Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Part 3
Legal relationships of the company and of the shareholders
Section 53a
Equal treatment of stockholders
Subject to the same pre-requisites being given, stockholders are to be treated equally.
Section 54
Principal duty of stockholders
(1) The duty of the stockholders to make contributions is limited by the issue price of the shares of stock.
(2) Unless the by-laws specify contributions in kind, the stockholders are to pay in the issue price of the shares of stock.
(3) The amount called in prior to application for entry of the company in the register may only be paid in in legal tender or by crediting the amount to an account maintained by the company, or the management board, with a credit institution or an enterprise pursuing activities governed by section 53 (1), first sentence, or section 53b subsection (1), first sentence, or subsection (7) of the Banking Act (KWG), such that it is available to be disposed over by the management board at its discretion. Receivables of the management board resulting from these payments towards the contributions shall be deemed receivables of the company.
(4) The company’s claim to having the contributions made shall become statute-barred ten (10) years after it has arisen. Where insolvency proceedings are opened for the company’s assets, the prescription shall not commence prior to the expiry of six (6) months after the time at which said proceedings were opened.
Section 55
Incidental duties of the stockholders
(1) Where the transfer of the shares of stock is bound to the company’s consent, the by-laws may impose on stockholders the duty to perform on a recurrent basis, such performance not consisting of money, in addition to making contributions to the share capital. In this context, the by-laws are to determine whether such performance is to be provided in return for monetary consideration or without such monetary consideration. The duty to perform and its scope are to be set out in the share certificates and temporary share certificates.
(2) The by-laws may stipulate contractual penalties for any case of failure to comply with the duty, or to properly comply with it.
Section 56
No subscription of a company’s own shares of stock. Acquisition of shares of stock for the account of the company or by a controlled enterprise or an enterprise in which a majority ownership interest is held
(1) The company may not subscribe to its own shares of stock.
(2) A controlled enterprise may not acquire shares of stock in the controlling company, and an enterprise in which a majority ownership interest is held may not acquire shares of stock in the company holding such majority ownership interest, neither as founders nor as subscribers nor by way of exercising a right of exchange or pre-emptive right for newly issued shares of stock conferred in the context of a conditional capital increase. A violation of this regulation will not cause the acquisition to be invalid.
(3) Anyone who has acquired, as a founder or as a subscriber or by way of exercising a right of exchange or pre-emptive right for newly issued shares of stock conferred in the context of a conditional capital increase, a share of stock for the account of the company or for the account of a controlled enterprise, or of an enterprise in which a majority ownership interest is held, may not rely on the fact that he has not acquired such share of stock for his own account. He shall be liable for the contribution in its full amount, irrespective of any agreements with the company or the controlled enterprise or enterprise in which a majority ownership interest is held. Prior to his having acquired the share of stock for his own account, he shall not be entitled to any rights attaching to the share of stock.
(4) Where shares of stock are subscribed to in the context of a capital increase such that subsection (1) or (2) is violated, each member of the company’s management board shall be liable for the contribution in its full amount. This shall not apply if the member of the management board proves that there is no fault on his part.
Section 57
No restitution of the contributions, no interest accruing to same
(1) The contributions may not be restituted to the stockholders. The payment of the purchase price in the context of a permissible purchase of treasury shares of stock shall not be deemed a restitution. The first sentence shall not apply to performance made where a control agreement or profit and loss absorption agreement (section 291) is in place, or where such performance is covered by a fully recoverable claim vis-à-vis the stockholder to counter-performance or to restitution. Moreover, the first sentence shall not apply to the restitution of a stockholder’s loan, nor shall it apply to performance under claims arising from legal transactions that correspond to a stockholder’s loan in economic terms.
(2) No commitment may be made to stockholders to pay interest, nor may such interest be disbursed.
(3) Prior to the company being dissolved, solely the net income may be distributed among the stockholders.
