§ 15 Transfer of shares

a)      General information

1Section 15 GmbHG regulates the transferability of shares in a GmbH. The purpose of Section 15 GmbHG is to hinder trading in company shares and to facilitate proof and legal certainty. BGH, Urt. V. 10. 3. 2008 - II ZR 312/06 = NZG 2008, 377 (378).

Section 15 GmbHG regulates the free transferability of shares in paragraph 1. They can therefore generally be sold and inherited. The alienability can be restricted by the articles of association, the law governing minors, matrimonial property law and the Freiberufler-GmbHG. Transferability by inheritance, on the other hand, cannot be excluded by the articles of association. 

The independence of the shares is stipulated in paragraph 2. In contrast to partnerships, the acquisition of additional GmbH shares by a shareholder does not lead to a merger of the shares. 

Paragraphs 3 and 4 stipulate formal requirements for the transferability of shares. Both the transfer of shares as a disposition transaction and the underlying obligation transaction are subject to notarization.

Paragraph 5 in turn allows for conditions to be attached certain conditions to the transfer in the company's articles of association or making the transfer dependent on the consent of the company or a certain group of shareholders.

b)     Transferability of GmbH shares

Section 15 GmbHG regulates the free transferability of company shares in a GmbH in paragraph 1. These can therefore be sold or passed on.

aa) Alienability under Section 15 (1) Alternative 1 GmbHG

2Section 15 (1) alternative 1 GmbHG establishes the principle of the free alienability of shares. Wicke, GmbHG, 5th edition (2024), Section 15 marginal no. 2. Accordingly, shares are generally freely alienable. In addition to shares, parts of shares are also freely alienable. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 marginal no. 6.

However, restrictions may arise from contractual and statutory regulations. Restrictions may be imposed by the articles of association, the law governing minors, matrimonial property law and professional law. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 40.

(1)   Contractual provisions

3The articles of association may make the transfer of shares subject to conditions or exclude it entirely. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 41. Furthermore, the sale of shares may be prescribed for certain cases or rights of repurchase or pre‑emption may be stipulated. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 41.

(2)   Statutory provisions

4If minors sell or acquire GmbH shares, approval by the family or guardianship court may be required in accordance with Section 1643 (1) BGB  in conjunction with Section 1822 no. 3 BGB. The BGH assumes that approval is required if the shareholding goes beyond a mere equity investment and is to be regarded economically as a participation in the acquisition business operated by the GmbH. BGH, judgment of. 28. 1. 2003 - X ZR 199/99 = NJOZ 2003, 1073 (1076 f.). This is particularly the case if the shareholding of a minor in a GmbH exceeds 50 per cent of the company’s share capital or if only minors are involved in a GmbH and they sell all shares and thus the company of the GmbH as a whole. BGH, judgment of. 28. 1. 2003 - X ZR 199/99 = NJOZ 2003, 1073 (1076 f.).

5According to the matrimonial property law of the community of accrued gains pursuant to Sections 1363 et seq. BGB, a transfer of shares may be subject to the consent of the other spouse. Under the matrimonial property regime of community of accrued gains, each spouse manages their own assets (Section 1364 BGB) and can dispose of the assets freely. This principle is restricted by Section 1365 BGB.  If a spouse disposes of his or her "entire assets", the obligation to transfer is already subject to the reservation of consent of the other spouse. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 44; Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th ed. (2025), Section 15 para. 510, 511, 512. The definition of assets in Section 1365 BGB includes all assets. BGH, judgment of. 25.6.1980 - IV b ZR 516/80 = NJW 1980, 2350 (2350). According to case law, a spouse disposes of his or her "entire assets" if the value of the object of the obligation accounts for at least 85 percent of the total assets. BGH, Urt. v. 25.6.1980 - IVb ZR 516/80, BGHZ 77, 293 (295 f.) = NJW 1980, 2350 (2350); BGH, Urt. v. 13.3.1991 - XII ZR 79/90 = NJW 1991, 1739 (1740). According to the prevailing view, it is also irrelevant whether this is a sum of items or an individual item. BGH, judgment of. 28.4.1961 - V ZR 17/60 = NJW 1961, 1301 (1303); BGH, Urt. v. 26.2.1965 - V ZR 227/62 = NJW 1965, 909 (910); BGH, Urt. v. 21.03.1996 - III ZR 106/95 = DStR 1996, 1903 (1903). Consequently, the term "entire assets" can also include a business share if this makes up the majority of the assets. BGH, judgment of. 28.4.1961 - V ZR 17/60, BGHZ 35, 134 = NJW 1961, 1301(1303); BGH, Urt. v. 21.03.1996 - III ZR 106/95 = DStR 1996, 1903 (1903). The declaration of consent of the spouse of the shareholder selling his/her share must therefore be available before the purchase agreement for the shares is notarized.

