4.4.5 Asset transfer

A third type of reorganization is the asset transfer in return for cash consideration. According to § 174 and 175 UmwG, a corporation can transfer all or part of its assets to the Federal Republic of Germany, or a German state (Bundesland), or a regional administrative body (Gebietskörperschaft), or some joint regional administrative bodies (Zusammenschluβ von Gebietskörperschaften). Upon the asset transfer, the GmbH ceases to exist, without the need of liquidation. The asset transfer involves steps similar to that of a legal (de) merger.1 All shareholders in a GmbH are to be compensated in cash.2

Strictly speaking, this compensation is not an appraisal right or a winding-up remedy. Rather, it could be considered as a reorganization type somewhere in between a demerger and regular liquidation. The rules for the appraisal right apply mutatis mutandis to this cash compensation.3