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Section 15 Transfer of shares

(1) Shares shall be alienable and inheritable.

(2) If a shareholder purchases further shares in addition to his original share, these shall remain legally independent.

(3) An agreement concluded in notarial form shall be required for the transfer of shares by shareholders.

(4) An agreement establishing the shareholder’s obligation to transfer a share shall likewise require notarial form. However, an agreement concluded without such notarial form shall become valid once the transfer agreement is concluded pursuant to subsection (3).

(5) The articles of association may stipulate that the transfer of shares be made dependent on further conditions, in particular the company’s consent.

Information for non-professionals

To Information for legal professionals

Relevance for legal relations

a) Relevance for legal relations, frequent applications

aa) General

1Section 15 German Limited Liability Companies Act (GmbHG) is one of the central norms of the GmbHG. It makes clear in subsection I that shares in a limited liability company (GmbH) are freely transferable as a matter of principle; they can therefore especially be sold and inherited.

Section 15 III GmbHG provides that the transfer of GmbH shares between living persons is only possible if the transfer in rem is notarised. The agreement establishing a shareholder's obligation to transfer a share must also be notarised pursuant to section 15 III. This means that for a transfer of GmbH shares it is necessary for the purchaser and the vendor to seek the assistance of a notary.

Section 15 V GmbHG provides that the free transferability of shares by the shareholders of a GmbH can be restricted. This especially makes it possible for the shareholders to ensure that the GmbH shares cannot be transferred to unknown or disagreeable persons so that the group of shareholders essentially stays the same, unless the (majority of the) other shareholders give their consent.

bb) Section 15 I GmbHG: Alienability and inheritability of shares

GmbH shares are freely alienable as a matter of principle. This means that they can be transferred from one (legal or natural) person to another person. The sale of a GmbH share takes place by way of a transfer in accordance with sections 413, 398 German Civil Code (BGB). This transaction in rem must be differentiated from the transaction under the law of obligations, i.e. the legal basis for the transfer. This can be a share purchase agreement but also a gift agreement or other legal transactions under the law of obligations.

There are only a few statutory provisions which oppose a free sale, in particular in the case of freelancer GmbHs, e.g. GmbHs of lawyers or tax advisors (see section 59e I German Lawyers' Act (BRAO), section 50 I no. 1, 3 German Tax Advisors' Act (StBerG), section 52e German Patent Lawyers' Act (PAO), section 28 IV sentence 1 no. 1 German Public Accountants' Act (WPO)).

However, according to section 15 V GmbHG, the articles of association of a GmbH can make the transfer of shares dependent on further conditions (such as the company's consent or the consent of the other shareholders) or even completely exclude alienability.

In connection with the acquisition of shares, there is often talk of what are known as "share deals". A share deal refers to the complete or partial acquisition of shares in a company limited by shares (Kapitalgesesellschaft). Share deals must be differentiated from "asset deals". In the case of an asset deal, it is not the company which is being sold but the assets or individual items of assets belonging to the company (real property, plants, etc.). Section 15 GmbHG only governs share deals, i.e. the sale of GmbH shares.

GmbH shares are not only freely alienable as a matter of principle but, pursuant to section 15 I GmbHG, can also be inherited. If a shareholder of a GmbH dies, the heir becomes a shareholder or the heirs become shareholders of the GmbH. This means that the GmbH share of the testator is transferred, with all rights and obligations, to the heir. The heir does not therefore only have a right to participate in any annual net income generated but may also have obligations, e.g. to pay any outstanding claims of the company against the deceased shareholder (e.g. payment of initial or subsequent contributions). If several heirs have inherited a share in a GmbH, they are only entitled to joint ownership of the rights arising from the share, section 18 GmbHG. The heirs do not acquire independent status, e.g. where there are two heirs half each, as owners of the share in the GmbH.

The inheritability of the shares in a GmbH cannot be abrogated by provisions in the articles of association of the GmbH either. However, the articles of association can provide whether the heir will ultimately remain a shareholder. The articles of association can provide for the heir's share to be redeemed after he has become a shareholder. This means that the heir's share must be transferred to the company in return for a fee ("compensation"). The articles of association can, instead or also, require the heir's share to be transferred to a specific person, e.g. to another shareholder. A fee must be paid to the heir in this case too.

cc) Section 15 II GmbHG: Independence of shares

Today, section 15 II GmbHG only has a clarifying function because, following a change in the law in connection with the German Act to Modernise the Law on Limited Liability Companies and Combat Abuses (MoMiG) of 23.10.2008, it is now the case that a shareholder may hold not only one but, pursuant to section 5 II sentence 1 GmbHG, more than one share, even at the time when the GmbH is established.

dd) Section III and IV GmbHG: Notarisation requirement

When a share in a GmbH is being transferred, two agreements are normally concluded (although it is often the case that they are part of the same deed).

One agreement is the agreement under the law of obligations in which one of the parties undertakes to transfer the share to the other party and in which the other party undertakes to pay consideration, where appropriate (underlying legal transaction/transaction establishing an obligation). This can, for example, be a share purchase agreement or a gift agreement. Pursuant to section 15 IV sentence 1 GmbHG, the agreement under the law of obligations must be in notarial form, i.e. concluded before a notary. If, for example, a share purchase agreement for a GmbH share is concluded and this agreement is not notarised, neither of the parties can derive rights from this agreement, section 125 BGB, i.e. one party cannot request that the GmbH share be transferred to it and the other party cannot request payment of the purchase price.

In addition to the agreement under the law of obligations, there is the agreement in rem in which the parties agree that the GmbH share will be transferred from one person to the other person and which governs the transfer ("disposal transaction"). This is a transfer agreement pursuant to sections 413, 398 BGB. Pursuant to section 15 III GmbHG, this agreement in rem must also be in notarial form, i.e. concluded before a notary.

As a rule, the agreement under the law of obligations and the agreement in rem are in one document which regulates both the obligation as well as the disposal, i.e. the parties only need to go to the notary once. However, there can also be cases where the two agreements are notarised separately, e.g. if one party promises to gift a GmbH share to the other party in five years' time. In this case, the agreement under the law of obligation is first notarised and the agreement governing the disposal five years' later. In practice, this is often the case when an agreement is being concluded concerning put or call options for shares. An option grants a person the right to sell (put option) or acquire (call option) a GmbH share from its owner by way of a unilateral declaration. In such cases, the transaction establishing the obligation, i.e. the agreement concerning the put or call option, must first be notarised and the disposal transaction only when the option is exercised.

All other agreements relating to the agreements ("collateral agreements") are also subject to the requirement of notarial form pursuant to section 15 III and IV sentence 1 GmbHG. The parties must, as a matter of principle, regulate everything connected with the transfer of the share in the agreements to be notarised. The transaction concerning the disposal or the transaction establishing an obligation will be rendered invalid if the parties make further arrangements in addition to the notarised agreement, e.g. in a side letter, which relate to the transfer under the law of obligations or in rem of the GmbH share. In practice such side letters, which are often considered, must therefore be strictly warned against. If, for example, a dispute arises years later, the party for whom it is favourable to do so, can invoke invalidity.

Section 15 IV sentence 2 GmbHG is what is known as a curing provision. As already shown, the transaction establishing the obligation must be notarised. Lack of notarisation leads to invalidity as a matter of principle. If, however, this agreement is not notarised but the disposal transaction is properly notarised, the transaction establishing an obligation, which was initially invalid, becomes valid subsequently, i.e. it is cured. This serves to establish legal certainty since it avoids reversal transactions. However, the disposal transaction must be properly and fully notarised in order for the cure to be effective. If the transfer is notarised but not a collateral agreement thereto (e.g. a condition or restriction for the transfer in rem), for example, then the requirements of form for the transfer are not met and the transaction establishing the obligation is not cured.

A power of attorney to conclude the agreements in rem and under the law of obligations does not, however, need to be notarised. Instead it is valid in any form pursuant to section 167 II BGB.