6Restrictions may also arise from professional regulations. If the company is a Freiberufler-GmbH, the assignment of shares may be limited to members of the respective professional group. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 46. Otherwise, the assignment may be invalid under Section 134 BGB. This applies in particular to auditors pursuant to Section 28 (4) sentence 1, no. 1 of the Regulating the Profession of Auditor (Wirtschaftsprüferordnung – WPO), to lawyers pursuant to Section 59e (1) of the Federal Code for Lawyers (Bundesrechtsanwaltsordnung – BRAO), to tax advisors pursuant to Section 50a (1) no. 1, 3 of the Tax Advisory Services Act (Steuerberatungsgesetz – StBerG), or to doctors pursuant to Section 23a of the Model Professional Code for Physicians in Germany ((Muster-)Berufsordnung für die in Deutschland tätigen Ärztinnen und Ärzte). Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 46; Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th ed. (2025), Section 15 para. 7.

bb)  Inheritance

7According to Section 15 (1) alternative 2 GmbHG, company shares are transmissible by inheritance. In the event of death, these become part of the deceased’s estate and are transferred to the heirs. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 48. Inheritance cannot be excluded by the articles of association. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 54. Membership obligations of the deceased linked to the share are also transferred to the heirs. They belong to the liabilities of the estate of the heir in accordance with Sections 1967 and 2058 BGB. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 443.

8In contrast to the regulations for partnerships, the GmbHG provides no special succession rights beyond those under general inheritance law. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 443. Thus, no direct transfer of the share to a non-heir can be effectively agreed in the articles of association. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 443.

9However, the heir may be obliged to assign his shares by means of assignment, succession or entry clauses in the articles of association. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 59-64.

In this way, the remaining shareholders can still exercise indirect influence over the ultimate ownership of the shares.

c)      Independence of company shares in a GmbH

10Section 15 (2) GmbHG stipulates the fundamental independence of GmbH shares. Wicke, GmbHG, 5th edition (2024), Section 15 marginal no. 11. If a shareholder acquires further shares in addition to his original shares through sale or inheritance, this does not lead to an independent consolidation of all shares. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 183.

11This regulation serves to enforce the principle of ensuring share capital is fully contributed. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 182. The independence of the shares allows recourse against previous shareholders in the event of a contribution that has not been fully paid in or a limited obligation to make additional contributions in accordance with Section 22 and 28 GmbHG. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 182.

