Legal entities can now use digital processes with their verified identity. Verifying the identity of legal entities poses particular challenges because, unlike natural persons, legal entities do not have an identity document.
1. Three components of identification
1. These three components must be taken into account during identification:
- Legal entity: The existence of the legal entity itself must be validated, e.g. the company or association.
- Power of representation: The power of representation of the natural person acting on behalf of the legal entity must be ensured.
- Company representative / natural person: The identity of the natural person acting on behalf of the legal entity must be established.
These three components are now combined in a digital process, enabling legal entities to benefit from the advantages of digital applications and real-time transactions. This is now even possible in compliance with the provisions of the Money Laundering Act, meaning that financing agreements, leasing contracts and loan agreements, for example, can be concluded digitally in accordance with the GwG.
2. The identification of legal entities
Legal entities are identified directly at the point of contact – efficiently and in compliance with legal requirements. Trained staff carry out the verification, eliminating waiting times, media breaks and subsequent coordination.
For identification, only a valid ID document of the authorised representative is required; additional documents are not mandatory but can be optionally included in the process (e.g. written power of attorney). The company is then verified by means of a suitable register check.
Certain representation arrangements require that several persons sign – and are identified accordingly. Whether and when this is the case depends on the respective representation rules of the legal entity.
Thanks to the asynchronous omnichannel approach, person A can be identified on site, for example, while person B goes through the process remotely at a later time and from any location. The advantage: maximum flexibility in identity verification.
3. Detailed identification
3. Step by step: How identification works in detail
- Search and verification of the company
The company is searched for and verified by comparing registers. All relevant data on the legal entity is provided for preparation and use in the company’s own business processes. - Selection of representatives
Based on the identified legal entity, the representatives listed in the register, including their roles and representation rules, are listed and can be selected for the process. Authorised persons can be added together with a power of attorney document. The selected representatives are then identified as natural persons. - Identification of representatives as natural persons
The identification of authorised representatives can be carried out either on site by means of ID verification and digital recording by the on-site employee or remotely using an identity method (e.g. eID, bank ID, video ID, photo ID). - Verification of power of representation
Once the natural person has been successfully identified, the data in the register is checked again to verify the power of representation. For powers of attorney that cannot be found in the register, a check is made to ensure that the identified person matches the authorised representative. - Provision of document data
Once the representative, the power of representation and the existence of the legal entity have been successfully identified, the relevant document data is provided digitally. - Execution of the digital signature
The previously identified representatives can then act and complete the desired business process on behalf of the legal entity, e.g. sign the contract documents alone or jointly. - Provision of the signed documents
Once all selected representatives have signed the documents, the documents can be provided digitally and used in further business processes.
4. Support for common legal forms
4. Support for common legal forms in Germany
The identification of legal entities is possible for a wide range of all common legal forms in order to meet the most diverse business and institutional requirements.
The supported legal forms include corporations such as GmbH, AG and UG (limited liability), as well as partnerships – including OHG, KG and GbR. Even registered associations (e. V.), including non-profit organisations, can be easily identified and provided with the appropriate digital powers of attorney.
In addition, foundations with legal capacity under private or public law are supported, as are cooperatives (eG). Public bodies such as chambers, universities or municipalities can also be integrated into the identification process and provided with digital powers of attorney, depending on their needs and legal basis.
Last but not least, freelance associations, for example in the form of partnership companies (PartG), can also be identified and clearly authorised.
5. Wide range of applications
5. Diverse areas of application for digital identification and processes
The digital identification solution can be used in many industries – wherever individuals or organisations need to be identified quickly, securely and flexibly, or administrative processes need to be handled digitally.
- Financial transactions & KYC processes: Banks and financial institutions must identify legal entities in accordance with Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements to ensure transparency and security. Transactions are carried out accordingly with legal entities.
- Legal Entity Identifier (LEI): Companies participating in financial transactions require a Legal Entity Identifier (LEI) to comply with regulatory requirements such as MiFID II and EMIR.
- Digital business processes: Legal entities must verify themselves for digital business processes, e.g. when concluding contracts, opening bank accounts or registering motor vehicles.
- Company registers & transparency registers: Identification is required to verify the ownership structure and beneficial owners of a company, particularly for compliance purposes.
6. Conclusion: Efficient, seamless, paperless & 24/7
Digital identification of legal entities at the point of contact enables fast, legally compliant and paperless processing. Thanks to guided workflows and real-time verification, there is no need for additional documents or manual follow-up work.
The entire process is media-agnostic and can be seamlessly integrated into existing systems – from identity verification to digital signatures. This significantly reduces administrative effort, saves time and minimises errors – for companies, partners and customers alike.
Need more information or want to seamlessly integrate digital identification into your processes? Verimi is one of the leading providers of legal entity identification, both at the POC and as a purely online process. Find out more here.
