E-signatures in finance and NPL transactions in Germany

The written form, paper format and wet-ink signatures are mandatorily required if an agreement or document needs to be certified or notarised in front of a notary public or filed with public registers (e.g. the commercial register or land register). This applies in particular to:

• share pledge agreements regarding a pledge over shares in a German limited liability company (GmbH) and related powers of attorney (regarding which notaries usually request to be provided with the original version executed with wet-ink signatures); and
• land charge and mortgage deeds including related powers of attorney.

Further, the written form, paper format and wet-ink signatures are mandatorily required under German law regarding:

• sureties (Bürgschaften), other than sureties that qualify as commercial transactions regarding which, for the avoidance of doubt, no written form requirement is applicable under German law; and
• the (security) assignment of EU trademarks.

In the above cases, electronic signatures are insufficient.

Finally, mandatory form requirements, which do not allow for electronic signatures, may apply to finance agreements and security documents (to be) entered into with individual persons/consumers.

Except for cases where paper-format and wet-ink signatures are mandatory, almost all finance transaction agreements and documents can (subject to the below) be prepared, concluded and signed electronically, with certain types of electronic signatures, including the following:

• facility/loan agreements;
• sureties (Bürgschaften) that qualify as commercial transactions and guarantees (bank, corporate, cost overrun, etc.);
• various security documents (except for those specified in point 1 above), e.g.  relating to the security transfer of assets, the assignment of receivables, the pledge over shares in a German entity (other than a GmbH) and accounts and the pledge or assignment of IP rights and claims (other than the assignment of EU trademarks);
• security trust agreements;
• subordination, sponsor’s and owner’s undertaking agreement;
• factoring/forfeiting agreements, ABS agreements, leasing agreements;
• power of attorneys except for the powers of attorney referred to in point 1 above).

Regarding the finance documents referred to in 2 above, no written or electronic form requirements exist under mandatory German law. Therefore, the question whether or not such finance documents can be signed electronically, and by which form of electronic signature, primarily depends on the wording of the relevant clauses in the finance documents. If the relevant clauses only provide for the electronic form without further specifying this requirement, any kind of e-signature is sufficient.

If a written form requirement is provided for in the relevant finance document without mentioning any electronic signatures, only qualified electronic signatures will be sufficient for electronically signing the relevant documents according to the German Civil Code. However, this should not be understood as a general rule but only as a legal rule of interpretation of the parties’ intentions. As a consequence, it cannot be excluded that the relevant counterpart might argue that it made it clear that electronic signatures were not acceptable. Therefore, to be on the safe side, it should be checked on a case-by-case basis with the relevant counterparty whether from its perspective electronic signatures in the form of qualified electronic signatures will suffice.

No, this is not applicable regarding typical German banking & finance transactions and agreements.

See point 3. above.

An attorney countersigning is not relevant to German banking & finance transactions. 

Based on the relevant act on public notaries, electronic notary public procedures are available in Germany. However, none of them are relevant to the parties to typical in German banking & finance transactions as in this context usually certain share pledge agreements and land charges or mortgages only need to be notarised (see point 1.1 above) and the parties (or any persons authorised by them under powers of attorney) need to sign the relevant documents in front of a notary public (see also 1.1. above).

The Apostille is not accepted in electronic form in Germany.

Germany has not implemented the Electronic Apostille Program (e-APP). 

Yes, according to the German act on the prevention and combating of money laundering and terrorist financing (the “AML Act”), obliged entities such as financial institutions are entitled to identify and verify their customers by an appropriate examination of the document presented physically or another procedure suitable for verifying identities under anti-money laundering and counter terrorist financing law, and having a security level equivalent to the “physical procedure”.

Regarding electronic AML customer authentication, the “suitable procedures” accepted by the German Financial Supervisory Authority (the “BaFin”): are: (i) video identification according to the BaFin Circular on Video identification (Rundschreiben 3/2017 (GW)—Videoidentifizierungsverfahren); (ii) identification via an electronic proof of identity according to Sec. 18 of the German Identity Card Act; (iii) identification via a qualified electronic signature according to the eIDAS Regulation; and (iv) identification via a notified electronic identification scheme according to the eIDAS Regulation.

According to the AML Act, the identification and verification of the beneficial owner is subject to less stringent requirements than the identification of individual persons who are contracting parties or representatives. Obliged entities such as financial institutions are not required to verify the identity of a beneficial owner via any regulated procedure. Rather, the verification of the beneficial owner’s identity is based on risk-appropriate measures. Furthermore, neither the AML Act nor the BaFin require a specific way of transmitting a PEP declaration. Therefore, the beneficiary owner declaration and PEP declaration are accepted in electronic form without any formalities.