4.1.1 Introduction

The German private limited company, or, in German, the Gesellschaft mit beschränkter Haftung, is a flexible type of private limited company that can be adapted to the needs of its shareholders. The GmbH is regulated by a separate statute pertaining to private companies with limited liability.1 The GmbHG dates back to 1892,2 although it was thoroughly revised in 2008 by the statute in order to modernize GmbH law and to combat abuses.3

The GmbHG contains few compulsory provisions in comparison with the statute on the German public limited company,4 Book 2 of the Dutch BW and the English CA 2006. This is caused by the historical choice of the German legislator to introduce a separate legal form, which can be placed somewhere between the partnership and the public limited company. The GmbH can be characterized as a limited liability company, whereas it has limited liability, a capital divided into shares and legal personality.5 In contrast, the English and Dutch legislators traditionally cared less about making a firm distinction between the private limited company and the public limited company and created legal forms resembling each other up to a large extent.6 Consequently, in contrast with the majority of English and Dutch exit rights, the German exit rights described in this chapter only apply to the GmbH and not to the AG.

The way the affürs of a GmbH and its interaal competencies are regulated is laid down in its articles of association (Gesellschaftsvertrag).7 In addition, shareholders may agree on additional arrangements by way of shareholders' agreements.

Shareholders of a GmbH do not have an exit right at will (ordentliches Austrittsrecht). Even so, shares in a GmbH are transferable, which is clarified by § 15 I GmbHG.8 The transfer of shares in a GmbH requires a notarized agreement, creating the obligation to transfer, and a notarial deed of transfer, embodying the transfer.9 Subsequently, in order for the new shareholder to be entitled to his shareholder's rights, the shareholder needs to be entered in the shareholders' list held by the trade register. The directors of the GmbH have the obligation to file the details of the shareholder with the trade register (§ 40 GmbHG).

The transfer of shares in a GmbH is often subject to restrictions. It is estimated that the articles of association of about 90% to 95% of the German private limited companies contain more or less far-reaching restrictions on the transfer of shares.10 These transfer restriction clauses, indicated as Vinkulierung, may comprehend that any transfer of shares requires the prior approval of the shareholders of the GmbH.11Pre-emption rights implying the prior approval by bodies of the company or even by third parties are possible as well. Although these rules intend to create control on who will enter the GmbH, these rules may also make it hard to exit the GmbH as a shareholder.

In order to understand how the exit rights work, a brief overview of the German rules on capital maintenance is needed. With this overview, we start in § 4.1.2.

The GmbHG provides for two exit rights. The first exit right is found in § 61 GmbHG. Further to this provision, a GmbH can be wound up by the court if there is an important reason to do so. This winding-up remedy (AuflOsung) is described in § 4.2.

There is no statutory oppression remedy onder German law. Nonetheless, it is recognized both in case law and in German legal literature that a shareholder of a GmbH can exit the company if there is an important reason to do so. This oppression remedy (auβerordentliches Austrittsrecht or Austritt), is described in § 4.3.

In § 4.4, attention is paid to several appraisal rights. Most of these appraisal rights apply in the situation the GmbH encounters reorganization, such as merger, demerger and cross-border merger. This paragraph concludes with the second exit right found in the GmbHG. This appraisal right applies in the situation shareholders are exposed to unlimited contribution obligations. The German debate about the exit right at will is dealt with in § 4.5. Finally, in § 4.6, the conclusion of this chapter is found.