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What lawyers advising international partnerships should prepare for

The German Act on the Modernization of Partnership Law (MoPeG) may force owners of partnerships to amend their partnership agreements in a timely manner.

As a lawyer or other legal advisor, you should especially inform and advise your clients with international business partners in good time. A desired deviation to the future legal situation as well as new obligations that go along with it have to be communicated and discussed interculturally.

With a reliable, experienced legal translation agency, you can provide your clients with focused support in this situation and act professionally on an international level.

What changes does the MoPeg bring with it?

Although the MoPeG has not yet been finalized, implementation by Q3 2021 is considered mostly likely. Partnerships have twelve months from the date to respond to the change in the legal situation by amending their partnership agreements.

Although the new partnership law does not correspond to a fundamental reform, it nevertheless entails far-reaching changes, such as:

  • Clarification of the GbR (German civil-law partnership) as an asset holder (Sections 713, 722 BGB-E): Previously, the GbR was recognized as an asset holder only in case law. Now the GbR is to be enshrined in law as a legally capable vehicle. This means that execution can only be levied against the assets of the partnership, not against the assets of the partners, provided that the title is directed against the partnership.
  • Voting power of OHG (German general partnership), KG (German limited partnership) and GbR will in future be based on shareholding ratios (Section 709 para. 3 BGB-E): The profit and loss participation of the shareholders has so far been based on the number of shareholders involved, but not on the actual participation ratios. This application, which is common in practice, is thus enshrined in law.  Other regulations are now to be recorded in the articles of association.
  • Increased liability for non-registered limited partners (Section 176 HGB-E): Unregistered limited partners must be liable for the partnership's obligations in the same way as a general partner until they are registered, provided they have consented to the legal transaction.

Other important changes relate, among other things, to the right to vote on seats, the passing of resolutions or the shareholders' right to compensation.

What are the implications for your clients' business relationships and how should you respond?

Legal changes and the associated adjustments to a contract must be handled with sensitivity, especially in intercultural contexts.

Foreign business partners might feel insecure at the first moment. Timely planned communication and discussion is needed before the partnership agreement can be adjusted.

Experience has shown that a lead time of several months is appropriate for communicating complex legal issues to foreign-language partners and discussing them with them.

Law firms and legal departments should approach this demanding challenge in a structured and careful manner.

 

With accurate legal translations you can act confidently and advise competently

Before amendments to the partnership agreement can be made, it is necessary to present the legal changes, the legal consequences for the company and the options in the respective foreign language of your clients' business partners in a comprehensible manner. A comprehensible presentation takes precedence over legal jargon here.

The translation of the partnership agreements to be adapted as a result requires above all expertise, professionalism and speed.

Linguaforum: An experienced partner for legal translations

Linguaforum GmbH, based in Wiesbaden, is a specialist translation agency with many years of expertise. Managing director Christiane Starke has gained relevant experience in international law firms and also in-house in legal departments. As a court-sworn legal translator, she convinces clients with her precise and dynamic way of working.

 

Trust a careful professional

Some law firms and legal departments make the mistake of not placing their legal translations in professional hands. Even small errors in the process can lead to complications and tensions, as well as client dissatisfaction. Convince permanently with a professional appearance, also in an international environment, by relying on a structured professional with high quality standards.

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