5.2 Structural Change in Germany

In Germany, most statutory provisions on structural change are brought together in a separate act, the Umwandlungsgesetz. A few types of transactions purely within a partnership context, such as conversion of an OHG into a KG, are not regulated by this act.

Like in France, a German partnership or company of one type can be freely converted into a partnership or company of any other type, and participate in a statutory merger or demerger with a partnership or company of the same or another type. Legal persons and partnerships with legal capacity are treated equally. Both are legal subjects. Also, a sole trader (Kaufmann) may demerge the assets and liabilities pertaining to his business to a commercial partnership or a company. A natural person who is the sole shareholder of a company can act as the acquiring legal subject in a statutory merger. The Innen-GbR is not a legal subject and has no access to the above facilitated transactions. The Auβen-GbR cannot participate in a statutory merger or demerger.

On the occasion of a conversion, merger or demerger, a shareholder who is not liable for the company’s debts may become a fully liable partner, or the other way around. In such cases, the liability rules for new and retiring partners will apply. A shareholder or partner cannot be forced to participate in a conversion, merger or demerger, if that were to create or expand personal liability for him.

The German creditor opposition rules for statutory mergers and demergers are more permissive than the French rules: they do not require a one-month waiting period prior to effectuating the transaction. Instead, they prescribe a six-months opposition period post-transaction. In another sense, the German rules are more severe than the French ones: the creditor opposition procedure applies not only to companies, but to partnerships as well. The German creditor opposition procedure also applies to the conversion of a partnership or company. All statutory demergers are subject to both the creditor opposition procedure and cross liability rules, irrespective of the type of company or partnership concerned. Cross liability is for the full amount of the relevant debt and limited to a period of five years from effectuation of the transaction.

A dissolved partnership with legal capacity can be un-dissolved (in other words: re-solved) during the liquidation phase. This does not apply in the event of retirement of the penultimate partner. In that case the partnership will immediately cease to exist. A one-person partnership does not exist. This rule de facto facilitates what can be described as a ‘merger-by-accretion’: as a result of the penultimate partner retiring, the last partner is the last of the ‘partners from time to time’, the partnership is dissolved, and the partnership assets and liabilities will forthwith belong to the former last partner personally.