12However, a consolidation or re‑denomination of company shares may be permissible under certain circumstances. BGH, judgment of. 13. 7. 1964 - II ZR 110/62 = NJW 1964, 1954 (1954); BGH, decision of 24. 10. 1974 - II ZB 1/74 = NJW 1975, 118 (118); Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 84, 85; Altmeppen, GmbHG, 11th ed. (2023), Section 15 para. 39. This requires that the share capital is sufficiently secured – through the payment of all contributions and the absence of any additional contribution obligations – and that a corresponding shareholder resolution has been validly passed in accordance with Section 46 (4) GmbHG. BGH, judgment of. 13. 7. 1964 - II ZR 110/62 = NJW 1964, 1954 (1954); BGH, decision of 24. 10. 1974 - II ZB 1/74 = NJW 1975, 118 (118); Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 84, 85; Altmeppen, GmbHG, 11th ed. (2023), Section 15 para. 39.

d)     Notarial form requirements

13The principle of free transferability is restricted in Section 15 (3) and (4) GmbHG by the prescribed notarial form. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 marginal no. 1. Form is required not only for the disposition transaction in the form of assignment in accordance with Sections 398 and 413 BGB, but also for the underlying obligational transaction, usually in the form of a purchase agreement. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), Section 15 marginal no. 29. The purpose of the formal requirement is to hinder trading in company shares and to enhance evidentiary certainty. BGH, judgment of. 10. 3. 2008 - II ZR 312/06 = NZG 2008, 377 (378). This is to ensure that GmbH shares do not become subject to the speculative market. This goes back to the intention of the historical legislator, who wanted to structure the GmbH as a personalistic capital company. Loritz, DNotZ 2000, 90 (94).  

14As a result, the formal requirement cannot be waived for either disposition or obligational transactions. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 80, 112.

15There is more room for maneuver in the execution of the notarization. According to Sections 128 and 157 BGB, successive notarization is permitted. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), Section 15 marginal no. 57. This means that it is not necessary for the transferor and transferee to be present at the same time and that the notarization of the offer and acceptance of the contract may take place at different times. This also applies if the notarization is carried out at different locations by different notaries. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), Section 15 marginal no. 57.

aa) Disposition transaction

16The assignment of shares must be notarized in accordance with Section 15 (3) GmbHG. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), Section 15 marginal no. 55. The assignment transfers the company shares with all rights and obligations to the purchaser. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), Section 15 marginal no. 66. The assignment agreement must comply with the principle of specificity under property law. Accordingly, it must be possible to determine beyond doubt which shares are the subject of the transfer, at least by means of an interpretation in accordance with Sections 133 and 157 BGB. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 26.

17According to Sections 16 (3) GmbHG, a bona fide acquisition of GmbH shares from a non-entitled party is possible. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 12; Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th ed. (2025), Section 15 para. 51, 52; see also below under F.

bb) Special forms of transfer

18The formal requirement und Section 15 (3) GmbHG also extends to special forms of transfer. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 99. These include, among other things, the assignment by way of security and trust assignment, the pledge of company shares or the creation of usufruct. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 181, 193, 201.

19This provision does not cover assignments of shares by operation of law, by virtue of a sovereign act or by accession. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 marginal no. 102; OLG Karlsruhe, judgment v. 16.10.2003 - 12 U 63/03 = BeckRS 2003, 303308122.

cc) Obligational transaction

20The obligatory transaction on which the disposal transaction is based is also subject to the notarial form requirement under Section 15 (4) GmbHG. The obligational transaction must, at minimum, identify the contracting parties, specify the share by its nominal amount, and express the respective intention to assign. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 106.

21The legal consequence is the obligation of the transferor to transfer the share and the obligation of the transferee to accept it. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 117.

22The scope of the notarial form requirement extends to any ‘agreement’ establishing the assignment obligation, according to the literal wording of Section 15 (4) GmbHG. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), Section 15 marginal no. 83. The wording of the law is very broad at this point and leaves room for ambiguity in the literature and legal practice regarding the scope and limits of the formal requirement. In principle, bilateral legal transactions are form-bound. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), Section 15 marginal no. 83. Unilateral or statutory legal relationships are excluded, as these are not based on a mutual obligation. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 marginal no. 83.