Section 58
Appropriation of the surplus for the year
(1) The by-laws may determine that amounts from the surplus for the year are to be allocated to other revenue reserves only in the event that the general meeting approves and establishes the annual accounts. At a maximum, solely half of the surplus for the year may be allocated to other revenue reserves based on such a stipulation of the by-laws. In this context, amounts to be allocated to the statutory reserves and a loss carried forward are to be deducted in advance from the surplus for the year.
(2) Where it is incumbent on the management board and the supervisory board to approve and establish the annual accounts, they may allocate a part of the surplus for the year to other revenue reserves, but no more than half of the surplus for the year. The by-laws may grant authority to the management board and the supervisory board to so allocate a larger or smaller portion of the surplus for the year. The management board and the supervisory board may not allocate any amounts to other revenue reserves on the basis of such stipulation of the by-laws if the other revenue reserves are in excess of half of the share capital, or inasmuch as they would exceed half of the share capital following such allocation. Subsection (1), third sentence, shall apply mutatis mutandis.
(2a) Notwithstanding subsections (1) and (2), the management board and the supervisory board may allocate to the other revenue reserves the share of equity capital made up by revaluations for items forming part of the fixed and current assets. The amount of these reserves is to be reported separately on the balance sheet; it may also be stated in the notes.
(3) In the resolution adopted as to the appropriation of the net income, the general meeting may allocate further amounts to the retained income or may carry forward such amounts as profits. Furthermore, the general meeting may also resolve on a different appropriation than that set out the first sentence, or than the distribution among the stockholders, provided the by-laws grant it authority to do so.
(4) The stockholders are entitled to the net income unless its distribution among the stockholders is prohibited by the law or in the by-laws, by a resolution adopted by the general meeting pursuant to subsection (3) or, where the resolution adopted as to the appropriation of the net income has appropriated same to additional expenses, by reason of said resolution. The claim shall be due on the third business day following the resolution adopted by the general meeting. The resolution adopted by the general meeting or the by-laws may stipulate a due date that is later.
(5) Where the by-laws so provide, the general meeting may also resolve to make a distribution in kind.
Section 59
Interim payment towards the net income
(1) The by-laws may grant authority to the management board to make an interim payment to the stockholders out of the prospective net income once the financial year has expired.
(2) The management board may make an interim payment only if the preliminary accounts drawn up for the expired financial year result in a surplus for the year. At a maximum, the interim payment may consist of half of the amount that remains after those amounts have been deducted from the surplus for the year that, by law or according to the by-laws, are to be allocated to retained income. Furthermore, the interim payment may not exceed half of the net income for the preceding year.
(3) Where an interim payment is planned to be made, this shall require the consent of the supervisory board.
Section 60
Distribution of profits
(1) The stockholders’ shares in the profits are determined based on their shares in the share capital.
(2) Where the contributions to the share capital have not been paid in for all shares of stock in the same ratio, the stockholders shall receive in advance, out of the profits eligible for distribution, an amount of four (4) percent of the contributions made. Where the profits do not suffice for this purpose, the amount shall be determined based on a correspondingly lower rate. Contributions made in the course of the financial year shall be taken into account pro-rated by the time that has lapsed since they were made.
(3) The by-laws may stipulate a different type of distribution of profits.
Section 61
Remuneration of collateral performance
Remuneration may be paid for any recurrent performance to which the stockholders are obligated pursuant to the by-laws, in addition to the contributions to the share capital, provided such remuneration is not in excess of the value of the performance, regardless of whether or not net income has been recognised for the year.
Section 62
Liability of stockholders in case of the receipt of prohibited performance
(1) The stockholders are to return to the company any performance they may have received from it in contravention of the regulations of the present Act. Where they have received amounts constituting a participation in the profits, this duty shall be given only if they were aware, or negligently unaware, that they were not entitled to receive such performance.
(2) The company’s claim may also be asserted by the creditors of the company inasmuch as they are unable to obtain satisfaction from same. Where insolvency proceedings have been opened for the company’s assets, the insolvency administrator or the insolvency monitor shall exercise the right of the company’s creditors against the stockholders for the duration of said proceedings.
