A Preference Shares Agreement is a crucial document for German companies seeking to raise capital while maintaining existing control structures. Used primarily when companies need to attract investors with preferential rights to dividends or capital returns, this agreement type is governed by German law, particularly the Aktiengesetz (Stock Corporation Act). The document details the specific rights and privileges attached to preference shares, including dividend priorities, voting rights (or limitations thereof), and capital participation rights. It's particularly relevant for private and public German companies looking to create different share classes for strategic investors or as part of their capital structure optimization. The agreement must carefully balance the preferential rights granted to new investors with the interests of existing shareholders while ensuring compliance with German corporate law requirements.
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1. Parties: Identification of the company issuing the preference shares and the preference shareholders
2. Background: Context of the preference share issuance, including company status and purpose of the issuance
3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement
4. Share Capital and Preference Shares: Details of the preference shares including nominal value, number of shares, and share class designation
5. Dividend Rights: Specification of preferential dividend rights, including amount, calculation method, and payment terms
6. Voting Rights: Description of voting rights attached to the preference shares, including any limitations or special voting privileges
7. Capital Rights: Rights in relation to capital events, including return of capital and participation in surplus assets on winding up
8. Transfer Restrictions: Limitations and procedures for transferring preference shares
9. Corporate Governance: Governance rights of preference shareholders, including any board representation rights
10. Notices: Procedures for giving notices under the agreement
11. General Provisions: Standard contractual provisions including governing law, jurisdiction, and amendments
1. Conversion Rights: Terms for converting preference shares to ordinary shares, if applicable
2. Redemption Rights: Terms for redemption of preference shares, if redeemable
3. Anti-dilution Provisions: Protections against dilution of preference shares, particularly relevant for convertible preferences
4. Tag-Along Rights: Rights of preference shareholders to join in sale of shares by majority shareholders
5. Drag-Along Rights: Rights to require preference shareholders to join in sale of company
6. Information Rights: Special information rights for preference shareholders beyond statutory requirements
7. Pre-emption Rights: Rights of first refusal on new share issuances
8. Change of Control Provisions: Special rights or protections in case of change in company control
1. Schedule 1: Share Terms: Detailed terms and conditions of the preference shares including dividend rates and calculation methods
2. Schedule 2: Form of Share Certificate: Template for the preference share certificates
3. Schedule 3: Corporate Resolutions: Copies of relevant corporate resolutions authorizing the preference share issuance
4. Schedule 4: Subscription Form: Form for subscribing to the preference shares
5. Schedule 5: Articles Amendments: Required amendments to the company's articles of association
6. Schedule 6: Shareholders Register: Current shareholders register showing existing shareholding structure
7. Appendix A: Dividend Calculation Examples: Examples illustrating the calculation of preference dividends in various scenarios
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