Unfortunately, that is a misconception. If one or more shareholders have not fully paid their capital contributions, the remaining shareholders are liable. If the shareholders obligated to pay fail to pay their share of the share capital, the remaining shareholders must cover the shortfall in proportion to their ownership interests. This risk exists not only in the event of insolvency, but also if shareholders prove to be unable to pay once the remaining payment is demanded.
However, certain conditions must be met in order to require the remaining shareholders to cover the shortfall:
No payment can be obtained from the party obligated to pay.
The outstanding capital contribution cannot be covered by the sale of the shareholder’s interest.
The defaulting shareholder must have been subject to a legally effective forfeiture (compulsory withdrawal).
Claims for payment against the legal predecessor(s) of the defaulting shareholder must have been unsuccessfully asserted or must be deemed futile.
This last point makes it clear that anyone who sells a GmbH share to another party cannot rest assured that they are in the clear. The last legal predecessor—and any earlier legal predecessors—registered with the company are liable for any unpaid portion of the excluded shareholder’s capital contribution.
This liability is, however, limited to a period of five years. It begins on the day the transfer of the share to the legal successor is duly registered. Ultimately, a GmbH share offers “limited liability” compared to a share in a partnership; however, every GmbH shareholder should be thoroughly informed about the existing risks. When purchasing a GmbH share, these points must always be reviewed and are generally the subject of what is known as due diligence.