(3) The claims governed by the present regulations shall become statute-barred after ten (10) years have lapsed since receipt of the performance. Section 54 (4), second sentence, shall apply mutatis mutandis.
Section 63
Consequences of late payment of contributions
(1) The stockholders are to pay in the contributions upon these being called in by the management board. Unless stipulated otherwise in the by-laws, notice of the call letter is to be given in the company’s publications of record.
(2) Stockholders who fail to make payment, in due time, of the amount called in shall pay interest from the date on which said amount falls due at a rate of five (5) percent per annum. The assertion of further damages is not precluded.
(3) The by-laws may specify contractual penalties for the case of contributions not being paid in in due time.
Section 64
Expulsion of defaulting stockholders
(1) Stockholders who fail to make payment, in due time, of the amount called may be set a period of grace, with a reminder being issued previously warning that, once the period has expired to no avail, their shares of stock will be declared forfeited, as will the amounts they have paid in.
(2) Notice of the period of grace must be given thrice in the company’s publications of record. The first notice must be published at least three (3) months, the last at least one (1) month prior to expiry of the period of grace. A period of at least three (3) weeks must lapse between each of the individual notices. Where the transfer of the shares of stock is bound to the consent of the company, then it shall suffice to send, instead of publishing the notices, a single call letter individually addressed to the defaulting stockholders; in this context, a period of grace must be granted amounting to at least one (1) month from receipt of the call letter.
(3) The shares of stock held by stockholders who, despite the above measures, fail to pay in the amount called, as well as the amounts they have paid in, will be declared forfeited by notice in the company’s publications of record; the shares of stock and the amounts paid in shall inure to the benefit of the company. The notice published is to list the shares of stock that have been forfeited along with their distinctive features.
(4) Instead of the old share certificates, new ones shall be issued; these shall set out, besides the partial payments made, the amount in arrears. Should the company fail to make payment in this amount or in the amounts called in at a later time, the expelled stockholder shall be liable to the company for these amounts.
Section 65
Payment obligation of preceding endorsers
(1) Each of the expelled stockholder’s preceding endorsers entered in the share register shall be liable to the company for payment of the amount in arrears inasmuch as this cannot be obtained from the expelled stockholder’s subsequent endorsers. The company is to notify the endorser immediately preceding a former stockholder of a call for payment it has issued. It shall be assumed that payment cannot be obtained if this is not received in the course of one (1) month following the call for payment and the notification of the preceding endorser. The new certificate shall be delivered in return for payment of the amount in arrears.
(2) Each preceding endorser shall be obligated to pay only those amounts that are called in in the course of two (2) years. The period shall commence running on that day on which an application is filed to have the transfer of the share of stock entered in the share register of the company.
(3) Where no payment of the amount in arrears can be obtained from preceding endorsers, the company is to sell the share of stock without undue delay at the stock exchange price and, should no stock exchange price exist, the company is to sell the shares of stock at public auction. If a public auction at the company’s seat does not hold out reasonable prospects of success, the share of stock is to be sold at a location that is suitable. The time and location of the sale at public auction as well as the items to be sold at same are to be published by notice. The expelled stockholder and his preceding endorsers are to be notified separately; the notification may be refrained from if it is not expedient. The publication by notice must be made and the notification must be issued at least two (2) weeks prior to the sale at public auction.
Section 66
No relief of the stockholders from their obligations to perform
(1) The stockholders and their preceding endorsers cannot be relieved of their obligations to perform pursuant to sections 54 and 65. A claim of the company pursuant to sections 54 and 65 may not permissibly be set off.
(2) Subsection (1) shall apply mutatis mutandis to the duty to provide restitution for performance received in contravention of the regulations of the present Act, to the liability of the expelled stockholder in the event of a default, as well as to the obligation of the stockholders to provide compensation for damages resulting from contribution in kind that has not been properly rendered.
