Equity loans are similar to silent participation, but creditors and debtors are not real. The loan is granted by one or more natural or legal persons to a company. In the case of a participating loan, the lender receives a share of the company’s profits or turnover instead of repayment of fixed capital or interest. The term partarian comes from the Latin verb partire, in English: divide. A partial loan is therefore a loan that divides something among the participants – the turnover or profit resulting from the project for which the loan was granted.
A participation loan is an equity financing in the form of a loan in the sense of 488 Civil Code (BGB). When granting a loan, a profit share or share of the turnover of a company or a transaction for which the loan has been granted (in particular for financing) is set as remuneration for the granting of the loan (participative = performance-based).
In addition to profit-sharing, interest may be agreed upon, which must focus on profit-sharing. The investment law, which came into force primarily on July 1, 2012, did not apply to the equity investment loan.
Since the entry into force of the Small Investor Protection Act
Which came into force in 2015, the participation loan has been included in § 2 (3) no. 2 as an investment within the meaning of the Investment Assets Act in order to further prevent the obligatory circumvention of the prospectus obligation for a refinancing amount of USD 100,000 or more and the investor in the obligation to take.
Loans are usually not loss-making and therefore are not subject to the concept of a mutual fund and thus not the so-called short form. Nor is this assessment influenced by the so-called Qualified Subordination, which is often agreed in connection with equity loans, as it is not a loss participation, but only a temporary right of retention.
The objective is to prevent profit-sharing and interest payments for the borrower from reducing the operating profit to the full rate, while profit-sharing and interest payments to the lender are taxed only at the withholding tax rate.
The loan must be recognized in the consolidated balance sheet of the borrower
The valuation is based on the repayment amount and regularly corresponds to the nominal amount of the loan. In the contract design as an investment product, it is very important in addition to the differentiation of tacit participation to make the loan so that it is not a custody business in the sense of 1 para. 1 no. 1 Banking Act (“KWG”). Otherwise, a bank concession in the sense of 32 KWK would be required. Participation loans are often subject to legal deficiencies, so that the BAFin in terms of borrowing repeatedly issued prohibitions on the basis of the acquisition or liquidation orders.