Every year - changing the financial year of a GmbH
Changing the financial year of a GmbH is one of the classics of company law. In a recent ruling, the Jena Higher Regional Court (OLG Jena, decision of 21.07.2021 - 2 W 244/21) made an important decision in this regard, which is of great importance in practice.
The case:
In August 2020, the shareholders' meeting of a GmbH resolved in a notarized deed that the financial year should in future begin on 1 October of each year and end on 30 September of the following year. The articles of association were amended accordingly on this point.
The managing director of the GmbH did not register the resolved amendment with the commercial register until January 2021. And now the problem began: the registry court rejected the application because, in its opinion, the amendment to the articles of association should also have clarified in which year the new financial year would begin and for which period the inevitably preceding short financial year would be formed. An impermissible retroactive effect of the amendment to the articles of association had to be excluded.
The decision of the OLG Jena:
Upon the complaint of the GmbH, the OLG Jena ordered the registry court to register the amendment to the articles of association as resolved.
The amendment of a financial year is an amendment to the articles of association within the meaning of Section 54 GmbHG, which becomes effective upon entry in the company's commercial register (Section 54 (3) GmbHG). The amendment of a financial year can therefore not be made retroactively to a date prior to its entry in the commercial register. Instead, the entry must be made before the start of the amended financial year (and therefore also before the end of the preceding short financial year). In the present case, the amended financial year could therefore not start on October 1, 2020, but only from October 1, 2021. At the same time, this change inevitably involved the creation of a preceding short financial year, as the current and new financial years may not each comprise more than 12 months (Section 240 (2) sentence 2 HGB). In the present case, the current financial year (corresponding to the calendar year) would have ended as a short financial year on September 30, 2021 if the change had been entered before October 1, 2021. However, this did not have to be expressly stated in the new articles of association. The OLG states:
"By inspecting the commercial register, legal transactions can determine when the amendment to the articles of association became effective through its entry and it is clear from the wording of the amended articles of association that the amendment to the financial year has no retroactive effect. It is therefore also clear that - assuming that the notified fact is entered before 30.09.2021 - the change to the financial year will take effect on 01.10.2021."
With reference to Section 241 No. 3 AktG (analogously), the OLG expressly disagrees with the frequently discussed opinion that it may be sufficient if at least the registration was submitted before the start of the new financial year. The resolution and the registration as such could not have any binding effect for a point in time prior to their entry in the commercial register.
The practical consequences:
- Changing the financial year of a GmbH is a change to the articles of association and only becomes effective upon entry in the commercial register.
- A retroactive change of the financial year to a date prior to the entry of the change in the commercial register is not permitted.
- Consequently, the amended financial year must be entered before the start of the new financial year (and the end of the short financial year to be formed).
- The amended articles of association do not have to clarify in which year the new financial year begins and for which specific period a short financial year is formed. These periods are readily apparent from the registration dates and the aforementioned principles.
One final note:
Not least because of the tax issues surrounding changes to a financial year, GmbHs should always seek advice from experienced lawyers or tax advisors in order to avoid legal stumbling blocks and ensure that all aspects have been fully considered.
