For most people it is a personal need to pass on the wealth accumulated during their lifetime, regardless of extent and composition, to the heirs in the event of death. If the personal assets at least partially also consist of company shares, special attention must be paid to this in the context of planning. The heritability of shareholdings differs depending on the form of company and also depends on the provisions of the concluded articles of association.

In the video we explain to you the allowances, the evaluation and the tax rates for inheritance tax and gift tax.

1. heredity of shareholdings in partnerships

The legal starting situation of the inheritability of shareholdings already differs significantly from each other within the partnerships. Depending on whether the (future) deceased is a shareholder of a civil company [GbR], an open commercial company [OHG] or a limited partnership [KG], there is an independent basic legal concept of the estate situation.

1.1. Company participation in a GbR

According to the statutory provision of § 727 para. 1 BGB, the death of a GbR shareholder shall in principle result in the dissolution of the company. The participation in the active company is therefore not inherited under the law, GbR automatically enters the liquidation stage. The heirs are, however, according to § 727 Abs. 2 BGB is obliged to continue the business entrusted to the decedent by the articles of association until the remaining shareholders of the GbR can take care of this otherwise.

1.2. Company participation in an OHG

In contrast to the legal situation at GbR, OHG will not be dissolved by the death of a shareholder. According to § 131 para 3 p. 1 no. 1 HGB, the death of a shareholder leads rather to his departure from the OHG. The company itself is continued by the remaining shareholders. The reason for this conception of the law is in particular the maintenance interest of the company, which within the framework of the OHG, according to the legislature, outweighs the personal association of shareholders attached to the partnership. In the case of OHG, however, the shareholding is not inherited according to the legal starting situation.

1.3. Shareholding in a KG

The shareholders in a limited partnership are divided into personally liable shareholders (complementary) and limited shareholders (commander). § 161 para 2 HGB applies to the legal situation of the OHG. In the event of the death of a general partner, the limited partnership will thus be continued by the remaining shareholders. However, if the sole general partner dies, the limited partnership will be dissolved if no new general partner is found to continue the company. The death of a limited partner, however, leads to m. § 177 HGB on the continuation of the company with the heirs of the deceased shareholder. Shares in a limited partnership are therefore already heritable by law.

1.4. Silent participation / BGB inner company

For both cases, the same applies that the death of the main shareholder/entrepreneur leads to the dissolution of the company, whereas the death of the inner shareholder/silent party leads to the death of the company acc. § 234 Abs. 2 HGB in case of doubt about the continuation of the company with the heirs of the deceased.

1.5. space for design

However, all statutory starting positions described in 1.1 – 1.4. are freely shaped by individual agreements between the shareholders according to their own ideas. Social contract regulations always take precedence over the dispositive legal regulations. The fundamentally existing design options for partnerships are examined in more detail under 3.1.

In contrast to the legal situation with partnerships, the shares in a GmbH acc. § 15 Abs. 1 GmbHG always heritable. The heritability of the GmbH shareholding is also not disposable, so that an exclusion of heritability, even if desired by the shareholders, cannot be made. Shares in a GmbH therefore always belong to the inheritance of the deceased shareholder. If there are several heirs, the business share is not automatically divided among the heirs, so that each heir becomes a shareholder independently. Rather, the community of heirs becomes a GmbH shareholder until the dispute over the inheritance.

3. The design options

Both for shareholders of a partnership and for GmbH shareholders, there are various options to influence the procedure with the shareholder participation in the event of death in one direction or the other through an individually agreed regulation in the company contract.

3.1. Partnerships

Since the statutory regulations for partnerships, as already stated, can be easily amended by the company contract, a different form of the company contract is therefore easily possible. For this purpose, essentially two variants have emerged in design practice.

3.1.1. The continuation clause

If the company contract contains a continuation clause, the deceased shareholder leaves the company while the other shareholders continue the company. This regulation thus corresponds to the initial situation of the OHG (see 1.2.). The heritability of the shareholding is effectively excluded by this regulation and the remaining shareholders do not have to tolerate new co-shareholders. However, since the heirs of the deceased partner are usually entitled to the (fictitious) dispute credit at the time of death, a continuation clause can put the company in financial difficulties. Therefore, in individual cases, a modification of the continuation clause, which limits or completely excludes any severance payment of the heirs, may be appropriate. Such a qualified continuation clause is generally considered legally effective in case law and specialist literature.

3.1.2. The successor clause

Conversely, if the company contract contains a succession clause, the shareholding of the deceased shareholder becomes heritable. The heir of the shareholder comprehensively replaces the deceased and assumes his social contractual rights and obligations, with the exception of special personal rights.

If there is a majority of heirs, however, the association of heirs does not become shareholders as in the case of a GmbH. Instead, a so-called "secondary" is used. Special succession of each heir directly shareholder in proportion to his share of the inheritance. As a result of this special succession, it is possible in the social contractual arrangement to limit the heritability of the shareholding to individual heirs. The restriction can take place, for example, either to certain persons or special personal features/properties. However, if such a design option for the social contract is chosen, a detailed coordination with the testamentary dispositions of the shareholders must be observed. If the two regulations do not agree, such a qualified succession clause can quickly become empty. In this case, the statutory regulation applicable to the subsidiary form of company concerned (cf. 1.1 – 1.4.) applies again.

3.2. GmbH

As already stated, one of the major differences between the GmbH and the partnerships is that the inheritability of the GmbH shares cannot be excluded. However, the company situation after the death of a shareholder can and should be clearly regulated in the articles of association for the purpose of legal certainty. In particular, the exclusion, confiscation and compulsory assignment clauses are available as legal instruments for shaping the social contract in this regard. These clauses may, among other things, allow the company to collect the inherited shares from the heirs with or without severance payment and to continue the company without them. It is also possible in this way, for example, to arrange for the inherited business shares to be transferred to persons to be determined by the company. By cleverly drafting a contract, a solution for the death of a co-shareholder can be achieved by using and combining appropriate contractual provisions.

4th Conclusion

Due to the differences between the different forms of company, an individual contract must always be drawn up in the context of the draft of the respective social contract. This applies in particular in cases where the statutory regulation does not correspond to the ideas and requirements of the shareholders. In no case should a contractual clause of a specimen of a company contract with a different legal form be used without explicit examination. Due to the differences described above, such a procedure is highly unlikely to lead to an appropriate solution. If you are or want to be in the start-up phase with your company If you have your company’s existing social contract reviewed on the occasion of your succession planning, our experts in company law are at your disposal.