Germany: The Purchase and Sale of Companies in Germany - Purchase Contract, Asset

Last Updated: 4 December 1997
In addition to =A7 25 of the German Civil Code referred to above, there are other regulations in German law which cause obligations to be transferred to the buyer by force of law in the event of a company sale and purchase. Reference is made to =A7 613a of the German Civil Code with regard to industrial law. Under =A7 613a of the German Civil Code, employment contracts connected with a company or part of a company are transferred to the buyer in the event of sale. In view of the fact that it can be difficult to determine exactly what is meant by a company or part of a company within the meaning of =A7 613a of the German Civil Code in certain cases, this is to be determined in accordance with the protective purpose of =A7 613a of the German Civil Code. For example, the transfer of a company or part of a company may apply even if all the assets concerned are not transferred to the buyer but, on the other hand, it does not automatically have to apply if only individual assets are transferred. Based on the jurisdiction of the Federal Labour Court, the supreme instance in Germany in industrial law matters, the major definition criterion is whether the factual and intangible basis for the use of the labour of the employees concerned are transferred to the buyer. These bases may well be transferred to the buyer with technical and commercial know-how, the market position of the company, current delivery agreements or customer orders, etc.

For the application of =A7 613a of the German Civil Code, it is irrelevant whether the company's previous identity is maintained or not after the date of transfer. Consequently, the purchase of a company or part of a company for the purpose of closure does not exempt the buyer from the obligation arising from =A7 613a of the German Civil Code. This is not the case with a company sale after its closure, however. =A7 613a of the German Civil Code does not apply in this case if the seller had discontinued the business for an indefinite or not insignificant period of time prior to the sale.

With the transfer of employment contracts in accordance with =A7 613a of the German Civil Code, all the related rights and obligations of the employer are basically transferred to the buyer. However, this does not apply in the case of rights and obligations arising from employment contracts which have already been terminated in the transition period. Obligations and commitments for lapsed pension expectancies or for existing pension entitlements of employees who had already left the company on the transfer date remain exclusively with the seller therefore. The previous owner and the new owner are, however, liable as joint and several debtors for obligations and commitments established before the transfer date and not later than one year after the transfer date. Those obligations and commitments arising from pension promises made by the seller to employees working in the company on the transfer date pass exclusively to the buyer.

Despite the ruling included under =A7 613a of the German Civil Code, the transfer of employment contracts does not apply if employees reject the transfer in question.

=A7 613a of the German Civil Code also plays a critical part as far as the termination of employment contracts are concerned after the transfer of the company. Terminations of employment contracts by the previous or new employer based on the company transfer are invalid. Such terminations are only valid if they are justified for another factual reason with the result that the transfer of the company was only the outward reason but not the main reason for the employment contract terminations. Based on the aforesaid, terminations by virtue of a transfer of the company may be justified as operationally essential if the financial or structural situation of the company prior to the date of sale would have necessitated rationalisation measures in the form of discarding manpower or reducing personnel costs.

In addition to the aforesaid employment law regulation, the above-mentioned =A7 419 of the German Civil Code also constitutes special commitments for the seller and/or the buyer by force of law. According to this law, a statutory transfer of liability passes to the buyer regardless of any agreement which may have been made between the buyer and seller if the company which has been sold represents the total assets of the seller, or a significant part thereof. This only involves assets which are subject to enforcement. Consequently, =A7 419 of the German Civil Code does not apply if the owner of a company which represents his/its total estate only transfers the name, goodwill and customers of the company but retains its fixed assets and inventories. Jurisdiction has not yet conclusively specified what percentage of the seller's total estate has to be sold for =A7 419 of the German Civil Code to apply. An asset transfer within the meaning of =A7 419 of the German Civil Code should be excluded if approximately 15 20 % of the assets are retained. The application of this regulation is not invalidated by the fact that the seller receives the purchase price and that the position of his/its estate is re-established to this extent.

=A7 75 of the German Tax Code ("AO") can be extremely important from a taxation point of view. Under =A7 75 of the German Tax Code, the buyer of a company is liable for all corporate taxes and tax deductions arising since the beginning of the calendar year preceding the transfer. =A7 75 of the German Tax Code is based on the philosophy that the party who acquires the economic benefit as a result of the take-over of the company should also take over taxation liabilities which would not be settled otherwise.

For further information please contact Dr Erich Michel, Wessing Berenberg-Gossler Zimmermann Lange, Freiherr-Vom-Stein-Strasse 24-26, Frankfurt am Maim 60323, Frankfurt, Germany- Tel: +496 997 1300, Fax: +496 997 130100.

You may also wish to read through related Wessing Berenberg-Gossler Zimmermann Lange. You can view the entire archive via the Internet on Business Monitor Online (, or via your online provider by entering "Wessing Berenberg-Gossler Zimmermann Lange" and "Business Monitor" as a free text search.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.