At signing, the purchase agreement and its annexes are signed. For the sale of shares in a German GmbH, notarisation is required under § 15(3) and (4) GmbHG. The notary reads out the agreement including the annexes, which can take several hours for extensive contracts.
For the seller, signing marks the end of negotiations. Purchase price, warranties and liability are fixed. Between signing and closing, the seller must continue to run the company in the ordinary course of business. Major decisions usually require the buyer's consent.
If signing and closing coincide, this is referred to as simultaneous signing and closing. This is common among mid-sized companies when no approvals are required. If merger control or foreign investment screening is required, there are often weeks to months between the two dates.
Example
Hypothetical example: The purchase agreement for 100 percent of a GmbH is notarised on 15 March. Because the Federal Cartel Office must review the merger, closing is planned for 30 April. Until then, the seller may not make any investment above €50,000 without the buyer's consent.
Signing vs. closing
| Feature | Signing | Closing |
|---|---|---|
| What happens | Agreement is signed | Agreement is completed |
| Ownership | Remains with the seller | Passes to the buyer |
| Purchase price | Agreed | Paid |
| Requirements | Agreement between the parties | Closing conditions fulfilled |
Sources
- Gesetz betreffend die Gesellschaften mit beschränkter Haftung (GmbHG), § 15 Übertragung von Geschäftsanteilen, Bundesministerium der Justiz / gesetze-im-internet.de
- Gesetz gegen Wettbewerbsbeschränkungen (GWB), § 41 Vollzugsverbot, Entflechtung, Bundesministerium der Justiz / gesetze-im-internet.de