The Covid-19 pandemic has acted as a “digitization booster” in many areas. This also applies to company law. However, notarizations have so far been left out, they could only be carried out in the presence of a notary. This will change from August 1, 2022.
Then the founding of a GmbH, the most popular legal form of companies in Germany, can be certified online in a video conference with the notary. It will also be possible to authenticate registrations for the commercial, partnership and cooperative register digitally.
Admittedly, some countries were quicker with online certification, especially Austria. But the German legislature did well to approach things cautiously. Because digitization must not come at the expense of security.
And the dangers of misuse are great in the online world with its technical manipulation possibilities. This was particularly impressive recently when Berlin’s governing mayor and other politicians fell for Russian comedians who successfully posed as the mayor of Kyiv and former world boxing champion Vitali Klitschko in video calls.
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It is essential to prevent criminals from founding companies in Germany under false identities. Because such companies are the perfect tool for money laundering, tax fraud and other crimes.
The German online certification is particularly secure
That is why the legislature has placed the highest demands on the design of the new notarial online procedure – above all on identification. An electronic means of identification that corresponds to the highest European security level, such as the German identity card, is essential.
The personal data and the photo are read electronically from the ID chip with a smartphone. It is automatically checked whether the ID document was forged or stolen.
On the other hand, it is not sufficient for the identification to be carried out by holding an ID document in front of the camera, as is customary, for example, when opening a bank account or custody account and is permissible in Austria even for notarizations.
Because such a so-called video identification process has proven to be too susceptible to forgery. Online certification is therefore later in Germany than in Austria, for example, but it meets higher standards.
The online certification is designed to be easy for citizens to use. In addition to a computer or tablet, all you need is a current ID card and a smartphone with the notary app.
(Photo: imago images/Westend61)
The next steps for further digitization of the notary’s office are scheduled for next year: Then it will also be possible to found companies in kind, in which case contributions in kind such as patents or machines are brought into a company instead of money, as well as changes to the articles of association and registrations in the register of associations will be possible online.
Procedures such as wills, marriage contracts and real estate purchases, but also the formation of a stock corporation and the sale of GmbH shares are reserved for the face-to-face procedure.
Other countries like Austria go further. However, limiting online procedures to the processes mentioned is appropriate because not all of them are suitable for this and there is a risk that online certification will not be able to develop the full protective function intended by the legislature.
The German solution is therefore balanced. The option of online certification is being introduced cautiously, because the proven standards from the face-to-face world are carefully transferred to the digital world.
The notarial advice is retained and now takes place in a video conference. An electronic signature of the highest security standard takes the place of the signature. This means that the result of the certification, the notarial deed, retains its previous high probative value, even in electronic form.
At the same time, the procedure is designed to be easy for citizens to use. All you need is a computer or tablet, a current ID card and a smartphone with the free notary app.
Further steps are necessary to set up a company quickly
However, the introduction of online certification is only the first step on the way to completely digital and unbureaucratic company formation. Because after the certification, the new entrepreneurs still have to overcome a large number of hurdles – such as applying for a sales tax identification number, registering a business and registering employees with the health insurance companies. All of this is usually still done with printed forms and requires visits to the authorities, which often have to be attended to in person.
In many cases, the founders then get the impression of a “jungle of authorities”. In order to relieve them so that they can start their business activities more quickly, all other administrative procedures should be bundled with the notary as a so-called one-stop shop.
>> Read here: These are the five biggest bureaucracy annoyances for entrepreneurs
The model has been common for real estate purchases for a long time: After the notarization, the notary takes over all further steps such as the notification of sale to the tax office, the request for the right of first refusal from the municipality or obtaining the cancellation documents from the bank – which leads to a considerable acceleration and relieves the citizens .
This procedure should be transferred to start-ups. The prerequisite would be to network authorities with the notary’s offices via the Online Access Act (OZG) and to stipulate the transmission of information by law.
Most of the data for this is already available to the notary and can be used further without any problems. The commercial registers have been doing this for 15 years. The data is taken over directly by the register courts with a simple click of the mouse – an early example of the “once-only principle”.
Uncomplicated start-ups are an important location factor
The most uncomplicated, fast and secure way to found a company is an important location factor and is therefore important for the economic power and prosperity of our country.
In addition, Germany is facing enormous challenges: digitization, the climate crisis and now the energy crisis. In order to cope with these mammoth tasks, it is of central importance that we support people with business ideas in such a way that they can actually realize their plans in their own company. There is still room for improvement here in Germany.
The author: Jens Bormann is a notary and President of the Federal Chamber of Notaries.
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