Hotly disputed is the question of whether notarisation before a foreign notary meets the notarisation requirements pursuant to section 15 III, IV sentence 1 GmbHG. There is not yet a clear decision from the higher courts, especially the Federal Court of Justice, on this. On the one hand, there are good arguments in favour of notarisations, e.g. in certain Swiss cantons, being valid. However, in order to be completely certain, it is best not to have the agreements notarised abroad and to have both agreements notarised before a German notary.

ee) Section 15 GmbHG: Ways of complicating the transfer (restricted transferability)

The articles of association can provide that a transfer of GmbH shares is only possible subject to certain conditions or even completely exclude such transfers ("restricted transferability"). There are numerous ways in which the parties can restrict the free transferability.

Section 15 V GmbHG expressly mentions the consent of the company as one condition for transfer which can be regulated in the articles of association. The articles of association can set out which body or which person must grant the consent, e.g. it can provide that the consent must be granted by the company, the general meeting or even by individual shareholders. The prevailing view in legal literature is that it is even permissible for the consent to be granted by a third party external to the company.

Further possibilities include pre-emptive rights or rights of first refusal in favour of certain shareholders, obligations which must be assumed by the transferee or establishing certain characteristics which the transferee must possess (e.g. must be a relative or have certain qualifications).

Section 15 V GmbHG gives the shareholders of a GmbH the possibility of preventing persons, with whom they do not want to run a company, subsequently becoming shareholders. This is even more relevant where the group of shareholders is small and the shareholders work closely together, e.g. where the GmbH is made up of two tradesmen. By placing restrictions on the transferability of the shares they can prevent the respective other party selling his shares to an unknown third party.

If the articles of association of a GmbH provide, for example, that the shares may only be transferred with the consent of the general meeting and if a shareholder transfers his share without the consent of the general meeting to a third party (by way of a notarised agreement pursuant to section 15 III, IV sentence 1 GmbHG), the transfer is provisionally invalid. Provisional invalidity means that the transfer is not effective. However, the general meeting can also grant its consent subsequently. If it does this, the agreement becomes fully valid. If the general meeting refuses its consent, the agreement is finally invalidated.

b) The company's point of view

For the company it is especially important that it is clear who the shareholders are. The notarisation requirement provided for in section 15 III and IV sentence 1 GmbHG creates a considerable amount of transparency since, unlike in the case of shares in a stock corporation (AG), the shares cannot be simply transferred by way of a written agreement. Section 15 III and IV GmbHG is supplemented by section 40 II GmbHG which requires a notary, who has been involved in making changes to the group of shareholders, to submit a new list of shareholders to the commercial register without delay. The list of shareholders – which anyone can access at the commercial register (also online) – shows who is registered as a shareholder and who must be treated as such in legal relations.

Further information can result from the "transparency register" (sections 20 et seq. German Anti-Money Laundering Act (GwG)) introduced on 26.06.2017. As a rule, the economic beneficiaries are clear from the list of shareholders which can be inspected in the commercial register. However, notification duties may exist if the shares in a GmbH are not held directly but through other companies, e.g. an AG, if shares in a GmbH are being held in trust for a third party, where there are subholdings or where there are voting agreements between the GmbH shareholders. The directors are the persons responsible for making the notifications for GmbHs.

c) The point of view of the shareholders (majority, minority, blocking minority)

Section 15 GmbHG makes four important statements as regards the shareholders: (1) They can, in principle, freely transfer their GmbH shares pursuant to section 15 I GmbHG, providing that the articles of association do not provide for any restrictions in the sense of section 15 V GmbHG. (2) They can freely inherit their GmbH shares. (3) The transfer of GmbH shares between living persons must be notarised pursuant to sections 15 III and IV sentence 1 GmbHG. This requirement applies to both the transaction establishing the obligation as well as to the transaction in rem. (4) The shareholders can provide for restrictions of the free transferability of the shares in the articles of association in order to prevent unknown third parties becoming shareholders of the company without their consent.

d) The point of view of a company's bodies

Since section 15 GmbHG primarily concerns the level of the shareholders, the bodies of a GmbH are less significant in this connection.

A director of a GmbH has a duty, pursuant to section 40 I GmbHG, to submit a new list of shareholders to the commercial register when a change is made to the group of shareholders. If a notary has notarised the transfer, it is the notary and not the director who must make the notification in accordance with section 40 II GmbHG. The duty to submit the list of shareholders can be of significance particularly where the shareholders change as a result of legal succession and, where relevant, in the case of transfers of shares abroad. If the director of the GmbH gains knowledge of the fact that a shareholder has passed away and an heir has become a shareholder, he must give notice of this change without delay pursuant to section 40 I GmbHG by submitting a new list of shareholders to the commercial register.

The director of a GmbH can also be involved in the restrictions on transferability pursuant to section 15 V GmbHG. Sometimes articles of association of a GmbH provide that the consent of the management board of the GmbH is necessary for the transfer of a share. However, such a provision is rare in practice.

e) From the point of view of legal relations

As already explained under II., the notarisation requirement set forth in section 15 III, IV GmbHG provides an additional degree of transparency meaning that – in conjunction with the list of shareholders and the effects of the list of shareholders pursuant to section 16 GmbHG – it is usually fairly easy to see who the shareholders of a GmbH are. Section 16 GmbHG was partially reworded in connection with the MoMiG and the legislator placed additional significance on the list of shareholders. Section 16 I GmbHG sets out who, in the case of a change in the person of a shareholder or the extent of his participation in the company, is deemed a shareholder of the company in relation to it. Section 16 III even makes it possible, subject to certain conditions, to acquire shares or rights in shares from a non-authorised person in good faith.

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Information for legal professionals

1) General

a) Section 15 GmbHG: Alienability and inheritability of shares

aa) Alienability

2GmbH shares are alienable as a matter of principle.

The disposal of a GmbH share takes place by way of a transfer in accordance with sections 413, 398 German Civil Code (BGB). The transfer can be subject to a condition precedent or be for a limited period of time.Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 4; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 12.   For example, it is often agreed that the transfer of a share in a GmbH only takes place once the full purchase price has been paid.

bb) Inheritability

A GmbH share is inherited to the heir on the death of the testator. The articles of association of the GmbH cannot prevent this. Unlike when shares in partnerships are inherited, the articles of association cannot provide for partial legal succession.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 12; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 24.   It is therefore not possible to provide in the articles of association of a GmbH for a different person to be the heir, ignoring the statutory provisions or the will. It is also not permissible to provide for shares to be automatically redeemed when the shareholder dies.

The heir immediately becomes a shareholder of the GmbH. However, as far as the relationship to the company is concerned, pursuant to sections 16 I sentence 140 GmbHG the heir only becomes a shareholder when he is entered on the list of shareholders.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 10; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 24.  

If there is more than one heir for a GmbH share, pursuant to section 18 GmbHG these heirs can only exercise the rights jointly. They are joint holders of the GmbH share.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 24; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 18 margin no. 18.  

2) Definitions

a) Section 15 GmbHG: Alienability and inheritability of shares

aa) Alienability

(1) General

3GmbH shares are alienable as a matter of principle.

GmbH shares which are created in the future can also be sold. The requirement for this is that they can be defined.Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 4; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 12.  However, the transfer only becomes effective on entry of the GmbH in the commercial register and must take place in the form required by section 15 III, IV GmbHG.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 33.  

This must be differentiated from the sale of shares in a GmbH in formation (Vor-GmbH). A GmbH in formation or a preliminary company is the name given to a GmbH when it is in the process of being established, i.e. between the time when the articles of association are concluded and entry in the commercial register. In legal literature whether section 15 GmbHG also applies to the sale of shares in a GmbH in formation or whether a change in the person of a shareholder only applies where a change is made to the articles of association in accordance with section 2 GmbHG is disputed.Supporting the first point Fleischer/Götte/Reichert/Weller, MüKo GmbHG, 2nd edition (2015), § 15 margin no. 44, supporting the last point Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 2; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 6.   It is accurate to say that shares in a GmbH only come into being on registration meaning that section 15 GmbHG does not apply to a GmbH in formation but only section 2 GmbHG.