23If the concluded obligatory transaction suffers from a formal defect, it is generally void in accordance with Section 125 sentence 1 BGB. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 marginal no. 119. However, according to Section 15 (4) sentence 2 GmbHG, the formal invalidity of the causal transaction can be cured. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 121.   The cure occurs ex nunc through the effective execution of the assignment of shares. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 136; Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th ed. (2025), Section 15 para. 121, 122.

24In contrast to the sale of company shares in a GmbH, shares in a joint‑ownership assets (Gesamthandsvermögen) – for example in a civil law partnership (GbR) or community of heirs – may be transferred without notarization. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), Section 15 marginal no. 49. This also applies if the community of joint ownership (Gesamthandsgesellschaft) holds real estate or GmbH shares. Wertenbruch, NZG 2008, 454 (456). However, the Federal Court of Justice BGH, Urt. v. 10.3.2008 - II ZR 312/06 = NZG 2008, 377 (377). has held that form may exceptionally be required if the joint‑ownership assets is used primarily to circumvent the formal requirements of Section 15 (4) GmbHG, constituting a case of evasion of law. If the joint‑ownership assets primary purpose is the holding of company shares, it is advisable, for reasons of legal certainty, to effect a notarial certification. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), Section 15 marginal no. 49.

dd)  Notarial form requirement for ancillary agreements

25The provisions of Section 15 (4) GmbHG on the requirement of form for the obligational transaction also extend to all material ancillary agreements. Cf. BGH, Urt. v. 27.6.2001 - VIII ZR 329/99 = NJW 2002, 142 (143); Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 marginal no. 119-126. Both obligatory and non-obligatory ancillary agreements require a form. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), Section 15 para. 56, 57.   This is based on the so-called principle of completeness. According to this principle, all agreements that the parties intend to be part of the causal transaction must be notarized. BGH, Urt. v. 27.6.2001 - VIII ZR 329/99 = NJW 2002, 142 (143); Möritz/Hell, in: Henssler, BeckOK GmbHG, Status: 01.08.2024, Section 15 marginal no. 170, 171, 172; According to case law, the decisive factor is therefore not what „the parties wish to notarize, but what they consider economically necessary to be part of a single transaction." Hanseatic Higher Regional Court, judgment of. 26. 1. 2007 - 11 U 254/05 = MittBayNot 2007, 514 (516).

26In practice, it is often difficult to assess whether agreements made between the parties already constitute material ancillary agreements and are therefore subject to notarization and must be assessed independently for each individual case.

27If there is a composite or mixed contract, the formal requirement applies to the entire contract. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 marginal no. 107.

The consequence of failure to notarize is the nullity of the ancillary agreement in accordance with Section 125 sentence 1 BGB. In principle, partial nullity pursuant to Section 139 BGB leads to the nullity of the entire legal transaction. To avoid the consequences of nullity, it may be advisable to subject the agreed provisions to a legal review.

e)     Hindering the transfer through provisions in the articles of association

28Section 15 (5) GmbH provides that of attaching certain conditions to the transfer in the articles of association or making the transfer dependent on the consent of the company or a certain group of shareholders. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 361. Such cases are referred to as the transfer restriction of company shares. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 361, 362. These only relate to the effectiveness of the disposal transaction and are part of the material provisions of the articles of association. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 363, 365. If restrictions on transferability are anchored in the articles of incorporation, they can already take effect in the pre‑incorporation stage. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 marginal number 365.

29Transfer restrictions can also be used to exercise control over the group of shareholders. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 362. On the one hand, appropriate regulations provide an outward defense against "unwanted" third parties and, on the other hand, prevent a shift in shareholdings. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 362.

