Overview and Legal Framework
The question of the admissibility of agreements regarding claims for differential liability under stock corporation law is of particular importance in the case of a non-cash capital increase. The core issue is whether, and to what extent, creditor protection provisions and mandatory stock corporation law provisions can be modified or excluded by contractual agreements between the company and the shareholder. In its judgment of December 6, 2011 (Case No. II ZR 149/10), the Federal Court of Justice (BGH) established important principles on this matter, the scope and impact of which are of considerable practical and legal significance for both stock corporations and the investors involved.
Non-Cash Capital Increase and Differential Liability Claims
Functionality of the Non-Cash Capital Increase
In a non-cash capital increase, the share capital of a stock corporation is raised not by depositing money but by transferring assets, so-called contributions in kind. This structure involves particular risks as the valuation of the assets contributed is regularly complex and can have significant effects on the company’s balance sheet and the interests of creditors.
Origination and Nature of the Differential Liability Claim
Claims for differential liability in German stock corporation law (§§ 9, 36a AktG) primarily ensure that contributions in kind are at least equal in value to the share to be granted. If the nominal value of the shares exceeds the actual value of the contribution in kind, the company has a claim for compensation of this difference against the contributor—the so-called differential liability claim. This liability primarily serves creditor protection and is legally mandatory to a large extent.
BGH Decision on Contractual Arrangements Regarding Differential Liability
Initial Situation of the Legal Dispute
The judgment was based on a scenario in which contractual agreements were made in the context of a non-cash capital increase that could impair the enforcement of claims for differential liability contrary to statutory provisions. The key legal question was whether and to what extent such agreements can remain valid, especially if they result in a permanent deprivation or significant restriction of the differential liability claim.
Key Findings of the Federal Court of Justice
The BGH made it clear that agreements leading to the complete or partial undermining of the differential liability claim are, as a rule, inadmissible and void. The decisive factor here is the protective purpose of the regulations set forth in §§ 9, 36a AktG: The preservation and safeguarding of share capital in the interest of creditors is mandatory and cannot be circumvented by individual agreements between the parties involved. The protective scope covers all measures that would prevent or hinder an effective equalization of the difference.
Limits of Freedom of Structuring
According to the ruling, the contractual exclusion of differential liability is prohibited, as are agreements that de facto negate the scope of liability (e.g., by retrospective revaluation of the contribution in kind in favor of the contributor or by agreements regarding only temporary liability). Furthermore, merely the risk of a permanent shortening of the liability claim is sufficient to render the agreement invalid. Freedom of structuring under corporate law exists only insofar as the mandatory protective mechanisms of the law are observed.
Practical Implications for Companies and Investors
Significance for the Practice of Non-Cash Capital Increases
The BGH ruling emphatically increases the requirements regarding the formal and substantive structuring of agreements in connection with non-cash capital increases. Any arrangement that is capable of restricting or undermining the differential liability claim risks being void and having no legal effect in any subsequent dispute.
Implications for Liability Risks and Contract Review
Companies and investors involved in the capital increase should be aware that both explicit and implicit limitations of liability in connection with contributions in kind are subject to strict scrutiny. The judgment further stresses the need for thorough examination and transparent documentation of the valuation basis of contributions in kind. Any subsequent amendment agreements made after the entry of the capital increase must also be assessed by the same standards.
Summary and Outlook
The decision of the Federal Court of Justice confirms the strict binding nature of corporate agreements in the context of non-cash capital increases to the mandatory requirements of the Stock Corporation Act for the protection of corporate capital. The judgment makes it clear to the parties involved that modifications or exclusions of differential liability are subject not only to formal but also to substantive review and are, in case of doubt, entirely invalid.
For companies, investors, and high-net-worth individuals involved in structuring and implementing non-cash capital increases under stock corporation law, the decision offers important guidelines. If, in connection with the implementation of a non-cash capital increase, there are uncertainties regarding the permissibility of certain agreements, a well-founded legal review can provide clarity. The Rechtsanwalt of MTR Legal, who specialize in stock corporation law, are available nationwide and internationally to assess and assist with such matters.
