Acquiring a GmbH

Share deal or asset deal: how does each work for the buyer?

Most lower-middle-market acquisitions of owner-run GmbHs are share deals. The asset deal is the exception, chosen to leave a specific risk behind, and it costs time because every counterparty gets a say.

Why must the share purchase agreement be notarized?

German law requires notarial form twice. The agreement that obliges the shareholder to sell (the SPA) needs it under GmbHG § 15 para. 4, and the assignment that actually transfers the shares needs it under § 15 para. 3. An SPA signed without a notary is void as an obligation; the defect is cured only if the parties later notarize the assignment itself (§ 15 para. 4 sentence 2), and the cure heals only the missing form; it does not give the buyer rights for the time before the assignment. This is why a "binding offer" for a GmbH is, in German law, not binding until the notary has recorded it.

In practice the notary reads the deed aloud to the parties or their representatives in one session; long schedules can be attached and, with the parties' agreement, taken as read. Parties abroad usually act through a representative with a notarized and apostilled power of attorney, or sign a deed of ratification afterwards. A notarization by a foreign notary can satisfy German law if the foreign procedure is equivalent (the Federal Court of Justice accepted a Basel notary in 2013), but equivalence is judged case by case, and German counsel will usually prefer a German notary.

Notary fees follow the statutory fee schedule (GNotKG) and scale with the value of the transaction up to a statutory ceiling of 60 million euros, above which they stop rising. The notary is required by law to charge those fees and may not discount them, so they are a known cost rather than a negotiated one.

When does the buyer become the shareholder?

Between the parties, the shares pass when the notarized assignment takes effect, usually at closing once the conditions precedent are met. Towards the company, the rule is different: only the person entered in the shareholder list that the commercial register has accepted counts as shareholder (GmbHG § 16 para. 1). Until the new list is in the register, the buyer cannot vote, appoint managing directors or receive dividends as of right. A legal act the buyer takes in relation to its shareholding in the meantime is treated as valid from the start if the list is filed without delay afterwards (§ 16 para. 1 sentence 2). Until then the company may still pay the listed seller with discharging effect, which is why the prompt filing of the new list matters.

The notary who recorded the transfer must sign and file the new list without delay after it takes effect, send a copy to the company and certify that the changes match what he recorded (GmbHG § 40 para. 2). The notary files it even if the underlying transaction is later attacked. Where no notary was involved in the change, the managing directors file it and are liable to the affected shareholders and to the company's creditors for damage caused by a late or incorrect list (§ 40 paras. 1 and 3).

The list also protects the buyer. A buyer acquires the shares even from a seller who was not the true owner, as long as the seller was entered in the registered list, unless the list had been wrong for less than three years without the true owner being responsible for the error, or the buyer knew or was grossly negligent not to know, or an objection was attached to the list (§ 16 para. 3). The register extract and the current list are therefore the first documents a buyer's counsel pulls, and a buyer never relies on a list that is not the one in the register.

What happens to employees when a German business is sold?

In a share deal nothing changes for employees: their employer is still the GmbH. The questions are mainly commercial (retention, key people). In undertakings with more than 100 permanent employees, though, the economic committee must be informed about the takeover and about the buyer and its intentions once control is acquired (BetrVG § 106 paragraph 3 no. 9a).

In an asset deal, § 613a BGB applies the moment a business or a separable part of it passes to a new owner by legal transaction. The buyer steps into every employment relationship that exists at the transfer date, with all rights and duties (para. 1 sentence 1). Terms that come from a collective bargaining agreement or a works agreement become part of each individual contract and may not be changed to the employee's disadvantage for one year, unless a different collective agreement applies at the buyer (para. 1 sentences 2 to 4). The seller remains jointly liable with the buyer for obligations that arose before the transfer and fall due within a year after it, for those falling due after the transfer only pro rata (para. 2). A dismissal because of the transfer is void; dismissals for other reasons remain possible (para. 4).

Before the transfer, the seller or the buyer must inform every affected employee in text form about the date or planned date, the reason, the legal, economic and social consequences, and the measures planned for employees (para. 5). Each employee may object in writing within one month of receiving that information, to either the seller or the buyer (para. 6). An employee who objects stays with the seller, which in an asset deal often means a company with no business left. In practice the information letter is drafted with care. A defective letter does not start the one-month period at all, and it does not matter whether the defect actually caused the delay (Federal Labour Court, 24 August 2017, 8 AZR 265/16). The right is not unlimited: where the basic information was given, it is generally forfeited after about seven years.

Which filings and clearances come with a GmbH acquisition?

