In a decision issued at the end of 2009 (case reference 3/13 O 46/09), the District Court (LG) Frankfurt a.M. expressed doubts as to the validity and enforceability under German law of a share purchase and transfer agreement regarding shares in a German limited liability company (GmbH) that had been recorded in Basel (Switzerland) by a Swiss notary public.
The German Limited Liability Companies Act (GmbHG) requires that a sale and transfer of shares in a GmbH be recorded by notarial deed to be effective. Although the German Federal Civil Court (BGH) and the District High Court (OLG) Frankfurt a.M. previously ruled that the notarial recording of a share purchase and transfer agreement recorded in Zurich and Basel, respectively (in each case by a Swiss notary public), was sufficient to fulfill the requirements under the GmbHG, the LG Frankfurt has noted that a revision of the GmbHG that became effective in November 2008 requires a notary public who has contributed to the change in the shareholders of a GmbH to provide the court with an updated list of shareholders, thereby conferring a public authority on the notary public (section 40 para 2 GmbHG). According to the LG Frankfurt a.M., a notary public in Basel could not satisfy the requirements of this section because it has no public authority under German law.
To avoid doubt, however, the court followed the previous decisions of the BGH and the OLG Frankfurt a.M. and upheld the validity of the share purchase agreement. The decision has nevertheless re-opened the debate on the validity of notarial recordings abroad, so that notarial deeds involving a GmbH not recorded in Germany may be at risk.
If you have any questions, please contact Dr. Tim Luthra of Raupach & Wollert Elmendorff Rechtsanwaltsgesellschaft mbH.
