BGH II ZR 71/24 — Call Options in Management Equity: Validity and Limits
With its judgment of 10 February 2026, the German Federal Court of Justice developed its case law on forced exit clauses in management equity models. The decision provides legal certainty for private equity transactions.
Facts
A managing director acquired an indirect participation of 0.38% at market value of EUR 149,984.46. Following his removal, the co-shareholders exercised the call option at EUR 35,173.68 — a loss of approximately 77%. The BGH reversed and remitted.
The rule and the exception
Forced exit clauses contravene § 138 para. 1 BGB as a matter of principle. They are valid only where materially justified — where the shareholding was granted by reason of the manager’s office and carries no independent significance alongside it.
Exit proceeds participation and economic risk
The BGH makes clear that exit proceeds participation fulfils the incentive and retention function equally to a current profit share. The entrepreneurial risk assumed does not establish a conceptually independent shareholding.
The limit: exercise review under § 242 BGB
Exercise is impermissible where it is designed to exclude the manager from an already foreseeable exit or where a deliberately adverse valuation basis is applied.
Practical note
The annex character must be consistently documented in the participation agreement, articles of association and internal correspondence. Upon exercise, timing and valuation basis must be carefully documented.
FAQ
- Are call options in management equity valid following the BGH judgment of 10 February 2026?
- Yes — where the participation is structured as a functional annex to the managerial office and consistently documented.
- Does exit proceeds participation establish an independent shareholding?
- No. The BGH makes clear that exit proceeds participation fulfils the incentive and retention function equally.
- What risks arise upon exercise of the call option?
- Exercise is subject to review under § 242 BGB. Exercise designed to circumvent an imminent exit participation is impermissible.