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Signing annual financial statements using a qualified electronic signature

The development towards a digitalised work environment has accelerated rapidly since the beginning of the coronavirus pandemic. This will also affect the activities related to the drawing up of annual financial statements that, for more and more companies, are being carried out mostly or even completely in a home office. It is questionable whether or not a handwritten

signature on the annual financial statements can be exclusively replaced by an electronic signature.

Requirement to sign annual financial statements

A business person is required to sign the annual financial statements and indicate the date (Section 245 of the German Commercial Code [Handelsgesetzbuch, HGB]). In the case of a sole proprietorship the signatory would be the sole proprietor, in the case of partnerships it would be the personally liable shareholders and for corporations the signatories would be either all the members of the management team (for a GmbH) or all the members of the management board (for an AG [a joint stock company]).

The persons who sign are documenting with their signatures that they accept responsibility for the completeness and correctness of the annual financial statements. The signature has to be put beneath the annual financial statements.

Qualified electronic signature

Annual financial statements have to be personally hand signed. Consequently, merely replacing a handwritten signature with an electronic copy or a printed reproduction of the original signature is not a valid option. However, a qualified electronic signature as a substitute, which complies with formal requirements, could possibly be considered.

A qualified electronic signature is a digital signature that is the equivalent of a handwritten signature and can thus be used in legal dealings. To this end, specific Trust Service Providers issue qualified certificates and link these electronically with the document that has to be signed.

As a result, the natural person who is the signatory can be clearly identified.

Admissibility of digital signatures not yet conclusively clarified

At this point in time, there are no clear legal regulations with respect to the admissibility of using qualified electronic signatures as a way of signing annual financial statements. Moreover, the accounting commentaries in this respect are modest in number as well as mixed. It is notable that qualified electronic signatures are already being used as substitutes for handwritten signatures in comparable areas of application.

For example, the Institute of Public Auditors in Germany (IDW) has deemed it to be admissible for auditors of annual accounts to use qualified electronic signatures when they issue audit opinions and draw up audit reports. Moreover, the use of qualified electronic signatures by preparers of financial statements on declarations of completeness has likewise been deemed by the IDW to be equivalent to handwritten signatures. The working group on accounting at the Chamber of Tax Consultants in South Baden also holds the view that qualified electronic signatures may be used on original digital documents.


Currently, there is continued legal uncertainty for preparers of financial statements in cases where solely qualified electronic signatures are used on annual financial statements. Since the approval of the annual financial statements does not depend on them being signed there is admittedly no risk of the statements being rendered invalid, nevertheless, this state of affairs could constitute a regulatory offence.

Recommendation: Furthermore, it should be noted that the record retention requirement under Section 257(3) HGB obliges preparers of financial statements to retain the annual financial statements in paper form and consequently to sign them by hand even if these have been drawn up and signed digitally. It would be desirable for lawmakers to clarify or review the current guidelines with respect to the signing of financial statements as well as the record retention requirements. We will keep an eye on further developments for you.

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