Pledging shares in German limited liability companies

Malte L. Bruhns

The pledge of shares in German limited liability companies (GmbH) has always been an important means of creating security for bank loans and in connection with purchase price payments under M&A transactions in Germany. With the increasing presence of foreign investors and lenders on the German market and a continued trend of corporate transactions being financed by third parties, the pledge of shares in German limited liability companies increasingly plays an important role also in the context of international acquisition financing. This article provides a systematic overview of the most important issues which need to be considered when drafting agreements for the pledge of shares in German limited liability companies.

Law and Financial Markets Review, Volume 1, Number 1, January 2007, pp. 25-30(6)