In 2006, Carl Tiedemann GmbH & Co. KG issued a series of profit-participation certificates. The company promoted and guaranteed a 7.75% p.a. rate of return. With capital of 2.5 million euros accumulated through the participation certificates, the company intended to extend existing installations and invest substantially into markets in Scandinavia, Eastern Europe, Switzerland and the Mediterranean region.
“Profit participation certificates can be traded on the stock market. In many cases they are bearer instruments and represent a mixture of both equity and debt. You could see them as a hybrid form of a share and bonds issue”, continues Dr. Becker.
The holder of profit participation rights is legally entitled to the repayment of the capital invested at the end of the maturity term. Investors who purchased profit participation rights in the insolvent company should seek legal advice on possible courses of action as quickly as possible, recommends legal expert Dr. Ina Becker, Hamburg.