30Typical types of transfer restriction clauses are rights of consent, conditions, the assumption of specific obligations or the outright prohibition of transfer. Blasche, RNotZ 2013, 515 (521 f.). The reservation of consent is the most common application. Blasche, RNotZ 2013, 515 (521 f.). The "consent" to be granted by the company for the assignment of the shares within the meaning of Section 15 (5) GmbHG refers to both prior and subsequent consent in accordance with Sections 182 and 184 BGB.  The managing directors are generally authorized to consent. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 161; Wicke, GmbHG, 5th ed. (2024), Section 15 para. 24.   Unless otherwise stipulated in the articles of association, a resolution of the shareholders' meeting is required. Wilhelmi, in: Ziemons/Jaeger/Pöschke, BeckOK GmbHG, 63rd ed. (2025), Section 15 para. 161-163.

31Particularly in the case of underlying corporate group structures, it must be examined to what extent restrictions on transferability can also interfere with indirect changes to the group of shareholders. Blasche, RNotZ 2013, 515 (530); Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), section 15 marginal no. 373.   Such cases are referred to as "indirect transfer restrictions". Blasche, RNotZ 2013, 515 (530), Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th edition (2025), section 15 marginal no. 373.    In principle, the protection of section 15 (5) GmbHG only extends directly to the company concerned. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 374. Direct intervention in a parent company is therefore ruled out. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 374. However, the structure and intended purpose of a transfer restriction clause may result in obligations that also affect the indirect shareholder. Blasche, RNotZ 2013, 515 (530). This must be determined on the basis of an objective interpretation of the articles of association. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 374.

32Statutory transfers of company shares cannot be subject to transfer restrictions. Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, Vol. 1, 5th ed. (2025), Section 15 para. 366.

33Transfer restriction clauses can be subsequently amended or introduced. OLG Munich, judgment of. 23. 1. 2008 - 7 U 3292/07 = BeckRS 2008, 2845 marginal no. 28; Blasche, RNotZ 2013, 515 (524). As the alienability of shares is also part of the core of membership rights, the prevailing view is that this requires a shareholder resolution with the consent of all affected shareholders. OLG Munich, judgment of 23. 1. 2008 - 7 U 3292/07 = NJW-Spezial 2008, 208; OLG Dresden, Ent. v. 10.5.2004 - 2 U 286/04 GmbHR 2004, 1080 = BeckRS 2004, 07290; Weller/Reichert, in: Goette/Fleischer, MüKo GmbHG, vol. 1, 5th ed. (2025), Section 15 marginal no. 389. Otherwise, there is a risk that such a transfer restriction resolution can be challenged through an action for nullity. OLG Munich, judgment of. 23. 1. 2008 - 7 U 3292/07 = NJW-Spezial 2008, 208.

f)       Significance of the regulation for share purchase transactions (including an excursus on Due Diligence)

34 aa) Importance of Due Diligence

An essential part of the share purchase process is the performance of Due Diligence (often abbreviated to "DD"). As part of Due Diligence, the object of the purchase – in the case of a share purchase, the company in which shares are to be acquired – is subjected to a detailed examination. Such an examination is usually divided into legal Due Diligence, financial Due Diligence and tax Due Diligence, which is carried out by the relevant experts.

The results of the Due Diligence are summarized in a Due Diligence report in order to enable the buyer of the company shares to assess any risks at the conclusion of the transaction. In the vast majority of cases, this evaluation is a so-called "red flag report", in which not all deviations from the ideal situation are included, but only those that could jeopardize the completion of the transaction and thus have a so-called "deal-breaker potential".

A potential buyer has an interest in carrying out Due Diligence for various reasons For the reasons, see also Greitemann/Funk, in: Holzapfel/Pöllath/Bergjan/Engelhardt; Unternehmenskauf in Recht und Praxis, 16th ed. 2021, para. 701. . On the one hand, it obtains an in-depth overview of the risks, but also the opportunities that the acquisition of shares may entail. On the other hand, the results of the due diligence can also have a direct influence on the purchase price negotiations.

