The Sale of GmbH Shares

How are GmbH shares sold?

The sale of GmbH shares takes place through the assignment of the shares from the seller to the purchaser. If a shareholder wishes to transfer their share in the GmbH, two separate legal transactions are required:

• Obligatory agreement: First, a purchase agreement for the sale of the GmbH shares must be concluded. This agreement establishes the seller’s right to receive the purchase price and their obligation to transfer the shares.
• Transfer: The actual transfer of the shares occurs in a second step.

In practice, both steps are usually combined in a single document, commonly referred to as a Share Purchase Agreement (SPA), which is executed immediately after the purchase agreement is signed.

When selling GmbH shares, the following points should be considered:

• Notary: Both the purchase agreement and the share transfer agreement must be notarised. In most cases, both transactions are executed before the notary in a single appointment.
• Spousal consent: If the GmbH shares constitute a substantial part of the seller’s assets (typically more than 85%), and the seller is married, it must be verified whether the consent of the spouse is required.

Can GmbH shares be freely sold?

According to Section 15 of the German Limited Liability Companies Act (GmbHG), shares in a GmbH are, as a general rule, freely transferable. However, this principle is often subject to contractual restrictions. The rationale behind such limitations is to prevent shares from being transferred to individuals with whom the remaining shareholders do not wish to collaborate. To address these concerns, the following mechanisms are commonly used:

• Transfer restrictions:
  It is possible to restrict the transferability of GmbH shares by requiring, for example, the prior consent of the company or the other shareholders (Section 15 (5) GmbHG). The consent may also be made conditional upon specific requirements being met.
• Shareholders’ agreement:
  Shareholders may enter into a contractual agreement under which they undertake not to sell their shares, or to sell them only if certain conditions are fulfilled. Such an agreement may, for instance, grant the other shareholders a pre-emption right.

How does the sale of GmbH shares take place?

The sale of a GmbH does not follow a rigid process. In general, the larger and more valuable the company, the more standardized the sales procedure tends to be. The following steps outline the typical process for the sale of a larger GmbH:

• Initial contact: The process begins with initial contact, which may be initiated by the buyer, the seller, or an advisor (in particular an investment bank).
• Letter of Intent (LOI): Following preliminary discussions, a Letter of Intent is usually signed. In this document, the buyer expresses their interest in acquiring the company and sets out initial ideas regarding key terms of the transaction, especially the purchase price. The legal effect of the LOI is limited — it does not create an obligation to ultimately complete the transaction.
• Due Diligence: As part of the due diligence process, the buyer reviews the company’s legal and financial situation. The objective is to identify all relevant risks and determine a fair purchase price. Sellers must take particular care to protect trade secrets while still providing the buyer with sufficient insight into the company’s operations.
• Contract negotiation: Following, and often concurrently with, the due diligence process, the parties negotiate the share purchase agreement (SPA).
• Completion: Both the purchase agreement and the transfer of the GmbH shares must be notarised. Accordingly, both documents — the purchase agreement and the share transfer — are typically executed before a notary in a single signing session.
• Filing of the shareholders’ list: After signing, the implementation phase (closing) takes place. Once all closing conditions have been fulfilled, the notary files the updated list of shareholders with the commercial register.

What should be considered when selling a GmbH?

The sale of a GmbH is generally a complex process. The level of complexity largely depends on the size and structure of the company — in most cases, the larger the company, the more extensive the sale process. The share purchase agreement typically contains numerous detailed provisions. When drafting the agreement and structuring the overall transaction, the following aspects should be carefully considered:

• Personal guarantees: It is common for shareholders to have personally guaranteed loans or other liabilities of the company. Such guarantees are usually intended to lapse after the sale of the shares. Accordingly, it must be coordinated with the lenders how these obligations will be secured in the future.
• Non-compete clause: It is standard practice for the purchaser and seller to agree on a non-compete clause. This ensures that the seller does not immediately compete with the buyer following completion of the sale.
• Power of attorney: If a party is unable to attend the notarial appointment in person, they may appoint a representative to act on their behalf. The power of attorney may be granted in simple written form.

How much does it cost to sell a GmbH?

When selling a GmbH, the following costs typically arise:

• Legal fees: The fees for legal counsel depend largely on the scope and complexity of the advisory services required. Lawyers are usually compensated on an hourly basis.
• Notary fees: Notarial fees consist of the notarisation fee and various ancillary charges. They are calculated based on the purchase price and generally amount to between 0.5% and 2% of the sale price. The higher the transaction value, the lower the percentage rate applied.
• Commercial register filing: A small registration fee is also charged for filing the updated shareholders’ list with the commercial register (Handelsregister).
• Advisory fees: Depending on the structure and complexity of the transaction, additional costs may arise — particularly for M&A advisors, auditors, and tax consultants, which can be substantial in larger transactions.