Buying a guarding company: trade licence, reliability and responsible management

Section 129(4) GewO 1994 assigns the guarding of businesses, buildings, facilities, construction sites, land and movable property to the guarding trade. It also covers operating alarm and emergency call centres. The listed activities include regulating people and vehicle traffic, security checks, cash and valuables transport within the statutory limits, concierge services, event stewarding and company fire brigade services.

The label “security company” is therefore not enough for diligence. The relevant questions are which services the target actually provides and which wording appears in GISA. Several commercial activities may coexist, but each authorisation must be mapped to the relevant service.

Section 94 no. 62 GewO 1994 lists the security trade, including professional detectives and guarding, as a regulated trade. The licence scope should be a separate workstream in legal diligence and in the warranties of the acquisition agreement.

In a share deal, the shares change hands while the target legal entity continues. The target’s trade licence does not become the buyer’s personal authorisation. The target remains the trader and must continue to satisfy the trade-law requirements.

Review the current GISA extract, all decisions and conditions, the actual service scope, open administrative proceedings and the trade-law managing director. A planned management change must leave the business with a functioning structure of responsibility.

Also identify whether the transaction brings an individual with controlling influence over the business into the structure. Section 91(2) GewO 1994 can require such a person to be removed in relevant cases. A change of ownership must therefore be reviewed from both a corporate and a regulatory perspective.

In an asset deal, the buyer acquires the business or selected assets, not the seller’s company. The agreement can address customer contracts, vehicles, equipment, brands and employees. It does not automatically transfer the seller’s trade-law status to the buyer.

Before operations start, determine which guarding services the buyer will provide and on which trade licence. A regulated trade generally requires proof of competence. If the buyer cannot provide it personally, a suitable managing director must be planned under sections 16 and 39 GewO 1994.

The timetable should cover the trade notification, proof of competence, personal requirements and the review under section 95 GewO 1994. A contractual transition clause cannot replace the required authority to trade.

Section 39 GewO 1994 defines the role of the managing director. The managing director is responsible to the trader for technically proper operation and to the authority for compliance with trade-law rules. The person must be able to participate in the business and must have independent authority to issue instructions.

A legal entity operating a trade requiring proof of competence must satisfy additional requirements concerning the managing director’s position and employment. The appointment and departure must be notified to the competent district authority. For a guarding company, check whether the planned management and staffing model works in practice and meets the statutory requirements.

A name on an organisational chart is not enough. The data room should show the employment or corporate position, qualifications, actual decision-making powers and communication with the authority.

Reliability matters at several levels. Under section 95 GewO 1994, the authority reviews the required reliability for certain regulated trades, including the security trade under section 94 no. 62. The appointment of a managing director for these trades requires approval.

Section 130(8) GewO 1994 permits the use of employees for reserved activities only if they have legal capacity and the required reliability and suitability. Under section 130(9), a list of persons used for guarding work must be submitted no later than two weeks before their use; changes must be notified within two weeks. These duties affect day-to-day operations and must be included in the staffing plan for a transaction.

Serious breaches can affect the trader’s reliability. Section 87 GewO 1994 provides for withdrawal of a trade licence where the required reliability is no longer present. Ask specifically about authority findings, administrative penalties, pending proceedings and missing notifications.

The data room should contain the GISA extract, trade notifications and decisions with conditions, management documents, operating and deployment instructions and current registers of persons used for guarding work. Review insurance, customer contracts, authority correspondence and pending administrative or court proceedings as well.

The acquisition agreement should address the licence and its scope, the accuracy of personnel and proceedings information, the absence of withdrawal or prohibition grounds and cooperation with management and authority notifications. An asset deal additionally requires the buyer’s own trade notification, contract consents and a reliable business-transfer plan.

Connect the licensing workstream with the general structural questions. The article Share deal versus asset deal compares the two forms. The article on FlexCo shares and value shares covers the participation structure of a FlexKapG.

The key provisions are sections 16 GewO 1994 on proof of competence, 39 on managing directors, 94 no. 62 on the security trade, 95 on reliability review and approval of management, 129 and 130 on guarding, and 87 and 91 on withdrawal and controlling influence. Verify the consolidated position using the RIS research for the GewO 1994 and the specific GISA and authority records. The BMWET overview of the guarding trade provides additional official information.