35bb) Due Diligence checklist

Typically, the buyer sends the seller a DD-Checklist comprising questions that are to be answered by submitting documents, or directly requests any specific documents deemed relevant. Unless the company is very small or there are other special situations (e.g. management buy-out or very low purchase price) that make a comprehensive Due Diligence appear unnecessary, it is always advisable to manage the documents required for the due diligence in a virtual data room (“VDR”). In this data room, the documents are organized in the VDR according to the DD-Checklist and a Q&A tool can be used throughout the Due diligence process.

36Typical categories of a legal DD-Checklist include:

• General information (e.g. formation documents, lists of shareholders, minutes of shareholders' meetings, members of the supervisory board/advisory board)
• Information on past capital/conversion measures of the company
• Restructuring and share transfers relating to business shares
• Rights and encumbrances to the company's shares
• Company contracts with shareholders and intercompany contracts
• Company bodies (e.g. Advisory Board/Supervisory Board)
• Industrial property rights and data protection of the company
• Real estate or lease agreements (the content of this section depends largely on whether the company owns real estate or rents the business property)
• Financing and security arrangements
• Other operating resources
• Supply and distribution agreements (including a list of significant customers and suppliers)
• Other contracts and standard forms (in particular general terms and conditions of sale and purchase)
• Insurances
• Employment relationships (in particular submission of an anonymized employee list including position title and length of service, submission of the standard employment contract)
• Company pension scheme regulations
• Public law matters, including licenses and permits
• Legal disputes
• Compliance (e.g. information on significant compliance violations and presentation of the company's compliance guidelines)
• Other (e.g. press releases)

A so‑called ‘catch‑all’ question at the end of the checklist is often useful in buyer-side advice. This can read, for example: "Documentation of all processes, facts and circumstances that are of material importance for the company and its business operations or its shareholders or that influence a potential buyer's purchase decision."

The scope and depth of each DD-Checklist should be tailored to the size and business activities of the target company.

37 cc) W&I insurance

In recent years, Due Diligence has become increasingly important in connection with W&I insurance (Warranty & Indemnity Insurance) originating from the Anglo-American legal system. This insurance is usually taken out by the purchasers of company shares The conclusion of a W&I insurance policy by the seller only occurs in exceptional cases. and means that the sellers’ liability for insured risks is typically capped at a nominal EUR 1.00. The basis for determining whether the transaction is covered by the insurance and the extent of that coverage is the DD-report and any findings contained therein. This is because only unknown risks are covered by W&I insurance. As soon as a topic is already disclosed in the DD-report, this excludes the insurability of the facts. Jakobs; in: Lanheid/Wandt, Münchner Kommentar zum VVG, 3rd ed. (2025), ch. 36 para. 144. Of course, taking out such insurance is a financial consideration that must be taken into account when negotiating the company purchase agreement. It is handled differently whether the price is included directly in the purchase price calculation or whether it is stipulated in the contract that the parties each bear half of the price for the insurance, for example.

38dd)  Review of the chain of title as part of due diligence

A central aspect of the Due Diligence process is the review of the chain of title. This review serves to clearly establish that the shares can indeed be transferred, which requires a complete and uninterrupted documentation of all ownership transfers of shares in the company from its formation to the time the Due Diligence is carried out. This review looks at the entire chain of ownership transfers to ensure that all previous transfers of ownership are correctly documented and registered and that there are no unlawful or missing transfers. The aim here is to identify possible risks or ambiguities regarding the ownership of the shares and to ensure that the seller is actually the legal owner and therefore the person authorized to dispose of the shares. In principle, the traceability of the shareholders of the shares of a GmbH is ensured by the fact that the respective lists of shareholders are historically filed in the commercial register. The good faith acquisition of shares is also possible in accordance with Section 16 (3) GmbHG. The prerequisites for such an good faith acquisition from a non-entitled party are that the share acquired through a legal transaction actually exists, that the seller is included as a shareholder in the list of shareholders deposited with the commercial register and that the list of shareholders has been incorrect for three years at the time of acquisition or that the incorrectness can be attributed to the entitled party. Wilhelmi, in: BeckOK GmbHG, Ziemons/Jaeger/Pöschke, 63rd ed. (2022), Section 16 para. 68. It is also essential that the buyer has no knowledge or grossly negligent ignorance of the inaccuracy of the list of shareholders, that he is therefore acting in good faith and that the list of shareholders is not contradicted. However, since Section 16 (3) GmbHG does not entirely rule out the possibility that the shares cannot be transferred (e.g. because the share does not actually exist or the list of shareholders has been incorrect for less than three years), a detailed examination of the share chain is still strongly recommended. Andreas, in: Beisel/Andreas, Beck'sches Mandatshandbuch Due Diligence, 4th ed. (2024), Section 11 para. 52.