(3) Where an ordinary capital reduction is performed, or a capital reduction by way of redeeming shares of stock, such relief will concern, at a maximum, that amount by which the share capital has been reduced.
Section 67
Entry in the share register
(1) Independently of whether or not the ownership interest has been certificated, registered shares of stock are to be entered in the company’s share register stating the family name, date of birth, and address of the stockholder, as well as the number of shares held or the share certificate number, and, in the case of par-value shares, their amount. The stockholder is under obligation to provide to the company the particulars set out in the first sentence. The by-laws may stipulate further details as to which pre-requisites must be met for shares of stock belonging to some other party permissibly being entered in a holder’s own name. Shares of stock belonging to a German, EU, or foreign investment entity in accordance with the Investment Code (KAGB), the shares or shares of stock in which are not exclusively held by professional or semi-professional investors, shall be deemed shares of the German, EU, or foreign investment entity also in those cases in which they are co-owned by the investors; where the investment entity does not have a legal personality of its own, they shall be deemed shares of stock in the management company of the investment entity.
(2) Only those parties shall be deemed to be stockholders of the company in their relationship with same who have been entered as such in the share register. However, no voting rights shall attach to entries that are in excess of a maximum threshold specified in the by-laws pursuant to subsection (1), third sentence, or regarding which the by-laws stipulate a disclosure obligation as to the fact that the shares of stock belong some other party, and this obligation has not been complied with. Furthermore, no voting rights shall attach to shares for as long as a demand for information pursuant to subsection (4), second or third sentence, has not been complied with following expiry of the period set.
(3) Where the registered share of stock devolves to some other party, it shall be cancelled and newly entered in the share register upon the corresponding notification having been provided and proof having been submitted.
(4) The credit institutions cooperating in and assisting with the transfer or safekeeping of registered shares of stock are under obligation to transmit to the company the particulars required for maintaining the share register and shall be reimbursed for the costs necessarily incurred. The party entered in the register is to notify the company within a reasonable period, upon the latter’s corresponding demand, of the extent to which the shares of stock regarding which he is entered in the share register as a holder in fact belong to him; should this not be the case, he is to provide the particulars set out in subsection (1), first sentence, regarding that party on behalf of whom he is holding the shares. This shall apply mutatis mutandis for that party whose data are transmitted pursuant to the second sentence or pursuant to this sentence. Subsection (1), fourth sentence, shall apply mutatis mutandis; the first sentence shall apply to the allocation of costs. Where the holder of registered shares of stock is not entered in the share register, the depositary financial institution is under obligation, upon a corresponding demand being made by the company, to have itself separately entered in the share register, in the stead of the holder, in return for reimbursement by the company for the costs necessarily incurred. Section 125 (5) shall apply mutatis mutandis. Where a credit institution is separately entered in the share register only temporarily in the context of registered shares of stock being transferred, this entry shall not trigger any obligations as a result of subsection (2) or pursuant to section 128 and shall not lead to the application of restrictions set out in the by-laws pursuant to subsection (1), third sentence.
(5) Where, in the view taken by the company, someone has been incorrectly entered in the share register as a stockholder, the company may cancel this entry only if it has previously notified the parties involved of the intended cancellation and has set a reasonable period within which said parties may lodge an objection. Where a party involved objects within the period set, no cancellation shall be made.
(6) The stockholder may demand that the company inform him about the data concerning his person that have been entered in the share register. In the case of companies not listed on the stock exchange, the by-laws may make further provisions. The company may use the data contained in the register as well as the data provided pursuant to subsection (4), second and third sentences, in order to fulfil the tasks incumbent on it in its relationship with the stockholders. It may use the data to advertise the enterprise only insofar as the stockholder does not object to this being done. The stockholders are to be appropriately informed on their right to lodge an objection.
(7) The above regulations shall apply mutatis mutandis to temporary share certificates.
