4.4.6.1 Introduction

Finally, an entity can convert its legal form, by means of a resolution of the general meeting of shareholders (or partners).1 A GmbH can be converted into a partnership onder the Civil Code (Gesellschaft bürgerlichen Rechts), or into an OHG, a KG, a PartG, an AG, a KGaA, or an e.G.2In nearly all situations of conversion of the legal form of an entity, an appraisal right arises pursuant to § 207 I UmwG.3 In the case of conversion of the legal form of a GmbH, the shareholders are always entitled to an appraisal right.

In order to initiate a conversion, the management board of the converting GmbH has to draft a conversion report. This conversion report has to clarify and explain the amount of the cash compensation with respect to the appraisal right.4 Moreover, this report has to include a draft resolution for the conversion of the GmbH. Subsequently, the general meeting of the GmbH has to resolve on the conversion. This resolution cannot be adopted outside of a meeting.5

A conversion into another legal form does not require a contract such as in the situation of merger or demerger, but the shareholders' resolution has to include several relevant matters. Inter alia, the resolution has to include an offer for cash compensation of the shareholders invoking the appraisal right. This offer is not required if the conversion is subject to approval of all shareholders or if there is a sole shareholder.6 The resolution approving the conversion has to be included in a notarial deed.7

Moreover, all steps for incorporation of the (new) legal form have to be complied with.8 The conversion has to be registered with the trade register of the converting GmbH.9 The conversion enters into effect when the new legal form of the entity is registered with the relevant register. From that moment on, the shareholders of the former GmbH become members of the entity in accordance with the rules of the legal form concemed.10