Definition and Nature of Difference Liability
Die Difference Liability is a civil law liability concept that is particularly significant in German corporate, capital market, and compensation law. It describes the obligation of a liable party to compensate for the difference between the financial position of a creditor as intended by law and the position actually achieved. In the context of difference liability, the focus is not on a specific item of damage, but rather on the shortfall or disadvantage difference that a creditor has suffered due to certain misconduct. Difference liability is strictly to be distinguished from so-called performance liability or breach-of-duty liability.
Areas of Application for Difference Liability
Difference Liability in Company Law
In German company law, difference liability is particularly relevant in the formation of corporations, namely the stock corporation (AG) and the limited liability company (GmbH). It ensures that the statutory minimum capital is fully and permanently available.
Formation of a GmbH
When forming a GmbH pursuant to § 9a GmbHG, the shareholders are liable for the difference between the capital actually paid in and the share capital agreed upon in the articles of association. If, for example, a non-cash contribution is made with excessive valuation, there is an obligation to pay in the amount of the valuation difference. The aim is to protect the company’s liable assets from being depleted and to safeguard the interests of creditors.
Stock Corporation (AG)
Difference liability is also of central importance under AG law (§§ 9, 54, 56 AktG). If parts of the share capital are missing due to undervaluation of non-cash contributions or breach of capital contribution rules, the founders, actors, or acquirers are liable for the corresponding difference. This liability ensures that the share capital is fully and unencumbered available.
Difference Liability in Compensation Law
In compensation law, difference liability is applied when calculating the compensable loss according to the so-called difference hypothesis. The standard is the difference in financial position with and without the damaging event. Accordingly, the liability covers the difference between the actual financial position and the hypothetically intact assets.
This is exemplified in § 249 BGB: The injuring party must restore the condition that would have existed if the damaging event had not occurred. The assessment is made by comparing the current financial situation with the hypothetical one.
Difference Liability under Capital Markets Law
In securities and capital markets law, difference liability is especially relevant in cases of prospectus liability. If investors are induced to invest due to incorrect or incomplete prospectus information, liability generally covers the difference between the actual purchase price paid for the securities and their actual value at the time of acquisition. The liability establishes a claim for compensation for the so-called reliance damages.
Legal Basis and Structure
Prerequisites for Liability
The following prerequisites must generally be met to establish difference liability:
- Emergence of an Asset Difference: The creditor must have suffered a financial disadvantage due to the act or omission of the liable party.
- Causality: The disadvantage must be directly attributable to the wrongful conduct.
- Breach of Duty: In most cases, a violation of statutory or contractual duties must be present (except in tort law in the case of statutory strict liability).
Scope of Liability
Liability is generally limited to the difference between the overpaid or underpaid value and the owed value. For example, if non-cash contributions of 50,000 euros are made, but their actual value is only 30,000 euros, there is a subsequent liability for 20,000 euros.
Entitled and Obligated Parties
Difference liability primarily concerns founders, shareholders, and relevant corporate bodies. The corporation itself or its creditors are usually entitled to claim, with creditors often being protected only indirectly.
Distinction from Similar Forms of Liability
Difference from Performance Liability
In contrast to performance liability, which focuses on fulfillment of primary performance obligations, difference liability is concerned exclusively with financial disadvantages that arise from the discrepancy between the target and actual state.
Difference from Capital Contribution Liability
Capital contribution liability concerns the failure to make the full contribution, while difference liability also covers liability for overvaluation or devaluation of contributions, and thus often goes beyond it.
Practical Importance of Difference Liability
Difference liability protects the substance of the company’s liable assets and is intended, in particular in the event of insolvency, to secure advantages for creditors. In capital market cases, it forms a central basis for correcting misinvestments resulting from incorrect disclosures.
Case Law and Literature
Difference liability is the subject of numerous rulings by the Federal Court of Justice as well as relevant literature in company and tort law. Fundamental is the application of the difference hypothesis in calculating damages and securing minimum capital in corporations.
Conclusion
Difference liability is a significant liability concept of German civil law with central importance in company and compensation law. It serves to compensate for financial disadvantages arising from improper performance, insufficient capital contributions, and breaches of duty, thus providing an essential mechanism for creditor protection.
