Share Transfer Restriction

A share transfer restriction (German: Vinkulierung) is a restriction in the articles of association on the transferability of shares. A restricted share can only be validly transferred to a third party with the consent of the company, the shareholders' meeting or certain co-shareholders. Such restrictions are widespread in the German Mittelstand for GmbH shares and registered shares with restricted transferability.

The purpose is to control the shareholder base and prevent unwanted third parties from entering. Especially in family businesses and among closely connected shareholders, this ensures that only persons with aligned interests can acquire shares. For the M&A process, the restriction has considerable practical significance: before a share deal, it must be examined whether and in what form consent resolutions need to be obtained.

A careful review of transfer restriction clauses is part of every due diligence in a share sale. The provisions are found in the articles and additionally in the shareholders' agreement. We coordinate the necessary steps as part of our M&A advisory.