DE: Changes in the new foundation law

Oct 6, 2021 Benn-Ibler Rechtsanwälte

A new unified civil law relating to foundations is to come into force in Germany on July 1, 2023. The aim of the draft law is both a greater standardisation of foundation law and the introduction of a central foundation register, to the effect that the public can trust in it (Publizitätseffekt), in order to resolve the existing legal uncertainty.

Under the current legal situation, civil law relating to foundations regulates both the creation and the constitution of foundations with legal capacity under civil law, which are foundations under private law. It is characterised by a coexistence of federal and state law. Sections 80 ff of the German Civil Code (Bürgerliches Gesetzbuch, BGB) are supplemented by the foundation law of the respective states.

It has proved problematic that the central provisions in the BGB contain only few fundamental provisions on foundation law and do not represent a uniform and clear regulatory structure due to numerous references to association law (Vereinsrecht).

The new version is intended to create a new, nationally uniform and all-conclusive foundation law. It is intended to create legal clarity and more flexibility for the foundations by granting them new scope for action.

The draft law provides for the following changes:

• New regulation of the concept of a foundation
• Facilitation of dissolution, changes in structure and articles of association
• Foundation assets - new uniform definition of assets
• Liability of the governing bodies
• Introduction of a central foundation register

In the future, Sections 84 ff BGB-new will regulate the liability of the governing bodies more comprehensively and specifically for foundations. New room for manoeuvre will arise with regard to the liability standards for foundation governing bodies.

The power of representation of the board members can now be regulated differently by the articles. In the future, the respective activity of the board member will be determined according to the provisions of the law on mandates and no longer according to association law, as was previously the case. The amendment to the law also introduces the Business Judgement Rule, which grants the members of the governing bodies a degree of liability-free discretion.

Furthermore, a central electronic foundation register, to the effect that people can trust in it, is to be introduced in order to ensure more legal security and transparency. This is intended to make it easier for foundations to prove the power of representation of board members and thus enable them to participate in legal transactions. The official certificates of representation required up to now will thus become obsolete.

Reg. draft: BT-Drs. 19/28173 (31.03.2021)