The disposal of a GmbH share takes place by way of a transfer in accordance with sections 413, 398 German Civil Code (BGB). The transfer can be subject to a condition precedent or be for a limited period of time.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 4; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 3.   For example, it is often agreed that the transfer of a share in a GmbH only takes place once the full purchase price has been paid.

There are restrictions on the alienability of GmbH shares in certain freelancer GmbHs e.g. GmbHs of lawyers or tax advisors (see section 59e I German Lawyers' Act (BRAO), section 50 I no. 1, 3 German Tax Advisors' Act (StBerG), section 52e German Patent Lawyers' Act (PAO), section 28 IV sentence 1 no. 1 German Public Accountants' Act (WPO)). Statutory restrictions on disposal are provided for these cases. On the basis of the prevailing opinion in legal literature, transferring shares to persons who are not members of a profession, i.e. persons who are not lawyers or tax advisors, for example, breaches a statutory prohibition pursuant to section 134 BGB and is therefore invalid.Fleischer/Götte/Reichert/Weller, MüKo GmbHG, 2nd edition (2015), § 15 margin no. 8.   The convincing counterargument is that transferring shares to persons who are not members of the profession only has professional law consequences. This means that, for example, the licence for a GmbH of lawyers or tax advisors is regularly revoked after fruitless expiry of a remedy period.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 28.   This is in line with the provisions on inheriting shares which also only provide for the possibility of revocation if a person who is not a member of a profession inherits shares in a freelancer GmbH.

(2) Acquisition and transfer of shares by minors

4For the acquisition and transfer of shares by minors, persons who do not have unlimited legal capacity or persons with guardians, no approval from the family court is necessary according to section 1643 I, 1822 no. 3 BGB.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 3; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 8.  According to the view taken by the Federal Court of Justice, there is an exception to this rule where the acquisition and transfer of shares is the equivalent of the acquisition of a trade or business.Federal Court of Justice, decision from 28.01.2003 - X ZR 199/99, DNotZ 2004, 152 (153) (link: https://www.jurion.de/urteile/bgh/2003-01-28/x-zr-199_99/); Michalski/Heidinger/Leible/J.Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 168.  In the view of the Federal Court of Justice, this is the case if a blocking minority is being acquired or transferred or the shareholding constitutes a stake of more than 50 %.Federal Court of Justice, decision from 28.01.2003 - X ZR 199/99, DNotZ 2004, 152 (153) (link: https://www.jurion.de/urteile/bgh/2003-01-28/x-zr-199_99/); Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 168.   Approval from the family court is also necessary according to the Federal Court of Justice if the shareholders of a GmbH are all minors.

Finally, a duty to obtain approval can also arise on the basis of sections 1643 I, 1822 no. 10 BGB if there are outstanding duties to pay initial contributions or claims arising from differential liability.BGHZ 107, 23, (26) = NJW 1989, 1926 (1927) (link: https://www.jurion.de/urteile/bgh/1989-02-20/ii-zr-148_88/); Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 128.  

(3) Share deal or asset deal

5A share deal refers to the complete or partial acquisition of shares in a company limited by shares (Kapitalgesellschaft).Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 9.  In the case of an asset deal, it is not the company which is being sold but the assets or individual items of assets belonging to the company (real property, plants, etc.). Section 15 GmbHG only governs share deals, i.e. the sale of GmbH shares.Knott/Becker/Voß, Unternehmenskauf, 5th edition (2016), VIII. margin no. 485, 503; Hölters/Semler, Hdb. Unternehmenskauf, 8th edition (2015), 7,112 et seq.  

(4) Liability for legal or material defects in connection with the transfer of GmbH shares

The liability for defects depends on whether it is only GmbH shares which are being transferred or an entire business.

(a) Liability where GmbH shares are acquired

6The acquisition of GmbH shares is the purchase of a right in accordance with section 453 BGB. The vendor is therefore liable for legal defects in the GmbH share sold in accordance with section 435 BGB and for material defects in accordance with section 434 BGB. According to section 437 BGB, the legal consequences of a legal defect are the same as those of a material defect which means that the differentiation between legal defects and material defects is no longer significant in practice.

The liability for legal defects arises from sections 453 I, 1 alternative433 I sentence 2435 BGB where rights are being purchased. The legal consequences for legal defects result from section 437 BGB and are the same as the legal consequences of material defects. There is deemed to be a legal defect if the right of a third party opposes the transfer or the right sold does not exist in the scope agreed.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 6; Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 29.  

Legal defects can, for example, be where

  • a third party can assert rights against the purchaser on the basis of the GmbH share purchased (e.g. pledge or encumbrance of the share with a usufructary right),Priester/Mayer/Wicke/U. Jasper, Münch. Hdb. GesR III, 4th edition (2012), § 24 margin no. 106; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 144.  
  • or where the GmbH is in insolvency or liquation proceedings.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 145; Palandt/Weidenkaff, BGB, 77th edition (2018), § 453 margin no. 23.  Whether over-indebtedness of the GmbH constitutes a legal defect is disputed,In favour Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 145, against Palandt/Weidenkaff, BGB, 77th edition (2018), § 453 margin no. 23.  
  • if the size of the GmbH share is not the size agreed or the GmbH share does not have the agreed characteristics.Palandt/Weidenkaff, BGB, 77th edition (2018), § 453 margin no. 23; Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 28.  

There is no liability for the market value of the share and defects in the company itself.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 177; Palandt/Weidenkaff, BGB, 77th edition (2018), § 453 margin no. 23.  

(b) Liability when acquiring a company

7Under the old law, case law applied the right to warranties for material defects, pursuant to sections 459 et seq. BGB old version, to cases where so many GmbH shares were being acquired that this was the equivalent of an acquisition of the entire company.RGZ 98, 289, 292; Federal Court of Justice, decision from 12.11.1975, – VIII ZR 142/74, BGHZ 65, 246, 248 (link: https://www.jurion.de/urteile/bgh/1975-11-12/viii-zr-142_74/).   On the basis of the current law, where shares are being acquired, there is also only liability for the quality of the company if the company is being acquired. Whether the defect in this case is a material one or a legal one is irrelevant since the legal consequences are the same. Legal literature predominantly talks – to the extent that this is discussed at all – about liability for material defects and thus uses the terminology of the case law on the old law.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 151 with further instances.  

In the case of an acquisition of a company, the vendor is exceptionally also liable for defects in the business operated by the company. There is deemed to be an acquisition of a company if either all of its shares are being acquired or so many shares are being acquired that, from an economic perspective, the entire company is being acquired.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 7; Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 178.  For this the Federal Court of Justice requires the purchaser to have the unrestricted power of disposal over the company which requires at least the majority necessary to change to the articles of association.Federal Court of Justice, decision from 02.06.1980 – VIII ZR 64/79, NJW 1980, 2409 (link: https://www.jurion.de/urteile/bgh/1980-06-02/viii-zr-64_79/); BGHZ 65, 246 (250) = NJW 1976, 236 (237), (link: https://www.jurion.de/urteile/bgh/1975-11-12/viii-zr-142_74/?q=BGHZ+65%2C+250&types=v_doctype_re&normal=1&sort=1).  

However, in practice the statutory warranty right is usually excluded – where this is possible – and substituted by warranty promises submitted by the vendor which set out the details of the cases in which the vendor is liable.

bb) Inheritability

(1) General

8A GmbH share is inherited to the heir on the death of the testator. The articles of association of the GmbH cannot prevent this. Unlike when shares in partnerships are inherited, the articles of association cannot provide for partial legal succession.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 12; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 24.  It is therefore not possible to provide in the articles of association of a GmbH for a different person to be the heir, ignoring the statutory provisions or the will. It is also not permissible to provide for shares to be automatically redeemed when the shareholder dies.