39In any case, a warranty should be included in favor of the buyer regarding the chain of title. Such a warranty falls into the category of so-called fundamental warranties (or core warranties). In contrast to operational warranties, which relate to current business activities and operational metrics, fundamental warranties concern essential and foundational aspects of the company and guarantee key facts or conditions that are of particular importance to the buyer’s decision. Unlike operational warranties, fundamental warranties are in most cases exempt from any agreed liability cap, and the limitation period for warranty claims is generally longer than that for operational warranties. For this reason in particular, it is also crucial for the seller, together with its advisors, to pay close attention to the issue of the chain of title in order to minimize liability risk.

A warranty clause in relation to the share chain could read:

"The company has been duly incorporated under the laws of the Federal Republic of Germany and is validly existing. The shares subject to the purchase have been validly issued and are solely and unrestrictedly owned by the sellers, both legally and beneficially. The shares are free from any third-party rights and are not subject to any restrictions on disposal, whether legal or factual. In particular, there are no pledges, security interests, usufructs, trusts, or similar rights, nor are there any conversion rights, purchase rights, pre-emption rights, options, or other third-party acquisition rights in respect of the shares."  

ee) Establishment of a separate liability regime in the company purchase agreement

40In addition to the fact that any agreed maximum liability limit does not apply to fundamental warranties in most cases, warranty claims in company purchase agreements are not governed by the statutory provisions on warranty under German law, which are typically expressly excluded. As an alternative to this liability regime, the parties agree in the SPA to deviate from the statutory liability regime and to implement a standalone contractual liability regime that is set out in detail in the agreement. According to this liability system, the seller guarantees in the form of an independent no-fault warranty pursuant to Sections 311 (1) and 241 (1) BGB that the statements made within the scope of the guarantees are correct on the signing date and, where applicable, the closing date, if different from the signing date, which is likely to be the case for such contracts on a regular basis.

41While the statutory liability regime is set aside for determining the legal basis of liability, the statutory rules are often referred to for determining the scope of liability. If a warranty case occurs, Sections 249 et seq. BGB apply for calculating damages, unless the parties agree otherwise in the contract. Damages generally include both direct and indirect losses. The most significant type of indirect damage in this context is loss of profit. As this category of damages involves a high financial risk, it is advisable to limit the indirect damages eligible for compensation to the extent that they must be typically foreseeable and arise from ordinary courses of causation. In addition, in many cases liability caps for operational warranties, typically ranging between 15% and 50% of the purchase price are agreed between the parties. Furthermore, company purchase agreements often contain so-called de minimis provisions. Here, certain (minor) claims are excluded or an amount is stipulated that a loss must cover in order to be eligible for compensation.

ff)     Significance of indemnities in the company purchase agreement

42In addition to the warranty structure, the provisions on indemnities are another central part of a SPA for shares in a GmbH. An indemnity is an agreement in which one party, in most cases the seller, undertakes to indemnify the other party, usually the buyer, against certain claims, demands or liabilities. This means that in the event of subsequent legal or financial claims resulting from certain pre-contractual circumstances, the seller assumes these and protects the other party from any resulting disadvantages. Typically, an indemnity is used to cover risks such as outstanding legal disputes, tax claims or environmental liabilities. This is intended to ensure that the buyer is not liable after the purchase for claims that already existed before the contract was concluded.

