Private Equity Minority Investments - Universität St.Gallen

Part Two: Legal Framework and ToolsàààThe GmbH’s articles of association may provide for obligations formembers to make supplementary financial contributions and toprovide ancillary performances. 410The transferability of a member's interest is subject torestrictions. 411The GmbH laws provides for both the withdrawal and expulsion ofa member. 412 Moreover, the GmbH allows its members to requestthe dissolution of the company if based on a reason cited in thearticles of association. 413Table 3: Capital-based and person-oriented elements of the GmbHBKey Legal DocumentsBefore examining what voice and exit rights and arrangements PEMIs cannegotiate for to protect their interests (the material perspective), this sectionfirst outlines the principal documents to do so (the formal perspective). Ageneral distinction must be made between structuring minority investmentsat the corporate level and the contractual level. At the corporate level, thearticles of association and organizational regulations are key legaldocuments. Contractual voice and exit rights are typically found in shareholders’agreements. Before exploring individual structuring options, theseprincipal legal documents are briefly described.1 Articles of Association1.1 TermThe articles of association are essentially the constitution for both the stockcorporation and the GmbH. 414 They determine the company’s governancestructure, stipulate the rights and duties of corporate organs and members,and determine the corporate decision-making process at the general meeting(meeting of members in a GmbH), among other organizational aspects. 415410CO 772 II, 776a I Sec. 1, 795 et seqq.411CO 786.412CO 822 et seqq. The articles of association may grant a right to withdraw from the company(CO 776a I Sec. 17). They may also provide for special grounds for the expulsion of amember (CO 776a I Sec. 18).413CO 821 I Sec. 1.414See SCHENKER, Basler Kommentar, CO 626, N 1; FORSTMOSER/MEIER-HAYOZ/NOBEL, § 7,N 2; ROTH PELLANDA, p. 87, N 165. With respect to the GmbH, see SCHENKER, BaslerKommentar, CO 776, N 1.415See FORSTMOSER/MEIER-HAYOZ/NOBEL, § 7, N 6.80