Handelsgesetzbuch (HGB): Lessons for Australian Business in 2025

Germany’s Handelsgesetzbuch (HGB)—or Commercial Code—has long set the benchmark for business regulation and accounting standards across Europe. While it may seem worlds apart from Australian law, the HGB’s principles of transparency, structured reporting, and robust corporate governance hold valuable lessons for Australian businesses navigating new regulatory and economic challenges in 2025.

What Is the Handelsgesetzbuch (HGB)?

The HGB is Germany’s comprehensive code governing commercial enterprises. First enacted in 1897 and regularly updated, it covers everything from company formation to accounting, auditing, and insolvency. Unlike Australia’s Corporations Act, the HGB is laser-focused on the commercial sector, setting out clear expectations for merchants, partnerships, and corporations.

• Accounting standards: The HGB mandates double-entry bookkeeping, annual balance sheets, and detailed profit and loss statements.

• Transparency requirements: All limited liability companies must publish their annual accounts, promoting trust and investor confidence.

• Corporate governance: The HGB emphasises director duties, shareholder protections, and insolvency rules.

In 2025, Germany continues to update the HGB, including new digital reporting obligations and sustainability disclosures—areas where Australia is catching up fast.

Key Differences and Similarities with Australian Law

While both countries aim for reliable, transparent business environments, their approaches diverge in some crucial ways.

• Accounting frameworks: Australia aligns with IFRS (International Financial Reporting Standards), while the HGB maintains some unique German GAAP principles. However, convergence is underway, especially for larger firms listed on European exchanges.

• Reporting thresholds: The HGB distinguishes between micro, small, medium, and large companies, with reporting requirements scaling accordingly. Australia, in contrast, typically uses a public/private and large/small proprietary company distinction.

• Auditing: Mandatory audits under the HGB apply to most GmbHs (German limited companies), regardless of size. Australia exempts many small proprietary companies from audit, though this is under review for increased transparency in 2025.

These structural differences highlight opportunities for Australian reform, particularly as ASIC considers enhanced reporting and auditing standards to counter financial crime and insolvency risk.

Lessons for Australian SMEs and Finance Professionals in 2025

With regulatory reform on the horizon, Australian businesses can look to the HGB for best practices in corporate governance and financial management:

• Proactive transparency: The HGB’s emphasis on timely, public financial disclosure builds trust with investors, lenders, and business partners. In a post-pandemic world, this transparency is increasingly expected by stakeholders and regulators alike.

• Structured growth: The HGB’s tiered approach to company size and reporting offers a blueprint for scaling compliance obligations as businesses grow, something Australia is considering as it updates its own thresholds in 2025.

• Digital and sustainability reporting: As of 2025, new HGB amendments require digital submission of accounts and, for larger firms, climate-related disclosures. Australia is following suit, with Treasury consultations on mandatory climate risk reporting for listed entities and large private companies.

For finance professionals, understanding the HGB can offer a competitive edge—particularly for those working with international clients, cross-border investments, or preparing for tighter local regulation.

Conclusion

While the Handelsgesetzbuch (HGB) is rooted in German legal tradition, its principles of accountability, transparency, and adaptability are universal. As Australia enters a new era of business regulation in 2025, there’s much to learn from the HGB’s practical, tiered approach—especially for SMEs and advisers navigating change. Embracing these lessons can help Australian businesses build resilience, access new markets, and meet rising stakeholder expectations.