Insight
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Insight
External Letter of Support: A Suitable Instrument for Liability Under Section 264(3), Sentence 1, No. 2 of the German Commercial Code (HGB), or a Liability Trap?
The exemption provision in § 264(3), sentence 1 of the German Commercial Code (HGB) is a popular means for medium-sized corporate groups to avoid the public disclosure of their financial statements. However, its application requires the assumption of a liability to cover losses pursuant to § 264(3), sentence 1, no. 2 HGB, which can be implemented through an external letter of comfort. This article demonstrates that while this instrument is generally suitable, it can entail significant—and often underestimated—liability risks, and explains how these risks can be mitigated through careful structuring.
in: BetriebsBerater, Issue 22/2026, May 26, 2026, 1217-1280
