The closing balance sheet in reorganization law – But on time, please!

published on 18 June 2025 | reading time approx. 3 minutes

The question of the conditions under which a closing balance sheet can be effectively taken into account when filing with the commercial register in the context of reorganization processes in accordance with the German Reorganization Act (UmwG) has long been controversial.

Two recent decisions from 2025 - from the Federal Court of Justice (BGH) and the Berlin Court of Appeal (KG) - shed light on this dispute from opposing perspectives. While the BGH allows a flexible, practical approach and permits the subsequent submission of a balance sheet that does not yet exist under certain conditions, the KG strictly adheres to the requirement that the balance sheet must already have been prepared and adopted at the time of filing.

The following article briefly compares both decisions and highlights their practical implications with recommendations.

The decisions deal with the question of whether a closing balance sheet may be submitted subsequently when registering a merger or spin-off - especially if it had not yet been prepared at the time of registration.

First, the legal classification and background

Section 17 UmwG regulates the requirements for the closing balance sheet, which must be submitted for certain transformation processes - in particular mergers and demergers. Essentially, this provision stipulates that the closing balance sheet of the transferring legal entity must be attached to an application for entry of a transformation measure in the commercial register. The balance sheet may not have been prepared more than eight months prior to the filing date.

The wording of the law therefore requires that the closing balance sheet "must be attached" and "must be prepared as at a specific reporting date".

Until now, it was unclear whether the balance sheet must already exist at the time of registration or whether a subsequent, but correct submission on the reporting date is sufficient.

Decision of the chamber court of Berlin from February 2025

The Court of Appeal is of the opinion that the closing balance sheet must already have been prepared and adopted at the time of filing. The subsequent submission of a balance sheet that does not yet exist is not permitted.

Berlin's highest court initially based its decision on the wording of Section 17 UmwG. It states "to be attached" and "has been prepared". This alone presupposes the existence of an existing balance sheet on the filing date. Subsequent submission of a balance sheet that has not yet been prepared would effectively extend the 8-month period and undermine the legislative system. There would otherwise be a risk that important decisions would be made on the basis of unsecured data. Creditor protection requires a complete information situation at the time of registration.

Decision of the BGH from March 2025

The BGH ruled that a closing balance sheet as at the reporting date can also be submitted after registration, even if it had not yet been prepared at the time of registration, provided that this is done "promptly".

In its reasoning, the BGH stated that the 8-month period in Section 17 para. 2 sentence 4 UmwG only applies to the period between the reporting date of the balance sheet to be submitted and the registration of the conversion, but not to the period between the reporting date of the balance sheet and its preparation or submission to the court.

The competent registry court can also request missing documents by interim order. The refusal of an entry due to a deficiency that can be rectified without the possibility of subsequent submission contradicts the principle of proportionality. The principle of creditor protection is thereby taken into account, according to the BGH, as long as the balance sheet is correct as of the reporting date and is submitted promptly.

Evaluation and consequences

While the BGH pursues a more pragmatic approach, taking into account the principle of proportionality and allowing a prompt subsequent submission, the Berlin Court of Appeal strictly follows the wording of the UmwG.

As a result, the BGH ruling makes it easier for companies to register reorganization transactions and, so to speak, relies on a more flexible solution subject to certain conditions.

The Berlin judges, on the other hand, insist on formal compliance with the requirements of the UmwG.

Conclusion on the timing of the two decisions

At the time it was issued, the KG's decision of February 18, 2025 was still in line with the prevailing case law at the time. However, just one month later, in its decision of March 18, 2025, the BGH overturned this narrow interpretation and established a new - more flexible - interpretation of the law.

As a result, the legal situation was readjusted by the supreme court in March 2025, which will have a significant impact on future commercial register applications for transformations.

The judgment of the KG is not yet legally binding. The BGH will have to comment on this as part of the appeal on points of law that has been filed. However, it is not to be expected that the BGH will deviate from its own decision from March 2025. In its decision, the BGH expressly stated that a closing balance sheet as at the reporting date pursuant to Section 17 para.2 sentences 1 and 4 UmwG may also be submitted retrospectively. According to the BGH, this applies irrespective of whether the balance sheet had already been prepared at the time of registration, provided that the subsequent submission is made "promptly". The BGH dealt in detail with the opposing view - as represented by the Court of Appeal - and rejected it as a result.

Recommendations for practice

Even if your closing balance sheet is not yet available when you register with the commercial register, it is still possible to submit it on time - the Federal Court of Justice has expressly permitted this under certain conditions.

In order to avoid delays and queries from the registry courts, we nevertheless recommend preparing and approving the balance sheet at an early stage and, if necessary, contacting the relevant registry court.