Section 68
Transfer of registered shares of stock. Restrictions on transferability
(1) Registered shares of stock may also be transferred by endorsement. Articles 12, 13, and 16 of the Bills of Exchange Act (WG) shall apply mutatis mutandis as regards the form of the endorsement, the legitimisation of the holder, and his duty to surrender.
(2) The by-laws may make the transfer contingent upon consent being granted by the company. Such consent is to be granted by the management board. However, the by-laws may stipulate that the supervisory board or the general meeting is to adopt a resolution on whether or not to grant consent. The by-laws may specify the reasons for which consent may be refused.
(3) In the case of transfers by endorsement, the company shall be under obligation to review whether the sequence of endorsements corresponds to formal and regulatory requirements; however, the company shall not be obligated to review the signatures.
(4) The above regulations shall apply mutatis mutandis to temporary share certificates.
Section 69
Joint holding of a share of stock
(1) Where several beneficiaries are entitled to one share of stock, they may exercise the rights attaching to the share of stock only through a common representative.
(2) They shall be liable as joint and several debtors for the performance under the share of stock.
(3) In cases in which the company is to make a declaration of intent to the stockholder, it shall suffice, where the beneficiaries have not provided the company with the name of a common representative, to make such declaration to one of the beneficiaries. In cases involving several heirs of a stockholder, this shall apply only to declarations of intent made after expiry of one (1) month since the accrual of the estate.
Section 70
Calculation of the period of possession of the share of stock
Where the exercise of rights attaching to the share of stock is contingent upon the stockholder having been holder of the share of stock for a specified period of time, a claim to transfer of title against a credit institution, a financial services provider, or an enterprise pursuing activities in accordance with section 53 (1), first sentence, or section 53b (1), first sentence, or subsection (7) of the Banking Act (KWG) shall be equivalent to ownership of the share of stock. The period of ownership of a predecessor in title shall be attributed to the stockholder if he has purchased the share of stock in any of the following manners: without monetary consideration, from his trustee, as a universal successor, in the course of a distribution of assets among a community, or as part of a portfolio transfer pursuant to section 13 of the Insurance Supervisory Act (VAG) or section 14 of the Act on Savings and Loan Associations (BauSparkG).
Section 71
Purchase of treasury shares of stock
(1) The company may purchase treasury shares of stock solely in the following cases:
1. If the purchase is necessary in order for the company to avert serious and imminent damage;
2. If the shares of stock are to be offered for sale to persons who are or were in an employment relationship with the company or an enterprise affiliated with it;
3. Where the purchase is made in order to compensate stockholders pursuant to section 305 (2), section 320b of the present Act or pursuant to section 29 (1), section 125, first sentence, in conjunction with section 29 (1), section 207 (1), first sentence, of the Transformation Act (UmwG);
4. If the purchase is made without monetary consideration or if a credit institution is executing a buying commission by making such purchase;
5. By way of universal succession;
6. Based on a resolution adopted by the general meeting to redeem shares of stock in accordance with the regulations governing the reduction of the share capital;
7. If it is a credit institution, financial services provider, or financial enterprise: based on a resolution adopted by the general meeting for purposes of securities trading. The resolution must stipulate that, at the end of any given day, the trading portfolio of the shares of stock to be purchased for this purpose must not exceed five (5) percent of the share capital; the resolution must stipulate the lowest and highest equivalent value. The authorisation may be valid for a maximum of five (5) years; or
8. Based on an authorisation granted by the general meeting that is valid for a maximum of five (5) years and that stipulates the lowest and highest equivalent value as well as the portion of the share capital, which must not exceed ten (10) percent. It is prohibited to have as a purpose the trade in treasury shares of stock. Section 53a shall apply to purchases and disposals. Purchases and disposals via the stock exchange shall be compliant with this stipulation. The general meeting may adopt a resolution as to different manners of disposing over the shares; in such event, section 186 subsections (3) and (4) and section 193 (2) no. 4 are to be correspondingly applied. The general meeting may grant authority to the management board to redeem the treasury shares of stock without any further resolution having been adopted by the general meeting.