The GmbH share of the testator is transferred with all rights and obligations to the heir, i.e. together with any duties to pay initial or subsequent contributions. However, according to section 1975 et seq. BGB, the liability for the initial and subsequent contributions can be limited to the estate; however, once the heir has been entered on the list of shareholders this is only possible to a limited extent owing to section 16 II GmbHG.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 10; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 12; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 24.  For outstanding obligations to pay initial contributions, section 16 II GmbHG provides for liability of the transferor and transferee which cannot be contracted out of. The heir is therefore always liable as shareholder without limitation for the outstanding payments of the testator. It is not possible to limit the liability of the heir to actions which he himself takes after the succession. The transfer takes place irrespective of whether the succession is a case of statutory succession or by way of a will.

The heir immediately becomes a shareholder of the GmbH. However, as far as the relationship to the company is concerned, pursuant to sections 16 I sentence 140 GmbHG the heir only becomes a shareholder when he is entered on the list of shareholders.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 10; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 24.  

If there is more than one heir for a GmbH share, pursuant to section 18 GmbHG these heirs can only exercise the rights jointly. They are joint holders of the GmbH share.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 24; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 18 margin no. 18.  

GmbH shares of certain freelancer GmbHs, such as those of lawyers or tax advisors, can also be inherited even if the heir does not have the required professional qualification. However, the shareholders have a duty, within the period set by the responsible institution, to bring about a situation which complies with the law since the licence of the freelancer GmbH can otherwise be revoked (see section 59h III BRAO, section 55 II StBerG, section 525 III PAO, § 34 I no. 2 WPO).Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 5; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 14.  

(2) Provisions on succession in the articles of association

9No provision in the articles of association of the GmbH can prevent a GmbH share being transferred to his heir on the death of the shareholder. However, the articles of association can provide whether the heir will ultimately remain an heir.

In practice articles of association usually contain one of two options. The first option is for the articles of association to provide for a GmbH share which has been inherited to be redeemed ("redemption clause") – either as a matter of principle or if the heir does not meet certain criteria.Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 20; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 13; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 13.  Alternatively, the articles of association can provide for the heir to have to assign the GmbH share he has inherited to a named person ("assignment clause").Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 134; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 16; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 13.  A combination of a redemption clause and an assignment clause is also possible.Langner/Heydel, GmbHR 2005, 377 (399); Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 17.  

Both the redemption as well as the assignment take place, as a matter of principle, in return for a fee ("compensation" in the case of redemption) which can be provided for in the articles of association. In the event that the articles of association do not contain a provision on the amount of compensation, the heir has a right to the market value of the GmbH share. The articles of association can provide for certain restrictions of the amount of the claim and the way in which it is paid out (e.g. in instalments). In exceptional cases, it is also possible to completely exclude the compensation.Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 18; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 14.  The Federal Court of Justice has decided, for example, that a provision in articles of association which provides, for all shareholders, that shares will be redeemed without compensation on their death, is permissible.Federal Court of Justice, decision from 20.12.1976 – II ZR 115/75, BB 1977, 563 (564) (link: https://www.jurion.de/urteile/bgh/1976-12-20/ii-zr-115_75/?q=BGH+Urt.+v.+20.12.1976+-+II+ZR+115%2F75&types=v_doctype_re&sort=1).  However, this can be a gratuitous contribution to the beneficiaries on death in accordance with section 2301 I BGB which, as a rule, has already taken place.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 20; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 18; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 14.  When shareholders exit the company and their compensation is lower than the market value of the share, this can lead to tax liability under the German Inheritance and Gift Tax Act (ErbStG).In detail on this Ivens, GmbHR 2011, 465.  

(3) Miscellaneous

10It is permissible for execution of a will to be ordered concerning a GmbH share. The executor can exercise all rights – provided there are no deviating provisions in the articles of association. However, it is also possible for the articles of association to provide that execution at the company is not permissible. In this case the heir is entitled to the rights – despite the fact that the testator has instructed execution of his will.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 250; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 17.  

In the case of GmbH shares, it is also possible to make provision for prior and subsequent heirs. Dispositions free of charge by the prior heir of the GmbH share become ineffective when the subsequent heir inherits the share in accordance with section 2113 II BGB (pursuant to section 2136 BGB, it is not possible to contract out of the provision according to section 2113 II BGB). Such dispositions made free of charge can, for example, be relinquishing special rights without compensation or consenting to redemption without compensation.Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 21; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 16.  The prior heir has a right, in principle, to claim the profit pursuant to section 29 GmbHG as use. Part of the inheritance, by contrast, constitutes surrogates according to section 2111 I BGB, such as the liquidation quota or the compensation on redemption.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 29, 30; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 43, 44).  

b) Section 15 II GmbHG: Independence of shares

11In the case of partnerships, if one partner holds more than one share, these shares are grouped together meaning that the shareholder still only holds one – larger – share. Section 15 II GmbHG makes it clear that if one GmbH shareholder holds more than one share, irrespective of whether he acquires another share or inherits one, the GmbH shares remain independent.

Section 15 II GmbHG now only has a clarifying function since – contrary to the situation before the MoMiG – a shareholder is now permitted to hold not only one but, pursuant to section 5 II sentence 1 GmbHG, more than one share, even at the time when the GmbH is established.

However, it is permissible pursuant to section 46 IV no. 4 GmbHG to group shares together providing that all of the initial contributions have been paid and there is no duty to make a subsequent contribution.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 19; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 24.

c) Section 15 III GmbHG: Transfer and requirement of form

aa) Notarisation requirement and scope

12The transfer agreement for a GmbH share, i.e. the disposal transaction, must be notarised in accordance with section 15 III GmbHG (sections 8 et seq. German Notarisation Act (BeurkG)). It is also possible, on the basis of section 128 BGB, to have the offer to transfer and the acceptance of the transfer notarised separately.

Pursuant to section 15 IV sentence 1 GmbHG, the agreement in which someone undertakes to transfer a GmbH share, i.e. the transaction establishing the obligation, must be notarised. Notarisation of the transaction establishing the obligation does not replace the requirement to have the disposal transaction notarised pursuant to section 15 III GmbHG. In practice the disposal transaction and the transaction establishing the obligation are normally notarised together in one deed.

The notarisation can be replaced by a court judgment pursuant to section 894 of the German Code of Civil Procedure (ZPO), a court settlement pursuant to section 127a BGB or a settlement in arbitration proceedings pursuant to section 1053 ZPO. A settlement reached between lawyers pursuant to section 796a ZPO, on the other hand, is not sufficient; the legal situation concerning settlements by way of court order pursuant to section 278 VI ZPO is disputed.Borsch, NZG 2013, 527 et seq.; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 80; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 26.  

The requirement of form set forth in section 15 III GmbH covers any kind of transfer of a GmbH share between living persons. This includes transferring GmbH shares which are created later, conditional or restricted transfers, transfers in the context of a legacy, transfers for the purpose of security or trust and transfers for the purpose of a pledge.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 24, 25; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 37.  The same applies to contributing a GmbH share into a company limited by shares or a partnership. Furthermore, assigning a right to have a GmbH share transferred is also subject to notarisation.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 70; Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 52.  

All other agreements relating to the transfer agreement are also subject to the requirement of notarial form pursuant to section 15 III GmbHG, i.e. also any collateral agreements.Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 40; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 39.  In practice this concerns "side letters" which contain further provisions supplementing the transfer.

