Division Agreement Template for Germany

A Division Agreement under German law (Spaltungsvertrag) is a formal legal document governed by the German Transformation Act (Umwandlungsgesetz) that facilitates the separation of a company's assets, liabilities, and operations into two or more entities. This comprehensive agreement details the transfer of business components, employee relationships, contractual obligations, and corporate structures, while ensuring compliance with German corporate, labor, and tax laws. It serves as the foundational document for corporate restructuring, establishing the terms and conditions for the division, including asset allocation, share distribution, and ongoing obligations between the separated entities.

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What is a Division Agreement?

The Division Agreement (Spaltungsvertrag) is a crucial document in German corporate restructuring, used when a company needs to separate its operations, assets, and liabilities into two or more distinct entities. This can be implemented through various forms under the Umwandlungsgesetz, including split-ups (Aufspaltung), spin-offs (Abspaltung), or hive-downs (Ausgliederung). The agreement is essential for corporate reorganizations, strategic realignments, or preparation for partial sales or listings. It must comply with strict German legal requirements, including notarization, and typically requires shareholder approval and registration with the commercial register. The document comprehensively addresses asset transfer, employee transitions, tax implications, and ongoing obligations between the separated entities, making it fundamental for significant corporate transformations.

What sections should be included in a Division Agreement?

1. Parties: Identification of the transferring company and receiving company(ies), including full legal names, registration details, and addresses

2. Background: Context of the division, including company history, reason for division, and type of division (split-up, spin-off, or hive-down)

3. Definitions: Definitions of key terms used throughout the agreement

4. Division Structure: Detailed description of how the company will be divided, including the legal form of division under UmwG

5. Transfer of Assets and Liabilities: Comprehensive provisions regarding the transfer of assets, liabilities, and legal relationships

6. Consideration and Share Allocation: Details of any shares or other consideration to be issued in exchange for transferred assets

7. Effective Date: Specification of the economic effective date (Spaltungsstichtag) and closing conditions

8. Employee Matters: Provisions regarding the transfer of employees and their rights

9. Tax Provisions: Basic tax-related provisions and allocations of tax liabilities

10. Post-Division Obligations: Ongoing obligations and cooperation requirements between the parties

11. Warranties and Representations: Basic warranties regarding authority, ownership, and compliance

12. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction

What sections are optional to include in a Division Agreement?

1. Intellectual Property Rights: Detailed provisions for IP transfer and licensing - required when significant IP assets are involved

2. Real Estate: Specific provisions for real estate transfer - needed when property assets are being divided

3. Information Technology: IT systems separation and transition services - relevant for technology-dependent businesses

4. Competition Restrictions: Non-compete and territory allocation provisions - important for market-sensitive divisions

5. Pension Schemes: Specific provisions for pension obligations - required when pension schemes are affected

6. Transition Services: Provisions for temporary service arrangements between divided entities - needed for complex operational separations

7. Data Protection: Specific GDPR and data protection provisions - required when significant personal data processing is involved

8. Environmental Matters: Environmental liability allocation - necessary for industries with environmental impacts

What schedules should be included in a Division Agreement?

1. Asset Register: Detailed list of all assets being transferred, including physical assets, contracts, and intellectual property

2. Employee List: Complete list of transferring employees and their key employment terms

3. Contract Register: List of contracts being transferred or split between entities

4. Real Estate Schedule: Details of any real estate being transferred, including relevant permits and licenses

5. Financial Statements: Closing balance sheet and relevant financial statements

6. Tax Allocation Schedule: Detailed allocation of tax assets, liabilities, and responsibilities

7. Intellectual Property Register: Comprehensive list of IP rights and their allocation

8. Pension Obligations: Details of pension schemes and their division between entities

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Germany

Publisher

Genie AI

Cost

Free to use

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