(2) The shares of stock purchased for the purposes set out in subsection (1) nos. 1 to 3, 7, and 8 may not, in the aggregate with the other shares of stock in the company that the company has already purchased and of which it is still in possession, amount to more than ten (10) percent of the share capital. Furthermore, such purchase shall be permissible only if the company were able, at the time at which the purchase is made, to form reserves in the amount of the expenditures for the purchase, without reducing the share capital or any reserves that are to be formed under law or in accordance with the by-laws and that may not be used to make payment to the stockholders. In the cases governed by subsection (1) nos. 1, 2, 4, 7, and 8, the purchase shall be permissible only if the issue price for the shares of stock has been paid in the full amount.
(3) In the cases governed by subsection (1) nos. 1 and 8, the management board is to notify the next general meeting of the reasons for the purchase and the purpose pursued by such purchase, the number of the shares of stock purchased and the amount of the share capital allocated to them, the portion of the share capital they represent, as well as the equivalent value of the shares of stock. In the case governed by subsection (1) no. 2, the shares of stock are to be issued to the employees in the course of one (1) year after they have been purchased.
(4) A violation of subsection (1) or (2) shall not result in the purchase of treasury shares of stock becoming invalid. However, a transaction under the law of obligations regarding the purchase of treasury shares of stock shall be null and void should the purchase violate subsection (1) or (2).
Section 71a
Transactions serving purposes of circumvention
(1) Any legal transaction having as its object the payment of an advance or the granting of a loan or the provision of security by the company to some other party for purposes of purchasing shares of stock in this company is null and void. This shall not apply to legal transactions entered into in the normal course of business of credit institutions or financial services providers, nor shall it apply to the payment of an advance or the granting of a loan or the provision of security for purposes of company employees or employees of an enterprise affiliated with same purchasing shares; however, the legal transaction shall be null and void in these cases as well if, at the time of the purchase, the company were unable to form reserves in the amount of the expenditures for the purchase without reducing the share capital or any reserves that are to be formed under law or in accordance with the by-laws that may not be used to make payment to the stockholders. Moreover, the first sentence shall not apply to legal transactions where a control agreement or profit and loss absorption agreement is in place (section 291).
(2) Furthermore, a legal transaction entered into by the company and some other party shall be null and void, according to which this party is to be entitled or obligated to purchase shares of stock in the company for the account of the company or for the account of a controlled enterprise, or of an enterprise in which the company holds a majority of the ownership interest, insofar as the company would violate section 71 subsection (1) or (2) by making this purchase.
Section 71b
Rights attaching to treasury shares of stock
The company shall not be entitled to any rights attaching to its treasury shares of stock.
Section 71c
Disposal of treasury shares of stock and redemption of same
(1) Where the company has purchased treasury shares of stock in violation of section 71 subsection (1) or (2), these shares of stock must be disposed of within one (1) year of having been purchased.
(2) Where the shares of stock which the company has purchased pursuant to section 71 (1) in a permissible manner and which continue to be in its possession amount to more than ten (10) percent of the share capital, that portion of the shares of stock that is in excess of said ratio must be disposed of within three (3) years of having been purchased.
(3) Where treasury shares of stock have not been disposed of within the periods stipulated in subsections (1) and (2), they shall be redeemed pursuant to section 237.
Section 71d
Purchase of treasury shares of stock by third parties
A third party acting in his own name, but for the account of the company, may only purchase or possess shares of stock in the company insofar as the company would be permitted to do so pursuant to section 71 (1) nos. 1 to 5, 7, and 8, and subsection (2). The same shall apply to the purchase or possession of shares of stock in the company by a controlled enterprise, or an enterprise in which the company holds a majority of the ownership interest, as well as to the purchase or possession by a third party acting in his own name, but for the account of a controlled enterprise, or an enterprise in which the company holds a majority of the ownership interest. In computing the portion of the share capital pursuant to section 71 (2), first sentence, and section 71c (2), these shares shall be deemed to be shares of stock in the company. In all other cases, section 71 subsections (3) and (4), sections 71a to 71c shall apply mutatis mutandis. The third party or the enterprise is to procure ownership in the shares of stock to the company should the company so demand. The company is to reimburse him for the equivalent value of the shares of stock.