All transfers of shares by way of universal legal succession are not subject to a (separate) notarisation requirement, i.e. especially those transferred by way of inheritance or transformation measures.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 123; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 77.  

bb) Power of attorney

13Pursuant to section 167 II BGB, a power of attorney to conclude a transfer agreement does not require notarisation but is valid in any form.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 23; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 95.   According to section 182 II BGB, this also applies to the approval of any actions taken without a power of attorney.Federal Court of Justice, decision from 25.09.1996 – VIII ZR 172/95, GmbHR 1996, 919 (920) (link: https://www.jurion.de/urteile/bgh/1996-09-25/viii-zr-172_95/); Federal Court of Justice, decision from 13.10.2008 – II ZR 76/07, GmbHR 2009, 38 (39) (link: https://www.jurion.de/urteile/bgh/2008-10-13/ii-zr-76_07/); Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 40.  Even an irrevocable power of attorney does not require a particular form.RGZ 135, 70; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 40.  The principles on granting powers of attorney for real property transactions pursuant to section 311b I BGB do not apply given the differing legislative purposes of the two norms.BGHZ 13, 52 = NJW 1954, 1157; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 23.   A blank power of attorney (i.e. a power of attorney which does not contain any information about the extent of its scope) is subject to different rules; such a power of attorney is invalid – even where the requirements of form of section 15 III GmbHG are met – because it would lead to a circumvention of section 15 III GmbHG.BGHZ 13, 49 = NJW 1954, 1157 (link: https://www.jurion.de/urteile/bgh/1954-03-24/ii-zr-23_53/); BGHZ 19, 72 = NJW 1956, 341 (link: https://www.jurion.de/urteile/bgh/1955-11-18/i-zr-176_53/).  

cc) Notarisation abroad

(1) General

14Much disputed is the extent to which notarisation of the transfer of a GmbH share abroad can meet the requirement of form set forth in section 15 III GmbHG (and also the requirement set forth in section 15 IV sentence 1 GmbHG).

Legal literature and case law agree that Art. 11 I first alternative of the Introductory Act to the German Civil Code (EGBGB) applies ("law applicable to the legal relationship"). Pursuant to this, it is necessary for the notarisation abroad to be the equivalent of notarisation by a German notary in accordance with sections 8 et seq. BeurkG.BGHZ 199, 270 margin no. 13 = NJW 2014, 2026 (link: https://www.jurion.de/urteile/bgh/2013-12-17/ii-zb-6_13/?q=BGH%2C+17.12.2013+-+II+ZB+6%2F13&types=v_doctype_re&sort=1); Düsseldorf Higher Regional Court, decision from 02.03.2011 – I-3 Wx236/10, ZIP 2011, 564 (link: https://openjur.de/u/149687.html); Baumbach/Hueck/Fastrich, GmbHG, 21th edition (2017), § 15 margin no. 22a.  However, in practice establishing this equivalence is problematic. The problem is that equivalence can only be assumed if the equivalence of the notarisation in the respective country concerned has been expressly established by the Federal Court of Justice.

Also controversial is the question of whether Art. 11 I second alternative EGBGB applies (law of the country in which the act is performed). Pursuant to this, it is sufficient for the form required by the law of the country in which the act is performed to be adhered to providing that the law of the country concerned recognises a legal transaction of the type in question, i.e. the transfer of a GmbH share.Prevailing opinion: For the time before introduction of the MoMiG Düsseldorf Higher Regional Court, decision from 25.01.1989 – 3 Wx 21/89, GmbHR 1990, 169; Stuttgart Higher Regional Court, preliminary ruling from 03.11.1980 – 8 W 530/79, NJW 1981, 1176; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 141, with further instances.; for the period after introduction of the MoMiG: Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 141; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 22a; another view: Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 36.  Switzerland, for example, allows the transfer of shares by way of written transfer agreement. If one were to apply Art. 11 I second alternative EGBGB, it would be possible for German GmbH shares to be transferred in Switzerland by way of written agreement without notarisation.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 22a; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 141.  

(2) Law applicable to the legal relationship – equivalence of the notarisation – especially in the case of notarisations in Switzerland

15In practice, what is particularly controversial is whether the notarisation requirement pursuant to section 15 III GmbHG (and also the notarisation requirement pursuant to section 15 IV sentence 1 GmbHG) can also be met by way of notarisation before a Swiss notary. The legal situation since the GmbH reform in Switzerland (reform of the Swiss law of obligations with effect from 01.01.2008) and in Germany (MoMiG with effect from 01.11.2008) is not completely clear. Up until the year 2008 it was recognised that Swiss notaries in the Cantons of Zürich-Altstadt and Basel-Stadt could definitely validly notarise agreements establishing obligations relating to and agreements concerning the disposal of German GmbH shares.For Zürich-Altstadt: Federal Court of Justice, decision from 16.02.1981 – II ZB 8/80, NJW 1981, 1160 (link: https://www.jurion.de/urteile/bgh/1981-02-16/ii-zb-8_80/); Federal Court of Justice, decision from 06.04.1989 – I ZR 59/87, NJW-RR 1989, 1261, (link: https://www.jurion.de/urteile/bgh/1989-04-06/i-zr-59_87/); for Basel-Stadt: Frankfurt Higher Regional Court, decision from 10.10.2005 – 20 W 226/05, ZIP 2005, 2069 (link: https://openjur.de/u/297027.html); Munich Higher Regional Court, decision from 19.11.1997 – 7 U 2511/97, NJW-RR 1998, 758 (link: https://openjur.de/u/254506.html); (later also Düsseldorf Higher Regional Court, decision from 25.01.1989 – 3 Wx 21/89, GmbHR 1990, 169 (link: https://openjur.de/u/149687.html)).  

When the MoMiG came into force in the year 2008, which introduced, among other things, the duty of the certifying notary to submit the list of shareholders pursuant to section 40 II GmbHG, Frankfurt Regional Court said, in passing, that a notarisation of a German GmbH share purchase agreement by a Swiss notary is probably no longer possible on the basis of the new law.Frankfurt Higher Regional Court, decision from 07.10.2009 – 3/13 O 46/09, NJW 2010, 683 (link: https://www.unalex.eu/Judgment/Judgment.aspx?FileNr=DE-2313)  In a decision from 17.12.2013 the Federal Court of Justice established that German registration courts can in future no longer reject a list of shareholders from a foreign notary on the basis of the lack of competence of the foreign notary. On the other hand, the Federal Court of Justice has also referred to its case law from the year 1981 which it developed following a notarisation by a notary based in Zürich-Altstadt. The Federal Court of Justice makes it clear that, even after introduction of the MoMiG, share transfers can be notarised by a notary abroad, providing that the notarisation can be regarded as "equivalent" within the meaning of the pertinent case law of the Federal Court of Justice.Federal Court of Justice, decision from 17.12.2013 – II ZB 6/13, NJW 2014, 2026 (link: https://openjur.de/u/675059.html).  Some voices in legal literature follow this view and believe that notarisations in the Cantons of Zürich-Altstadt and Basel-Stadt, at least, meet the requirements for equivalence.Böcker, DZWIR 2014, 234; Meichelbeck/Krauß, DStR 2014, 752; Götze/Mörtel, NZG 2014, 369; for all of Switzerland: Landbrecht/Becker, BB 2013, 1290; for Basel-Stadt when observing certain preconditions: Lieder/Ritter, Notar 2014, 187.  

However, Charlottenburg Local Court decided at the beginning of 2016 that notarisation of the formation of a GmbH (but not the transfer of a GmbH share) is not equivalent in the Canton of Bern. The decision was met with agreement.Charlottenburg Local Court, decision from 22.01.2016 – 99 AR 9466/15, 99 AR 9466/15 B-A-69455/2016, ZIP 2016, 770 (link: https://openjur.de/u/874989.html); Schodder, EWiR 2016, 593 (which regards the "lax" notarisation procedure in Bern as the reason for this); Berninger, GWR 2016, 96.  Berlin Higher Regional Court, by contrast, has since decided that even the formation of a German GmbH in the Canton of Bern can be validity notarised if the record is read out in the presence of the notary to the persons appearing, approved and signed by them.Berlin Higher Regional Court, decision from 24.01.2018, 22 W 25/16, NZG 2018, 304 (link: https://www.jurion.de/urteile/kg-berlin/2018-01-24/22-w-25_16).  

