. The commercial register is open to the public and can be accessed via the internet.

If the board of directors of a public limited liability company wishes to sell the entire assets or essential assets of the company, it needs a resolution of approval of the shareholders (§ 179a of the German Act on Public Limited Liability Companies (AktG)). This provision is also applied analogously to all other companies according to the prevailing opinion in Germany. Without that consent, which can also be given after the transaction has been concluded, the transaction is not valid.

As further described in question 11, in case of abusive collaboration between the director and the third party, the transaction is not binding on the company.

The commercial register is an online database, which can be accessed by everyone. The available languages on the website of the commercial register are German, English, French, Italian and Spanish.

Notaries are obligors within the meaning of the German Money Laundering Act (GWG). Notaries are obligated to identify the beneficial owner before carrying out the relevant transaction (§ 11 para 1 GWG). In order to establish the identity of the beneficial owner, the notary has to as least collect the name of the beneficial owner and, where appropriate in view of the individual risk of money laundering or terrorist financing, collect further identifiers. The obligor shall take risk-adequate measures to ensure that the information collected for identification is accurate; the obligor may not rely exclusively on the information in the transparency register (§ 11 para 5 GWG).

With regard to the beneficial owner of a corporation, the commercial register can be inspected, which contains the following information about the shareholders: surname, first name, date of birth, place of residence, nominal amounts of the shares acquired by each of them and the respective percentage of the share capital represented by the nominal amount of each share. The commercial register is electronically accessible to everyone, thus also for professionals from other countries and available in various languages (see question 14 for further details).