The DD-report is again a key basis for the formulation of the indemnities. As a rule, the buyer tries to secure the findings of the Due Diligence by obtaining indemnities from the seller in such a way that, in the event that he sees himself exposed to a claim due to the respective problem or he has to fear financial disadvantages in connection with the findings, he can indemnify the seller.

In this context, an indemnification is a plus compared to a warranty given by the seller. This applies in particular with regard to the seller's scope of liability. This is because indemnities are generally not limited to the purchase price and are not subject to a de minimis rule.

gg)  Exclusion of warranty otherwise

43In addition to the warranty and indemnification claims, the parties regularly agree to a further exclusion of warranty. As a result, the warranty provisions of the BGB do not apply in addition.

If the supplementary application of the statutory warranty provisions under the BGB As the exclusion of warranty liability pursuant to the German Civil Code (BGB) is standard practice in corporate transactions, this section will be limited to an overview. were not excluded, Sections 433 et seq. BGB would apply, as the purchase of company shares qualifies as a sale of rights (Rechtskauf) under German law with regard to the contractual obligations. OLG Munich, judgment of. 25.3.1998 - 7 U 4926/97 = NZG 1998, 593 (594); Kruse/Pfisterer, in: Saenger/Inhester, HK GmbHG, 5th ed. (2024), Section 15 para. 48-51. . Whether the statutory provisions on title defects or material defects apply to the acquisition of company shares depends on whether the transaction qualifies merely as a share acquisition or as a full company acquisition (asset deal or share deal involving the transfer of the business as a going concern). According to established case law of the BGH (Bundesgerichtshof), this is the case if not only individual assets, but an bundle of assets, rights and other components of value are to be transferred and the purchaser is thereby enabled to continue the company as such. BGH, judgment by default. V. 28. 11. 2001 - VIII ZR 37/01 = NJW 2002, 1042 (1043). Such a controlling interest can be assumed from an acquisition of 75 % of the shares, as the purchaser thus obtains the possibility of exercising control in resolutions of the acquired GmbH amending the articles of association in accordance with Section 53 (2) GmbHG. BGH, judgment of. 2. 6. 1980 - VIII ZR 64/79 = NJW 1980, 2408 (2409); OLG Munich, Urt. v. 25. 3. 1998 - 7 U 4926/97 = NZG 1998, 593 (594). In the case of a mere acquisition of shares, it is generally assumed that only liability for title defects, and not also for material defects, can be considered. OLG Munich, judgment of. 25. 3. 1998 - 7 U 4926/97 = NZG 1998, 593 (594); Wicke, GmbHG, 5th ed. (2024), Section 15 Rn. 4-6. The seller's liability for title defects is based on Sections 453 (1) alternative 1, 433 (1) sentence 2, 435 BGB. According to this, a title defect exists if the right falls short of the contractually agreed scope, the share sold does not grant promised rights (e.g. with regard to profit participation or the scope of voting rights), is encumbered with unpaid capital contributions or further capital contribution obligations or its existence is jeopardized (e.g. due to liquidation of the company or pending insolvency proceedings). Altmeppen, GmbHG, 11th edition (2023), Section 15 marginal no. 7; Wicke, GmbHG, 5th edition (2024), Section 15 marginal nos. 4-6. A legal defect also exists if the share is subject to third-party rights in rem, such as usufruct or a lien. Altmeppen, GmbHG, 11th edition (2023), Section 15 marginal no. 7; Wicke, GmbHG, 5th edition (2024), Section 15 marginal nos. 4-6. In the case of a company purchase, the seller may also be liable for material defects in accordance with Sections 453 (1), 434, 437 BGB. Kruse/Pfisterer, in: Saenger/Inhester, HK GmbHG, 5th edition (2024), Section 15 marginal no. 51.