In view of this, some voices in literature advise against notarisation abroad, especially in Switzerland.Müller, NJW 2014, 1994; Beckmann/Fabricius, GWR 2016, 375; Wicke, GmbHG, 3rd edition (2016), § 15 margin no. 20.  However, the voices in literature and case law are increasing which consider notarisation in some Cantons of Switzerland to be permissible, especially where the notarisation procedure is the same as in Germany.Böcker, DZWIR 2014, 234; Meichelbeck/Krauß, DStR 2014, 752; Götze/Mörtel, NZG 2014, 369; for the whole of Switzerland: Landbrecht/Becker, BB 2013, 1290; for Basel-Stadt when observing certain preconditions: Lieder/Ritter, Notar 2014, 187.

(3) Notarisations in other countries

16Apart from in Switzerland, equivalence has been recognised for notarisations in AustriaKiel Higher Regional Court BB 1998, 120.  and in the Netherlands.Koblenz Higher Regional Court, NJW-RR 2007, 1989, 2200.  However, it must be noted that also in these countries changes may have since been made to the notarisation procedures meaning that it must always be checked in the individual case before notarisation whether the notarisation procedure is equivalent to the German procedure on the basis of the criteria established by the Federal Court of Justice. Some voices in literature take the view that notarisations in France, Italy, Spain and South America are also equivalent.Hachenburg/Zutt, GmbHG-Großkommentar, 8th edition § 15 margin no. 59.  It is been expressly established that notarisations in California (USA)Stuttgart Higher Regional Court NZG 2001, 45.  are not equivalent.

dd) Effect of the transfer

17Once the transfer has been notarised, the GmbH share is transferred to the transferee with all rights and obligations. However, no rights or obligations which are personal to the transferor are transferred – unless otherwise contractually agreed.

As far as the GmbH is concerned, the transfer only takes effect once the new list of shareholders has been submitted to the commercial register pursuant to sections 16 I sentence 1, 40 GmbHG.

ee) Breach of the requirement of form

18Pursuant to section 125 I BGB, a breach of the notarisation requirement set forth in section 15 III GmbHG leads to the transfer being invalidated. Unlike in cases where there is a breach of the requirement of form for the transaction establishing an obligation pursuant to section 15 IV GmbHG, there is no way of curing a disposal transaction which does not observe the requirement of form. Instead, it is necessary to subsequently perform or repeat the notarisation.

If a transfer is treated by the parties, despite the disposal transaction being invalid, as though the transfer had taken place, the prevailing opinion is now that the principles on a defective company do not apply.Federal Court of Justice, decision from 22.01.1990 – II ZR 25/89, NJW 1990, 1915 (1916) (link: https://www.jurion.de/urteile/bgh/1990-01-22/ii-zr-25_89/); Federal Court of Justice, decision from 27.01.2015 – KZR 90/13, NZG 2015, 478 (link: https://openjur.de/u/766138.html); Federal Court of Justice, decision from 17.01.2007 – VIII ZR 37/06, NJW 2007, 1058 (link: https://openjur.de/u/79878.html).  Rather, the transaction remains invalid. As far as the relationship between the transferee and the transferor on the one hand and the GmbH on the other is concerned, section 16 I, II GmbHG applies. The general civil law provisions apply to the relationship between the purchaser and the vendor; in particular, a reversal on the basis of the law of enrichment is possible.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 129; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 29.

d) Section 15 IV sentence 1 GmbHG Agreement establishing the obligation and cure

aa) Notarisation requirement and scope

19In the same way as the disposal transaction, the transaction establishing the obligation, i.e. the contractual obligation to transfer GmbH shares, must be notarised in accordance with section 15 IV GmbHG (sections 8 et seq. BeurkG).

All agreements which establish an obligation to transfer a GmbH share must be notarised, i.e. purchase agreements, gift agreements or agreements granting a put and/or call option.Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 54; Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 68 et seq.  A partnership agreement of a partnership can also be subject to the notarisation requirement if this contains an obligation (which may be conditional or restricted) to transfer a GmbH share which is sometimes the case with partnership agreements of limited partnerships with a GmbH as general partner (GmbH & Co. KG).Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 51; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 31.  

In the view of the Federal Court of Justice, all transactions which are inseparably connected on the basis of the interests of the parties with the GmbH share purchase agreement subject to the notarisation requirement in such a way that they form one legal unit are also subject to the notarisation requirement ("completeness principle" of the Federal Court of Justice).Federal Court of Justice, decision from 14.04.1986 – II ZR 155/85, NJW 1986, 2642 (link: https://www.jurion.de/urteile/bgh/1986-04-14/ii-zr-155_85/); Federal Court of Justice, decision from 27.06.2001 – VIII ZR 329/99, NJW 2002, 142 (link: https://openjur.de/u/65062.html); Frankfurt a. M. Higher Regional Court, decision from 28.01.2002 - 20 W 599/99, (link: https://openjur.de/u/293690.html); Priester/Mayer/Wicke/U. Jasper, Münch. Hdb. GesR III, 4th edition 2012, § 24 margin no. 33; Fleischer/Götte/Reichert/Weller, MüKo GmbHG, 2nd edition (2015), § 15 margin no. 106; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 57.  Any collateral agreements (side letters) must therefore also be notarised.

The principle of completeness also covers the case where limited partner's interests in a GmbH & Co. KG and the GmbH shares in its general partner are to be sold simultaneously.Düsseldorf Higher Regional Court, decision from 22.02.2005 – 10 W 92/04, NZG 2005, 507 (link: https://openjur.de/u/108178.html) (on appeal to the Federal Court of Justice, decision from 29.01.1992 – VIII ZR 95/91, GmbHR 1993, 106 (link: https://www.jurion.de/urteile/bgh/1992-01-29/viii-zr-95_91/)); Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 90; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 85.  The obligation to transfer the limited partner's interests which is not subject to any requirements of form then does become subject to these requirements in accordance with section 15 IV sentence 1 GmbHG. However, this does not apply, as a matter of principle, to the transfer of the limited partner's interests.Düsseldorf Higher Regional Court, decision from 22.02.2005 – 10 W 92/04, NZG 2005, 507 (link: https://openjur.de/u/108178.html) (on appeal to the Federal Court of Justice, decision from 29.01.1992 – VIII ZR 95/91, GmbHR 1993, 106 (link: https://www.jurion.de/urteile/bgh/1992-01-29/viii-zr-95_91/)); Federal Court of Justice, decision from 14.04.1986 – II ZR 155/85, NJW 1986, 2642 (link: https://www.jurion.de/urteile/bgh/1986-04-14/ii-zr-155_85/); Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 137.   As far as the law of property is concerned, the abstract nature of the transfer criteria must be observed. However, the Federal Court of Justice has suggested that, in the individual case, if the parties so wish, it is possible to link the transaction establishing the obligation and the disposal transaction in such a way that the requirement of form applies to both.Federal Court of Justice, decision from 14.04.1986 – II ZR 155/85, NJW 1986, 2642 (link: https://www.jurion.de/urteile/bgh/1986-04-14/ii-zr-155_85/), on appeal to the Federal Court of Justice, decision from 02.02.1967 – III ZR 193/64, NJW 1967, 1128 (link: https://www.jurion.de/urteile/bgh/1967-02-02/iii-zr-193_64/); Düsseldorf Higher Regional Court, decision from 22.02.2005 – 10 W 92/04, NZG 2005, 507 (link: https://openjur.de/u/108178.html).  

