Founder Stock Purchase Agreement for Germany

Founder Stock Purchase Agreement Template for Germany

A Founder Stock Purchase Agreement under German law (governed by the German Stock Corporation Act and Limited Liability Companies Act) is a legal document that formalizes the sale and transfer of company shares from a founding member to the company or another entity. This agreement outlines the terms and conditions of the share transfer, including purchase price, payment terms, representations and warranties, and closing conditions. It must comply with German corporate law requirements, including notarization requirements for GmbH share transfers, and addresses specific tax implications under German tax law. The agreement typically includes provisions for ongoing obligations, confidentiality, and dispute resolution under German jurisdiction.

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What is a Founder Stock Purchase Agreement?

The Founder Stock Purchase Agreement is a crucial document used when a founding member of a company sells their shareholding, either back to the company or to another entity. This agreement is particularly important in the German corporate context, where strict regulatory requirements govern share transfers, especially for GmbH companies where notarization is mandatory. The document addresses all aspects of the share transfer, including valuation, payment terms, tax implications, and ongoing obligations. It becomes necessary during company restructuring, founder exits, or strategic reorganizations. The agreement must comply with German corporate law, including the German Stock Corporation Act (Aktiengesetz) for AGs and the Limited Liability Companies Act (GmbH-Gesetz) for GmbHs. It typically includes comprehensive representations and warranties, conditions precedent to closing, and may also address continued involvement of the founder in the company's operations.

What sections should be included in a Founder Stock Purchase Agreement?

1. Parties: Identification of the selling founder(s) and the purchasing company/entity

2. Background: Context of the agreement and brief description of the transaction

3. Definitions: Key terms used throughout the agreement

4. Sale and Purchase of Shares: Core transaction terms including number of shares, price, and class of shares

5. Purchase Price and Payment: Details of consideration and payment mechanics

6. Closing Conditions: Prerequisites that must be met before the transaction can complete

7. Closing: Mechanics and timing of the closing process

8. Representations and Warranties of the Seller: Founder's confirmations regarding ownership, authority, and company status

9. Representations and Warranties of the Purchaser: Buyer's confirmations regarding authority and capacity to purchase

10. Covenants: Ongoing obligations of the parties

11. Tax Matters: Treatment of tax obligations and allocations

12. Confidentiality: Provisions regarding non-disclosure of agreement terms and company information

13. Notices: Communication procedures between parties

14. Governing Law and Jurisdiction: Confirmation of German law application and dispute resolution forum

15. Miscellaneous: Standard boilerplate provisions including severability, entire agreement, and amendments

What sections are optional to include in a Founder Stock Purchase Agreement?

1. Earn-out Provisions: Used when part of the purchase price is contingent on future performance

2. Non-Competition and Non-Solicitation: Include when founder will be restricted from competing activities

3. Continuing Employment: Required when founder will maintain employment role post-transaction

4. Intellectual Property Assignment: Include when specific IP rights need to be transferred with shares

5. Escrow Arrangements: Used when part of purchase price is held in escrow

6. Tag-Along Rights: Include when other shareholders need right to join in future sales

7. Drag-Along Rights: Used when majority shareholders need right to force minority participation in future sales

8. Investment Representations: Required for compliance with securities laws if applicable

What schedules should be included in a Founder Stock Purchase Agreement?

1. Schedule 1 - Share Details: Detailed description of shares being transferred including share certificates numbers

2. Schedule 2 - Company Information: Key details about the company including capital structure and subsidiaries

3. Schedule 3 - Closing Deliverables: List of documents and actions required at closing

4. Schedule 4 - Disclosure Schedule: Exceptions to representations and warranties

5. Appendix A - Share Transfer Form: Official form for recording share transfer in company registers

6. Appendix B - Shareholders' Resolution: Required corporate approvals for the transfer

7. Appendix C - Registration Rights: If applicable, terms for registration of shares

8. Appendix D - Calculation of Purchase Price: If complex pricing mechanism is used

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 | Serial Founder & Legal AI Author

Jurisdiction

Germany

Publisher

Genie AI

Document Type

Purchase Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Technology

Software Development

E-commerce

Financial Services

Healthcare

Biotechnology

Manufacturing

Professional Services

Media and Entertainment

Clean Technology

Real Estate

Consumer Goods

Telecommunications

Education Technology

Transportation and Logistics

Relevant Teams

Legal

Finance

Corporate Development

Executive Leadership

Compliance

Tax

Business Development

Corporate Secretariat

Investment

Mergers & Acquisitions

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Corporate Lawyer

Legal Director

Company Secretary

Head of Legal

Corporate Development Director

Investment Manager

Founder

Co-founder

Board Member

Managing Director

Finance Director

Compliance Officer

Tax Director

Business Development Director

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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