How do I receive dividends, exit and liquidation proceeds?
Which payments you are entitled to as a holder of profit participation rights and how they are calculated.
As a holder of profit participation rights, you receive a pro-rata share of dividends, exit and liquidation proceeds, just like a shareholder. How these rights are structured legally is explained in What are profit participation rights?
Dividends
Dividends let you share in the company's current profits. This requires a shareholder resolution on the appropriation of profits for a financial year.
You are entitled to dividends if you hold the profit participation rights at the time this resolution is published. To determine this, an admin of the company creates a snapshot on the platform: a record of who holds which profit participation rights at that moment. The dividends are paid into a payout account set up for this purpose, from which you withdraw them via your account.
Example calculation
Formula: GBA = GR / VGK × VG
- GBA = profit participation entitlement (the amount sought)
- GR = number of your profit participation rights
- VGK = virtual total capital (sum of all profit-entitled shares: shareholders plus profit participation rights)
- VG = available profit according to the shareholder resolution
A GmbH has a share capital of €25,000, divided between two shareholders, and has also issued 5,000 profit participation rights. The shareholder resolution provides for a distribution of €100,000. An investor holds 1,000 profit participation rights.
1,000 / 30,000 × €100,000 = €3,333.33 dividend for the investor
Liquidation proceeds
If a company is liquidated, for example after insolvency, shareholders and holders of profit participation rights receive liquidation proceeds in proportion to their stake. However, all of the company's liabilities are settled first; payouts to shareholders and holders of profit participation rights are subordinated. The calculation follows the same principle as for dividends.
Exit proceeds
In an exit, you have three years to return your profit participation rights and receive a pro-rata payout from the exit proceeds. The period starts when the exit is published, for example on the company's website. The payout is made no earlier than seven months after the exit.
An exit occurs if at least one of these conditions is met:
- sale or transfer of more than 50% of the share capital
- sale of more than 50% of the tangible or intangible assets at market value
- share conversion, merger or transformation of the company
- initial public offering
Example calculation
Formula: P = GRE / VSK × RP
- P = exit proceeds due to you
- GRE = number of your profit participation rights at the time of the exit
- VSK = virtual share capital (calculated like the VGK for dividends)
- RP = repayment amount after deduction of liquidation preferences
The process is similar to dividends: instead of a snapshot, the returned profit participation rights count. They are then cancelled.