§ 15 Transfer of shares

Section 15 of the Act on Limited Liability Companies (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – GmbHG) regulates the transferability of shares in a limited liability company (“GmbH”). As the GmbH continues to be one of the most important forms of company in German law, the provision is of great importance in legal transactions.

A characteristic feature of the corporation, which includes the GmbH, is basically its (facilitated) trading in company shares and thus its orientation towards a certain fluctuation of its shareholders. In contrast to this, the GmbH plays a special role, as the transfer of GmbH shares requires notarization. This is primarily intended to slow down the trading of shares and protect the generally smaller (more personal) group of shareholders from excessive and dynamic changes of shareholders. In this context, questions regularly arise in practice in connection with the obligation to notarize ancillary agreements to the purchase and assignment agreement.

In practice, the agreement on the transfer of company shares is commonly referred to as a "SPA" (Share Purchase Agreement). A central part of a SPA deals with the warranties and indemnities. These are the results of Due Diligence, which the buyer carries out in the vast majority of cases before concluding the SPA (see also General information under f). The results of the Due Diligence are also of particular importance for any W&I insurance to be taken out. Within the framework of a SPA, the parties negotiate an independent liability system that deviates from the statutory liability of the German Civil Code (Bürgerliches Gesetzbuch – BGB). One of the core warranties in a SPA deals with the issue of the chain of title. The fact that the seller is actually entitled to the shares and can freely dispose of them must also be examined in detail as part of the Due Diligence.

In the event of the inheritance of shares in a GmbH, there are also a number of things to consider, in particular the possibility that the heirs are nevertheless obliged to transfer the shares to the remaining shareholders due to assignment, succession or entry clauses in the articles of association of the GmbH.

The shareholders are also given the opportunity to influence the choice of acquirer of the shares through specially drafted assignment clauses or by requiring consent to the transfer (so-called transfer restriction). This is based on the wide scope that the standard allows when drafting the articles of association. In practice, a large number of different contractual clauses have developed on the basis of these regulations, which enable shareholders to control the transfer of shares in a way that serves their individual interests or the strategic objectives of the company.