Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Chapter 3
Approval and establishment of the annual accounts. Appropriation of profits
Subchapter 1
Approval and establishment of the annual accounts
Section 172
Approval and establishment by the management board and the supervisory board
Where the supervisory board endorses the annual accounts, this is tantamount to their approval and establishment unless the management board and the supervisory board decide to leave the approval and establishment of the annual accounts to the general meeting. The resolutions adopted by the management board and the supervisory board are to be included in the report submitted by the supervisory board to the general meeting.
Section 173
Approval and establishment by the general meeting
(1) Where the management board and the supervisory board have resolved to leave the approval and establishment of the annual accounts to the general meeting, or where the supervisory board has not endorsed the annual accounts, the general meeting shall approve and establish the annual accounts. Where the supervisory board of a parent company (section 290 subsections (1) and (2) of the Commercial Code (HGB)) has not endorsed the consolidated financial statements, the general meeting shall decide on the endorsement.
(2) The regulations applicable to the manner in which annual accounts are drawn up shall apply to their approval and establishment. In approving and establishing the annual accounts, the general meeting may only allocate those amounts to retained income that are to be so allocated pursuant to the law or the by-laws.
(3) Where the general meeting modifies annual accounts that have been audited by reason of the corresponding statutory duty by an auditor of annual accounts, any resolutions regarding the approval and establishment of the annual accounts and the appropriation of profits that are adopted by the general meeting prior to the new audit being performed pursuant to section 316 (3) of the Commercial Code (HGB) shall enter into force only once an unqualified audit opinion has been issued by reason of the new audit regarding the modifications. The modifications shall become null and void if no unqualified audit opinion is issued regarding such modifications within two (2) weeks of the resolution having been adopted.
Subchapter 2
Appropriation of profits
Section 174
(1) The general meeting shall adopt a resolution as regards the appropriation of the net income. In so doing, it shall be bound to the annual accounts as approved and established.
(2) The resolution is to set out the details of the appropriation of the net income, and particularly is to state
1. The net income;
2. The amount or non-cash asset to be distributed to the stockholders;
3. The amounts to be allocated to retained income;
4. Any profits carried forward;
5. The additional expenses resulting from the resolution adopted.
(3) The resolution shall not result in a modification of the annual accounts as approved and established.
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