Section 71e
Accepting treasury shares of stock in pledge
(1) Where treasury shares of stock are accepted in pledge, this shall be equivalent to the purchase of treasury shares of stock pursuant to section 71 subsections (1) and (2) and section 71d. However, a credit institution or financial services provider may, in the normal course of its business, accept treasury shares of stock in pledge up to the portion of the share capital as determined in section 71 (2), first sentence. Section 71a shall apply mutatis mutandis.
(2) A violation of subsection (1) will cause the acceptance in pledge of treasury shares of stock to be invalid if the issue price for them has not yet been fully paid in. A transaction under the law of obligations as to the acceptance in pledge of treasury shares of stock shall be null and void insofar as the purchase violates subsection (1).
Section 72
Invalidation of shares of stock by way of judicial public notice
(1) Where a share of stock or a temporary share certificate is lost or stolen, or has been destroyed, the certificate may be declared invalid in a judicial public notice procedure pursuant to the Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction (FamFG). Section 799 (2) and section 800 of the Civil Code (BGB) shall apply mutatis mutandis.
(2) Where profit participation certificates have been issued to the bearer, the invalidation of the share of stock or of the temporary share certificate shall also cause the claim to expire that attaches to the profit participation certificates that have not yet fallen due.
(3) The invalidation of a share of stock pursuant to sections 73 or 226 shall not contravene the invalidation of the certificate pursuant to subsection (1).
Section 73
Invalidation of share certificates by the company
(1) Where the content set out in share certificates has become inaccurate as a result of the legal circumstances having changed, the company may declare, with the authorisation of the court, those shares certificates to be invalid that have not been produced to it for correction or exchange in spite of a corresponding call having been made. Where the inaccuracy is the result of a change of the nominal amount of the shares of stock, the certificates may be invalidated only if the shares’ nominal amount has been reduced for purposes of reducing the share capital. Certificates of registered shares of stock cannot be invalidated on the grounds of the designation of the stockholder having become inaccurate. A complaint may permissibly be lodged against the decision taken by the court; there shall be no right of appeal against the decision granting the authorisation.
(2) The call to produce the share certificates shall include a warning that they may otherwise be invalidated; the call shall indicate the authorisation granted by the court. The invalidation is subject to the pre-requisite of the call having been published by notice in the manner stipulated for the period of grace in section 64 (2). The invalidation shall be effected by notice in the company’s publications of record. The notice shall designate the invalidated share certificates such that it is readily apparent from the notice whether or not a share of stock has been invalidated.
(3) Subject to a provision having been made in the by-laws pursuant to section 10 (5), new share certificates are to be issued to take the stead of the invalidated share certificates and are to be physically handed over to the beneficiary or, should a right to deposit exist, to be so deposited. The court is to be notified of the handover or deposit.
(4) Insofar as shares of stock are merged in order to reduce the share capital, section 226 shall apply.
Section 74
New certificates replacing damaged or defaced share certificates or temporary share certificates
Where a share certificate or a temporary share certificate has been damaged or defaced to such a degree that the certificate is no longer suited for circulation, the beneficiary may demand that the company provide him with a new certificate in return for his producing the old one, provided that the substantial content and the distinctive features of the certificate are still clearly recognisable. The beneficiary shall bear the costs arising in this regard and shall advance them.
Section 75
New profit participation certificates
New profit participation certificates may not be issued to the holder of the renewal coupon if the party in possession of the share certificate or of the temporary share certificate objects to such issuance; they are to be delivered to the party in possession of the share certificate or of the temporary share certificate upon that party producing such principal certificate.
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