Document background
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.