Frequently Asked Questions
In which cases does difference liability apply?
Difference liability applies in situations where a shareholder of a corporation—especially a GmbH—has not fulfilled his obligation to make contributions completely or in a way that fails to meet legal requirements. This mainly concerns cases where cash contributions were made only in part or in circumvention of statutory requirements (e.g., by concealed non-cash or back-and-forth payments), meaning the company’s assets are not freely available to the extent required. In the event of the company’s insolvency, it is determined what assets should have been available and what assets actually exist. The difference between the intended and actual state is to be covered by difference liability, with potential claimants such as the insolvency administrator relying on § 9 GmbHG (especially subsections 1 and 3). Therefore, difference liability is a special statutory form of liability for fulfilling the contribution obligation.
Who is obliged to perform under difference liability?
The shareholder who has not properly fulfilled his contribution obligation is generally obliged to perform under difference liability. It must be determined whether the shareholder can rely on a prepayment that is eligible for setoff, or whether he is responsible, due to culpable acts (such as concealed refund of contributions), for a shortfall in assets. Depending on the circumstances, legal successors (e.g., acquirers of a shareholding) or joint debtors (if multiple shareholders are involved) may also be held liable. It is not uncommon for several shareholders to be jointly and severally liable for the shortfall under § 24 GmbHG.
How is the scope of liability calculated in difference liability?
The liability scope for difference liability is calculated by comparing the company’s actual assets with the amount that should have been available had all contributions been properly and fully made. Not only nominal amounts but also any additional payments, such as premiums or services eligible for setoff against the contribution, are taken into account. Amounts demonstrably and lawfully paid towards the contribution are to be deducted. In cases of refund of contributions, concealed financing transactions, or so-called “concealed non-cash contributions,” the difference between the hypothetical assets and the actual assets forms the subject of the liability claim.
What claims do creditors have in the event of difference liability?
Creditors cannot generally proceed directly against the shareholder in the context of difference liability. The right of enforcement lies primarily with the company or, in the case of insolvency, with the insolvency administrator as the legal representative of the creditors as a whole. The insolvency administrator can assert the difference liability claim to increase the insolvency estate and distribute the received amounts among the creditors according to the rules of the Insolvency Act. Direct recourse by creditors is generally excluded, unless special personal liability situations (such as § 826 BGB – intentional immoral damage) are present.
How do claims arising from difference liability expire (statute of limitations)?
Claims arising from difference liability are generally subject to the standard limitation period in accordance with § 195 BGB, i.e., three years from the end of the year in which the claim arose and the creditor became aware, or should have become aware without gross negligence, of the circumstances giving rise to the claim (§ 199 BGB). In the event of insolvency, however, the limitation period starts anew from the opening of insolvency proceedings pursuant to § 146 InsO. In cases of difference liability relating to non-cash formation or premium on non-cash contributions, the law sometimes stipulates different commencement or limitation periods.
Is a bona fide acquirer of a share affected by difference liability?
Yes, even a bona fide acquiring shareholder can be subject to difference liability under certain conditions. According to § 16 para. 3 GmbHG, the new shareholder acquires the interest “free of encumbrances” unless the list of shareholders entered in the commercial register shows otherwise. However, if contribution obligations were not met, or only partially fulfilled, and this is not clearly ascertainable by the acquirer from the registry documents, liability risks can still arise in individual cases, especially if the acquirer had positive knowledge of the deficiency or acted with gross negligence. Case law on this issue is nuanced and regularly requires careful review of registry and contract documentation.
What legal defenses are available against a claim arising from difference liability?
A shareholder can generally only defend against difference liability with objections referring to the proper or already completed fulfillment of his contribution obligation. This includes proof of actual and complete performance of the contribution, valid offsetting of advance payments, or company agreements that clearly regulate the contribution obligation without constituting circumvention (keyword: prohibition of backdoor non-cash formation). The shareholder can especially exonerate himself if he can objectively prove that the claimed difference no longer exists. Faulty articles of association or defective register entries, on the other hand, do not provide reliable protection against being held liable.
