In Germany, capital management companies are generally required to redeem issued share certificates at the market price. However, a company may suspend redemption for a maximum of two years if bank balances (cash at bank) and other liquidity are insufficient to pay the redemption price and ensure proper ongoing management („red alert“). For the first time in December 2005, DB Real Estate (Deutsche Bank’s real estate fund company) suspended the redemption of unit certificates. The chain reaction feared by experts (run on all funds) failed to materialize. It was not until 2008, when the subprime crisis escalated into an (international) financial crisis, that numerous funds introduced a redemption ban. – In this case, however, the holder of a share certificate can sell it on the open market, where the price is determined by supply and demand. Under certain circumstances, a considerable loss may have to be accepted.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/

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