The same question arises if a GmbH share is also sold in a share purchase agreement for shares in a stock corporation (AG). In such cases the agreement on the purchase of shares in the AG must also be notarised pursuant to section 15 IV sentence 1 GmbHG. However, whether the – separate – transfer of the shares is exceptionally subject to notarisation in accordance with section 15 III GmbHG is left open. This question does not appear to have been discussed in legal literature. However, the same arguments apply as to the case concerning the GmbH & Co. KG discussed above.

bb) Power of attorney

20A power of attorney for the purpose of concluding an agreement establishing an obligation to transfer a GmbH share does not need to be notarised pursuant to section 167 II BGB but is valid in any formBaumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 30; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 88. ; the same applies pursuant to section 182 II BGB to the approval of any actions taken without a power of attorney.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 30; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 89.  See c) bb) above for details.

cc) Notarisation abroad

21In principle, the comments on section 15 III GmbHG also apply here. However, since the transaction concerned here is a transaction establishing an obligation, it is the law of obligations which applies. This means that the parties are free to choose the applicable law in principle in accordance with Art. 3 Rome I Regulation. If German law applies – because the parties have not chosen a particular law – in accordance with Art. 4 Rome I Regulation, Art. 11 I Rome I Regulation applies to the form.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 97; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 30.  This is satisfied in principle – in the same way as Art. 11 I EGBGB – in addition to by an equivalent notarisation abroad, by way of the form required by the law of the country where the transaction is taking place.In favour of the legal transaction under the law of obligations which appears to be the present prevailing opinion, also Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 97; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 93; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 51.  However, also in the case of section 15 IV GmbHG, the same arguments have been voiced in connection with the application of the law of the place where the transaction is taking place as in the case of section 15 III GmbHG.

dd) Beach of the requirement of form and cure

22If the requirement of form pursuant to section 15 IV sentence 1 GmbHG is breached, the obligation to transfer the GmbH share is invalid in accordance with section 125 BGB.

However, the agreement establishing the obligation is cured by way of the transfer of the GmbH share being properly notarised in accordance with section 15 IV sentence 2 GmbHG, providing that the transfer merely did not comply with the requirement of form but was otherwise valid. The cure takes place ex nunc.BGHZ 138, 195 = NJW 1998, 2360 (2362) (link: https://judicialis.de/Bundesgerichtshof_VIII-ZR-185-96_Urteil_25.03.1998.html); Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 30; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 108.  However, the cure only concerns defects of form and not other defects in the transaction establishing the obligation.

e) Section 15 GmbHG: Ways of complicating the transfer (restricted transferability)

aa) General

23The articles of association can provide that a transfer of GmbH shares is only possible subject to certain conditions or even completely exclude such transfers ("restricted transferability"). In practice articles of associations often contain reservations of consent in connection with the transfer of GmbH shares and these are often combined with pre-emptive rights for the co-shareholders.

Section 15 V GmbHG expressly mentions the company's consent as a requirement to which a transfer can be subjected. In this respect, the articles of association can freely determine which body or which person must grant the consent. Further possibilities include pre-emptive rights or rights of first refusal in favour of certain shareholders, certain obligations which must be assumed by the transferee or establishing characteristics which the transferee must possess (e.g. being a relative or having certain qualifications).Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 180, 196; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 38.  

The restricted transferability must be set out in the articles of association, either when it is first established or subsequently. If rules on restricted transferability are introduced subsequently by way of an amendment to the articles of association, the consent of all shareholders concerned is required since the introduction of restricted transferability constitutes interference with the free alienability of the shares.Munich Higher Regional Court, decision from 23.01.2008 – 7 U 3292/07, GmbHR 2008, 541 (542) (link: https://openjur.de/u/465925.html), Dresden Higher Regional Court, decision from 10.05.2004 – 2 U 286/04, GmbHR 2004, 1080; Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 73.  The shareholders themselves can determine the form of restricted transferability in the articles of association; they can, for example, provide for the restricted transferability to only apply to certain GmbH shares or for transfers to certain groups of persons (e.g. close relatives) to not be covered by the restricted transferability.

The restricted transferability only concerns legal transactions relating to the transfer of shares between living persons, i.e. not to statutory acquisitions such as those resulting from succession or transformation measures.Lutter/Hommelhoff/Bayer, GmbHG, 19th edition (2016), § 15 margin no. 75; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 113.  

(1) Reservations of consent

24The consent pursuant to section 15 V GmbHG can be granted both before and after the transfer. From a technical legal perspective, this is consent in accordance with sections 182 et seq. BGB.Munich Higher Regional Court, decision from 23.01.2008 – 7 U 3292/07, NZG 2008, 320 (link: https://openjur.de/u/465925.html).  According to section 182 I BGB, the consent can either be granted to the transferee or to the transferor.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 45; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 129.  Where the articles of association do not provide for any special requirements of form, the consent can be granted without any requirements of form.

(a) Responsibility

25The responsibility for granting the consent results from the provision on restricted transferability in the articles of association. Responsible bodies can, for example, be the general meeting or another corporate body (e.g. the supervisory board) or even the management. If the articles of association provide for the consent "of the company", this must be granted by the management.BGHZ 15, 324 = NJW 1955, 220 (link: https://www.jurion.de/urteile/bgh/1954-12-01/ii-zr-285_53/).  It this connection it necessary to determine, by construing the articles of association, whether a resolution of the general meeting is necessary for the purpose of granting the consent of the management. If the articles of association do not contain any provisions on this, if there is any doubt it must be assumed, by way of reference to section 46 no. 4 GmbHG, that it is required.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 123; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 42.   If the articles of association provide for the consent "of the shareholders", it must be determined, on the basis of construction, whether this means the consent of all of the shareholders or the majority of the shareholders (i.e. the consent of the general meeting). The prevailing view appears to be that it is permissible for the responsibility for granting consent to be transferred to an external third party.In favour of this view Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 42; Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 152 in each case with further instances; alternative view Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 252; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 122.  

(b) Effect

26The transfer becomes effective when the consent is granted, with retroactive effect where applicable, pursuant to section 184 I BGB, if the consent is granted after the transfer has taken place.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 156; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 47.  Until the consent is granted or refused, the transfer is provisionally invalid.Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 192; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 47.  

(c) Right to a declaration and granting of consent

27The transferor, but not the transferee, has a right to a decision by the responsible body within a reasonable period.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 153; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 257.  

Whether the consent is granted, by contrast, is at the discretion of the person or persons responsible. However, in this connection the purpose of the restricted transferability, the non-discrimination duty and also the fiduciary duty of the shareholder must be taken into account. The discretion is also restricted by the prohibition of abuse of rights. In principle, neither the transferee nor the transferor has a right – where the articles of association do not contain any specific requirements – to be granted the consent.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 154, 155; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 46.  

If a decision is made on the basis of discretion not properly exercised, the decision must be contested. The party concerned then again has a right to a new decision, which is not defective.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 46; Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 155.

(d) Legal protection

28A right to a decision on the grant of the consent must be pursued by way of an action for performance (Leistungsklage). In the case of a decision made on the basis of discretion not properly exercised, an action to set aside (Anfechtungsklage) must be brought, where appropriate together with an action for performance where a new decision is being sought or, in the case of a right to consent, by way of an action for a positive resolution (Beschlussfeststellungsklage).Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 190; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 255.  Only the transferor is entitled to bring an action, not the transferee (unless the transferee is itself a shareholder of the GmbH). In principle, the action must be brought against the company, if all of the shareholders are responsible for granting the consent, against the shareholders who voted to refuse consent and, in cases where a third party is responsible, against this third party.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 255; Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 190; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 47a.

f) Pledge, right of usufruct, trust and subholding

29It is not only possible to freely transfer a GmbH share. It is also possible for it to be pledged or for a right of usufruct, a trust or a subholding to be created over it.

aa) Pledging a GmbH share

30A share can also be pledged in accordance with section 1274 I sentence 1 BGB; it is also possible for the pledge to only concern part of the share.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 48; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 172.  Pursuant to section 15 III GmbHG, the pledge must be notarised.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 162; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 49  It is not necessary to inform the company about the pledge pursuant to section 1280 since this provision only applies to obligations and not to other rights such as the membership right.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 175; Fleischer/Götte/Reichert/Weller, MüKo GmbHG, 2nd edition (2015), § 15 margin no. 287.  The articles of association can provide, pursuant to section 15 V GmbHG, that, in addition to the transfer, pledging GmbH shares is also impermissible. The articles of association can alternatively only provide for pledges or transfers to be subject to restrictions.

