The Acquisition of GmbH Shares in Good Faith

Abstract

It can take a lifetime from the recognition of a legal problem until it is finally solved. Seventy-nine years after Walter Grau focused attention on gaps in the security of transactions of Gesellschaft mit beschränkter Haftung (GmbH – private limited company) shares, the GmbH reform intends to solve the problem. Until this reform, a prospective buyer of a GmbH share ran the risk that the person transferring the share was, in fact, not the true shareholder and, thus, had no power to assign the share. While the former law did not provide for a bona fide acquisition, the new § 16 (3) of the Gesetz betreffend die Gesellschaften mit beschränkter Haftung (GmbHG – Private Limited Companies Act) protects the true shareholder while also taking into account the buyer's reliance upon the transferor, considering him or her to be the shareholder. This little revolution results in a new kind of good faith acquisition that mixes different elements of “traditional” bona fide rules and adds new details.