Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Chapter 3
Exploitation of influence over the company
Section 117
Obligation to provide compensation for damages
(1) Anyone who intentionally compels, by exploiting his influence on the company, a member of the management board or of the supervisory board, an officer of the company vested with full commercial power of attorney (Prokurist), or an authorised agent to act to the detriment of the company or its stockholders shall be under obligation to provide compensation to the company for the damage it has suffered as a result. Such party shall also be under obligation to compensate the stockholders for the damage they have suffered as a result, insofar as they have suffered damage above and beyond the damage that has been caused them by the damage caused to the company.
(2) In addition to that person, the members of the management board and of the supervisory board shall be liable as joint and several debtors if they have acted in dereliction of their duties. Where it is in dispute whether they have exercised the due care of a prudent manager faithfully complying with his duties, the onus of proof shall be upon them. The obligation of the members of the management board and of the supervisory board to provide compensation shall not arise vis-à-vis the company and also not vis-à-vis the stockholders if the action taken is based on a lawful resolution adopted by the general meeting. The fact that the supervisory board has endorsed the action does not preclude the obligation to provide compensation.
(3) In addition to that person, furthermore, those parties shall be liable as joint and several debtors who have obtained an advantage by the action causing damage, should such parties have intentionally instigated the influence being exerted.
(4) Section 93 (4), third and fourth sentences, shall apply mutatis mutandis to the release from the obligation to provide compensation vis-à-vis the company.
(5) The company’s claim to compensation may also be asserted by its creditors inasmuch as they are unable to obtain satisfaction from the company. The company’s waiving its claims to compensation, or concluding a compromise regarding these claims, shall not serve to release it from the obligation to provide compensation to the creditors, nor will it be so released from this obligation by the fact that the action is based on a resolution adopted by the general meeting. 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 for the duration of said proceedings.
(6) The claims governed by the present regulations shall become statute-barred within five (5) years.
(7) The above regulations shall not apply if the member of the management board or of the supervisory board, the officer of the company vested with full commercial power of attorney (Prokurist), or the authorised agent has been compelled to take the action causing damage by either of the following being exercised:
1. The power of direction based on a control agreement, or
2. The power of direction of a principal company (section 319) into which the company is integrated.
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