1. Commercial register: the new shareholder list (GmbHG § 40), which the register accepts rather than enters; any change of managing directors; and, if the buyer renames or moves the company, the amended articles, which first need a notarized shareholders' resolution (GmbHG § 53). The register court makes the entries after the notary's electronic filing.
2. Transparency register: after closing, the GmbH must notify its beneficial owners to the Transparenzregister without undue delay (GwG § 20 paragraph 1). A foreign acquisition vehicle can have a registration duty of its own if the target owns German real estate (GwG § 20 paragraph 1 sentences 2 and 3).
3. Foreign investment review: a buyer from outside the EU and EFTA may face a review from 25 percent of the voting rights, or from 20 or 10 percent in listed sectors, and a separate 10 percent review for defence applies to every foreign buyer, EU buyers included (AWV sections 56, 60 and 60a). Asset deals are covered too (AWV section 55 paragraph 1a). Where a filing is mandatory, the closing is provisionally ineffective until clearance, and the buyer may not exercise voting rights or receive sensitive information in the meantime (AWG section 15). See the rules section of our Germany buyer guide for thresholds and periods.
4. Merger control: a filing with the Bundeskartellamt is required only above the turnover thresholds in GWB § 35, which most lower-middle-market deals do not reach; a separate threshold catches deals priced above 400 million euros with significant German activity (§ 35 para. 1a).
5. Works council: in an undertaking with more than 100 permanent employees, the economic committee must be informed about a takeover that involves the acquisition of control, and about the buyer and its intentions, in a share deal as well as an asset deal (BetrVG § 106). Where the deal is followed by a restructuring that counts as a change of operations, the works council's consultation and negotiation rights apply before measures are implemented, in undertakings with more than 20 employees (BetrVG §§ 111 to 113).

Where does real estate transfer tax bite in a share deal?

Real estate transfer tax is a state tax on the acquisition of German land, at rates set by each federal state. It is obvious in an asset deal that includes property. It is less obvious in a share deal, and it is where foreign buyers of property-owning GmbHs get surprised.

Under GrEStG § 1 para. 2b, if a corporation owns German real estate and, within ten years, 90 percent or more of its shares pass directly or indirectly to new shareholders, the law treats this as a transfer of the property to a new company and taxes it. Indirect changes through intermediate companies count, and an intermediate corporation counts as a new shareholder in full if 90 percent or more of its own shares change hands. Separately, and without any ten-year window, § 1 para. 3 taxes the unification of 90 percent or more of the shares in one hand or in one group, and § 1 para. 3a taxes an economic participation of 90 percent or more. When counting under paras. 2a and 2b, transfers of listed shares made on a regulated market or trading facility are disregarded; a block trade outside the market is not (§ 1 para. 2c).

For a buyer this means two things. First, ask early whether the target or any subsidiary owns German land, including the factory it operates from. Second, the tax is assessed on a statutory property value, not on the purchase price, and it falls on the company in the § 1 para. 2b case, so it is a diligence item and a price item, not an afterthought. Rates range from 3.5 to 6.5 percent depending on the federal state (as at November 2026). The company must also notify the tax office within one month of such a change of shareholders, even where no tax is due (GrEStG § 19).

What else changes in the company's tax position after a change of ownership?

A change of more than 50 percent of the shares within five years can cause the company's tax loss carry-forwards to be forfeited under the Corporate Tax Act, subject to exceptions for continued business operations and intra-group transfers. If the target's value rests partly on losses it can use, that is a diligence item for the buyer's tax advisor before signing, not after. The same event can also wipe out trade tax losses and interest carried forward.

Everything beyond this, from the acquisition vehicle to the interest deduction rules, is a question for the buyer's tax advisor and depends on the buyer's own jurisdiction. This page stops here on tax.

What should the buyer ask the notary and local counsel before signing?

1. Do the articles of association restrict transfers or require the company's consent (GmbHG § 15 para. 5), and has that consent been obtained in the form the articles require?
2. Does the shareholder list in the register match the seller's claim to the shares, and when was it last changed?
3. Are all shares fully paid in, was the capital validly paid in at all (GmbHG § 19), and is there any outstanding contribution for which the buyer would become jointly liable (GmbHG § 16 para. 2)?
4. Which of the company's contracts have change-of-control clauses, and which permits are personal to the current owner or managing director?
5. Does the company or any subsidiary own German real estate, and what share transfers have taken place in the last ten years, and is any ten-year window still running?
6. Does the buyer's jurisdiction or ultimate control, including control by a foreign state, or the target's sector trigger the foreign investment review (for defence targets even for EU buyers), and should the review be a condition precedent?
7. Who will act for the buyer at the notary appointment, and are the powers of attorney notarized and apostilled in time? Apostilles work only between Hague Convention states; elsewhere consular legalisation takes materially longer.
8. What is the timeline from signing to the register's acceptance of the new shareholder list, and what may the buyer do in the company before then?

FISART does not replace the notary or counsel. What we do is make sure that by the time a buyer reaches this list, the owner on the other side has already decided to sell to that buyer, so the formalities are the end of the process rather than a negotiation in disguise.

Frequently asked questions