Property Company / Operation


Indirect property investment invariably requires – apart from the mutual property fund (MPF) – a legal entity which has to be formed, operated, restructured and, if necessary, liquidated:

  • Formation
  • Operation / company management
  • Restructuring / merger
  • Liquidation


The formation of a legal entity requires – apart from the mutual property fund or contractual investment fund and other specific features of the law governing collective investment schemes – the following formation documents irrespective of the legal entity:

  1. Articles of incorporation
  2. Entry in the Companies Register (CR)
  3. Stamp Declaration
  4. Organisational rules
  5. Poss. Shareholder Commitment Contract (SCC)

Operation / Company Management

All legal entities and the mutual property fund or contractual investment fund have one thing in common, namely that the legal entity which holds the properties must be managed as a company. The day-to-day business issues are:

  1. Internal decision-making process
    • Property company limited by shares
      1. Meeting of the Board of Directors
      2. Annual General Meeting (AGM)
    •  Property funds
      1. Contractual contacts
    • Property investment trusts
      1. Meeting of the Board of Trustees
  2. Management and representation
  3. Investments / day-to-day business
  4. Refinancing with borrowed capital
  5. Involvement of investors
  6. Legal obligation to keep records
  7. Creation of reserves
  8. Distribution of profits / assumption of losses
  9. Taxation

Restructuring / Merger

The legal entities that are formed for the purpose of indirect property investment may also require restructuring. A wide variety of reasons for restructuring or a shake-up are conceivable.


  1. Market concentration (e.g. property companies listed on the stock market or listed before official hours)
  2. Insolvency (e.g. property funds)
  3. Unfavourable refinancing (e.g. private equity property companies or unprofessional property companies limited by shares)
  4. Unsuccessful property management (e.g. gap between rental income from long-term rental agreements and the mortgage interest payments)
  5. Property development in the wrong locations, with the wrong use and at the wrong time
  6. And so on


The legal entity which holds assets from the indirect property investment is liquidated in accordance with the winding-up and liquidation rules of the relevant legal entity.

Print / Share: