Succession Clauses in the Articles of Association — Partnerships and Companies Compared
The death of a shareholder is not an exceptional event. It is a legal occurrence that affects every company sooner or later — and one that, without preparation, can have significant consequences.
Limited liability companies — universal succession as the starting point
In limited liability companies, shares pass to the heirs by way of universal succession. The articles of association may restrict entry through redemption or transfer clauses — but require a precise compensation provision.
Partnerships — articles of association take precedence
In partnerships, company law takes precedence over succession law. The articles of association may provide for simple, qualified or special succession clauses. Where no provision exists, dissolution may threaten.
The critical interaction
Articles of association and will must be coordinated. Where succession to the shareholding and succession to the property diverge, a de facto split of operations may terminate. Compensation clauses at book value can significantly reduce the forced share.
Conclusion
The legal form determines the starting point — the articles of association determine the outcome. Those who fail to coordinate both leave succession to chance.
FAQ
- Do heirs automatically join a GmbH?
- Yes — GmbH shares pass to heirs by way of universal succession. The articles of association may restrict entry through redemption or transfer clauses.
- What happens in a partnership without a succession clause?
- It depends on the legal form. In a civil law partnership, dissolution may threaten. The heirs receive a compensation claim — not the shareholding.
- What is the difference between a simple and a qualified succession clause?
- The simple clause permits all heirs to enter. The qualified clause restricts entry to persons meeting defined requirements — such as family members or professional practitioners.