The modernised law on partnerships (MoPeG for short), which came into force on 1. January 2024, takes up decades of case law and practical developments and pours them into adapted legal forms (see §§705 et seq. of the German Civil Code (BGB)). 
As partnership law plays an essential role in modern business life, market participants should gain an overview of the extensive modernisation.


Why the need for modernisation?

‘The law as it stands is no longer the law as it is practised today,’ states Heribert Hirte, Chairman of the Legal Affairs Committee, in a much-cited statement on the MoPeG.
 The legislator's aim was to adapt the outdated law on partnerships, which dates back to the 19th century, to the practical needs of the modern economy. Previously, the structure of partnership law was outdated and not ‘alive’ - the law therefore lagged behind what was already recognised by case law and practice.

According to Hirte, the MoPeG creates this synchronisation of written law and practice as a ‘work of the century’. It introduces fundamental changes for all companies as long as they are organised in the legal form of a civil law partnership or BGB company (GbR), a general partnership (OHG) or a limited partnership (KG). This modernisation also offers opportunities and advantages for luxury brand companies.

What changes does the MoPeG make?

The MoPeG only affects partnerships, which make up the legal form of company law alongside corporations. This is important as the choice of the appropriate legal form for a company determines fundamental structures, rights and obligations. In particular, the law of the GbR, the basic form of partnership, has been changed.

The GbR

The GbR regulated in §§705 et seq. BGB is therefore referred to as the basic form of partnership, as it only becomes either an OHG or KG if it fulfils further requirements under commercial law. In other words, if a company does not fulfil these further requirements, it is at least a GbR, the predominant partnership.

Legal capacity of the GbR


The MoPeG establishes as a mission statement a GbR that now has legal capacity, is intended to be of a certain duration and may operate as a company.
Before the modernisation of partnership law, legal capacity, i.e. the possibility for the GbR itself to acquire rights and enter into liabilities, was controversial.
 This has now been made possible by the MoPeG in an explicit regulation in §705 II, III BGB. 
Legal capacity first requires the effective establishment of the GbR, which continues to take place by means of a partnership agreement.

Here, the will of the partners must be directed towards the promotion of a common purpose (§705 I BGB).
If the intention of the partners to participate in legal transactions emerges at least from the partnership agreement, the legal capacity of the GbR now arises in accordance with §705 II BGB. §705 III BGB, newly introduced by the MoPeG, makes it easier to establish the common purpose.

This is presumed if the purpose of the company is to operate a business under a joint name.
 Despite modernisation, a GbR can of course continue to be managed in such a way that only the partners can conclude transactions in the sense of a so-called internal company (§705 II BGB). In practice, the MoPeG gives the GbR itself the capacity to act, as it can act as its own legal entity and can therefore conclude contracts, acquire rights and enter into liabilities.

This can be advantageous in the luxury brand sector, for example, as it enables a cohesive and professional appearance.

Innovation of the register entry 


As part of a further innovation of the MoPeG, §707 BGB opened up the possibility of registering the GbR in the newly created company register.  By entering mandatory information about the company itself and the partners, such as their respective names, addresses and powers of representation (§705 II BGB), the MoPeG ensures a level of transparency for third parties that did not previously exist.

After registration, the GbR is obliged to bear the name suffix ‘eingetragene’ or ‘eGbR’ in accordance with §707a II BGB.
It is worth mentioning that, in addition to the merely voluntary registration option granted by the MoPeG, there is an obligation to register for important legal transactions such as the acquisition of land (see §47 II German Land Registry Code (GBO)). If no disclosure is desired with regard to certain information, organisational strategies must be developed to minimise transparency.

This is particularly important as once a GbR has been registered, it cannot be cancelled upon request (§707a IV BGB).
Nevertheless, the possibility of entry in the register can generally provide more credibility in business life as, for example, a partner can provide clear proof of their power of representation. In addition, such transparency with regard to company structures can generate potential new partners and investors.


Modernisation also ensures greater legal certainty in the event of registration, as third parties can generally rely on the entry in the company register in accordance with the so-called publicity effect (§707a III (1) BGB in conjunction §15 German Commercial Code (HGB)).

New possibilities in regards to company assets and advantages for luxury brands

The MoPeG also gives the GbR new possibilities for action with regard to company assets by abolishing the principle that only the partners hold assets. The newly created §713 BGB now enables a GbR with legal capacity to hold its own company assets, which consist of the contributions of the partners and the rights acquired for or by the company and the liabilities created against them.

For partnerships and in particular for luxury brand companies, this separation means that the partners' private assets are protected from unexpected financial burdens. Enforcement only takes place against the company's assets (see §722 II BGB).

Death of shareholders and dissolution of the company

The MoPeG also contains new regulations on the dissolution of the GbR. 
In particular, the MoPeG creates a new ‘guarantee of continued existence’ for the GbR. 
Before the MoPeG came into force, reasons such as the cancellation or death of one of the partners led to the dissolution of the entire GbR. Now, §723 BGB stipulates that the company remains in existence and that the respective partner merely withdraws from the GbR.

In the event of death, the company shares can still be transferred to the heirs with the help of a contractual provision. The MoPeG now opens up the option under inheritance law of entering into the shareholder position or assuming limited liability (§724 BGB). At this point, the modernisation regulations therefore show an increased degree of structuring options, with a more streamlined norm structure and an attempt to avoid undesirable legal and financial consequences in the event of unforeseeable life circumstances.


The OHG and KG

Both the law of the OHG (§§105 et seq. HGB) and that of the KG (§§161 et seq. HGB) were adapted more cautiously by the MoPeG. The OHG is still a partnership with legal capacity for professional market participants. The regulations of the OHG are therefore generally found in commercial law.

However, even before the modernisation, the subsidiary applicability of the GbR regulations in §§705 et seq. BGB to those of the OHG (§105 III HGB). The far-reaching adjustments within the framework of these standards and the identification of the GbR with legal capacity as a new model by the MoPeG give this reference particular significance.

The KG, in turn, is a modification of the OHG, which only consists of fully liable partners. At least one partner of the KG has only limited personal liability (§161 I HGB).


Opening up of partnership law to Freelancers

In this context, the MoPeG makes an adjustment worth mentioning, which concerns the opening up of partnership law to freelancers. 
Doctors and pharmacists, lawyers, notaries and tax advisors, business economists, engineers and architects, computer scientists, natural scientists and journalists, designers and writers are now given the option under §107 I (2) HGB to join together as an OHG, KG or GmbH & Co. KG, insofar as this is permitted by the respective professional regulations.


Previously, the law provided for a partnership company, which included limited professional liability. The modernisation now opens up the possibility of benefiting from more extensive limitations of liability.

Résumé

dtb-lawyer and corporate and foundation law expert Maximilian Brazel sums up: ‘The long-awaited and overdue reform and modernisation of partnership law has been completed with the “work of the century” MoPeG’. The MoPeG constructs the synchronisation of practice and law with the help of structured regulations and the codification of instruments.

These include the newly created register entry and options for freelancers, which can open up new opportunities in business life. In particular, the establishment of the GbR with legal capacity and corporate assets allows luxury brand companies, for example, to adapt more flexibly to the constantly changing requirements of the market.

Status 20.02.2025