The pledger of a GmbH share remains a shareholder with all rights and duties.Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 108; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 50.  The exercising of the voting right is not restricted by the pledge, even if exercising this right leads to the pledged share being disposed of (e.g. by way of consent to redemption).Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 178. The right to pledge the share does not extend to the uses (rights to profit) arising from the GmbH share either.Fleischer/Götte/Reichert/Weller, MüKo GmbHG, 2nd edition (2015), § 15 margin no. 291. The obligation of the pledger as against the pledgee primarily consists in an internal relationship between these two parties. Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 50; Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 110.  However, it is also possible for the pledger and the pledgee to conclude an additional agreement on how the voting right is to be exercised to the extent that this is permissible on the basis of the general principles of GmbH law.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 179.  

The pledgee as such only has the right to obtain satisfaction on the basis of the pledge. It can especially obtain satisfaction by way of immediate execution on the basis of section 1277 BGB on the basis of an enforceable title. Additional agreements between the pledger and the pledgee which provide for the share to be exploited in a manner different to the manner provided for by statute (e.g. the waiver of an enforceable title) are also permissible.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 194. Free exploitation is normally not agreed which means that the pledge over GmbH shares must be regarded as a means of security which is not very effective.

Instead of pledging the share in a GmbH, it is possible to pledge only individual asset rights, e.g. the current or future right to profit or the liquidation credit.Fleischer/Götte/Reichert/Weller, MüKo GmbHG, 2nd edition (2015), § 15 margin no. 310.  There are no requirements of form in this respect providing that the articles of association do not exclude this option.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 123; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 27.  For this it is necessary – unlike in cases where the entire share is pledged – for the pledge to be notified to the company in accordance with section 1280 BGB since this is not concerned with membership rights but with claims.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 49; Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 225.

bb) Creating a right of usufruct in a GmbH share

31A right of usufruct can be created in a GmbH share in accordance with section 1068 I BGB. The creation of a right of usufruct is subject to requirements of form pursuant to section 15 III GmbH; however, § 15 IV does not apply to the underlying transaction establishing the obligation.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 213.  No requirements of form must be observed when cancelling a right of usufruct.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 195; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 222.  

The person creating the right of usufruct remains a shareholder with all rights and duties. The prevailing opinion is that this also applies to the voting right.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 217; Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 92, in each case with further instances).  Some voices in literature take the view that the party to whom the right of usufruct is granted is fully or partly entitled to exercise the voting right.In favour of dividing the voting right in the case of a BGB company, Ulmer in MüKo BGB, 7th edition (2017), § 705 margin no. 99; on general partnerships (OHG) Baumbach/Hopt, 37th edition (2016), § 105 margin no. 46; with sympathy for dividing the voting right in the case of a GmbH, but without determining how Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 188; Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 202.  This question has not been clarified by the courts of highest instance.

The usufructary has a right to the uses. The uses of the share are especially the profit distributed by the company during the term of the right of usufruct and/or any profit with can be withdrawn.Fleischer/Götte/Reichert/Weller, MüKo GmbHG, 2nd edition (2015), § 15 margin no. 329.  The claim is directly against the GmbH as soon as it has resolved the use of the profit.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 214.  

cc) Holding a GmbH share in trust

32It is possible, in principle, for a GmbH share to be held in trust. This means that a trustee holds a share in trust for the trustor. As far as the external relationship is concerned, the trustor remains the shareholder without restrictions. However, in terms of the internal relationship, the restrictions set out in the trust agreement apply. If a share in a GmbH is to be transferred by a shareholder to a trustee, the preconditions set forth in section 15 III and IV sentence 1 GmbHG apply to the transfer and the restrictions set forth in section 15 V GmbHG must be observed.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 208, 212; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 55.  

dd) Subholding in a GmbH share

33A subholding in a GmbH share or part of a GmbH share is permissible. Pursuant to the prevailing opinion, the subholding gives rise to a BGB internal company between the shareholder and the sub-shareholder.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 59; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 216; Fleischer/Götte/Reichert/Weller, MüKo GmbHG, 2nd edition (2015), § 15 margin no. 243; another view in favour of a silent company within the meaning of section 230 of the German Commercial Code (HGB) Esch, NJW 1964, 902, 904.  The creation and termination of subholdings are not subject to section 15 III – V GmbHG since the shareholders do not change.

g) Attachment of a GmbH share

34Attachment of a GmbH share is permissible and takes place on the basis of section 857 ZPO. The attachment order must be served on the company for the attachment to be effective since the company is third-party debtor in accordance with sections 857, 829 ZPO.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 195; Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 150.  By way of the attachment, the creditor acquires a security right to the GmbH share.Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 151; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 318.  The shareholder must refrain from making any disposals of the share which would impair the creditor's right, sections 804 I, 829 I sentence 2 ZPO.Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 240; Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 151.   However, a transfer of the share is still valid but does not affect the pledging lien. Good faith does not assist the transferee, see section 16 III GmbHG.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 318; Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 240.  

The voting right of the shareholder remains unaffected, in principle, by the attachment; in particular there is no need to obtain the consent of the creditor when the shareholder exercises his voting right.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 318; Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 163.  The voting right cannot be the subject of special pledges either since it is not a property right within the meaning of section 857 I BGB.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 197.  

The articles of association cannot prevent the attachment; if the articles of association exclude the transfer of shares, this does not oppose an attachment either.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 202.  However, the articles of association can provide that, after a share has been attached, the share can be redeemed.Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 150; Michalski/Heidinger/Leible/J. Schmidt/Ebbing, GmbHG, 3rd edition (2017), § 15 margin no. 243.  

In the case of an attachment in accordance with section 844 ZPO, realisation is implemented by way of a "disposal" of the GmbH share which can be ordered by the court in accordance with section 857 I, V ZPO.Rowedder/Schmidt-Leithoff/Görner, GmbHG, 6th edition (2017), § 15 margin no. 241; Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 63.  The "disposal" usually takes place by way of public auction; if the court so orders, free sale is also possible.Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 200.  The prevailing opinion is that other types of realisation, i.e. forced administration (with the exception of a lien for use) are not permissible.Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 320; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 201.

h) Insolvency of a shareholder

35If a shareholder becomes insolvent, the insolvency administrator exercises all of the shareholder rights; this especially includes the voting right in accordance with section 80 German Insolvency Act (InsO).Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 254; Ulmer/Habersack/Löbbe/Löbbe, GmbHG, 2nd edition (2013), § 15 margin no. 338.  The articles of association cannot prevent this but they can provide that the shares of a shareholder who has become insolvent can be redeemed. The sale by the shareholder must comply with the requirements of form pursuant to section 15 III, IV sentence 1 GmbHG. However, in this case the restrictions according to section 15 V GmbH do not apply.Baumbach/Hueck/Fastrich, GmbHG, 21st edition (2017), § 15 margin no. 63; Scholz/Seibt, GmbHG, 12th edition (2018), § 15 margin no. 256.  

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3) Summary of the jurisdiction

36Federal Court of Justice, decision from 28.01.2003 - X ZR 199/99, DNotZ 2004, 152 (153) (link: https://www.jurion.de/urteile/bgh/2003-01-28/x-zr-199_99/)

Federal Court of Justice, decision from 12.11.1975, – VIII ZR 142/74, BGHZ 65, 246, 248 (link: https://www.jurion.de/urteile/bgh/1975-11-12/viii-zr-142_74/)

Federal Court of Justice, decision from 02.06.1980 – VIII ZR 64/79, NJW 1980, 2409 (link: https://www.


Footnotes