Term · Risks & Red Flags
Squeeze-out
In briefIn a squeeze-out, minority shareholders are pushed out of the company on a statutory basis against a cash settlement; in Germany several variants exist, each with its own requirements. For smaller companies with a dominant anchor shareholder it can end the holding period of a position involuntarily.
Definition
A squeeze-out is the statutorily governed exclusion of minority shareholders against a cash settlement. In Germany there are several variants with differing requirements, including under the AktG (Stock Corporation Act), the UmwG (Transformation Act) and in a takeover-law context.
How it is calculated
Formula. Not a metric. Thresholds, procedures, valuation and legal protection depend on the specific statutory variant.
Why it matters for small caps
For smaller listed companies with a dominant anchor shareholder, a squeeze-out is a real scenario that can involuntarily end the holding period of a position.
Common misreadings
- A uniform 95 percent threshold is often presented as generally applicable. The merger-law squeeze-out can, under different conditions, already be relevant from 90 percent.
In the process
Frequently asked
What is a squeeze-out?
It is the compulsory exclusion of minority shareholders against a cash settlement. Its legal bases include stock-corporation law and transformation law.
Under what conditions is a squeeze-out possible?
Thresholds, procedure, calculation of the settlement and legal protection follow the particular statutory variant chosen. A dominant major shareholder is the typical starting point.
Does the 95 percent threshold always apply to a squeeze-out?
No, this is often presented blanketly as generally applicable. The merger-law squeeze-out can already become relevant from around 90 percent.
Related terms
Sources
Primary
Bundesministerium der Justiz – Aktiengesetz (AktG)
https://www.gesetze-im-internet.de/aktg/
https://www.gesetze-im-internet.de/aktg/
Methodology
Bundesministerium der Justiz – Wertpapiererwerbs- und Übernahmegesetz (WpÜG)
https://www.gesetze-im-internet.de/wp\_g/
https://www.gesetze-im-internet.de/wp\_g/
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.