Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Subchapter 2
Simplified capital reduction
Section 229
Pre-requisites
(1) A reduction of the share capital intended to offset impairments in value, to cover other losses, or to allocate amounts to the capital reserves may be performed in simplified form. The resolution is to specify that the reduction is being made for these purposes.
(2) The simplified capital reduction shall be permissible only after that part of the statutory reserves and the capital reserves has been reversed in advance, along with the retained income, by which these reserves, taken together, exceed ten (10) percent of the share capital that remains after the reduction. The simplified capital reduction shall not be permissible for as long as profits carried forward exist.
(3) Section 222 subsections (1), (2), and (4), sections 223 and 224 as well as sections 226 to 228 regarding the ordinary capital reduction shall apply mutatis mutandis.
Section 230
Prohibition of payments to the stockholders
The amounts obtained from the reversal of the capital reserves or the retained income and from the capital reduction may not be used to make payments to the stockholders, nor may they be used for purposes of releasing the stockholders from the duty to make contributions. They may be used solely for purposes of offsetting impairments in value, covering other losses, and allocating amounts to the capital reserves or the statutory reserves. Using them for any one of the above purposes shall be permissible only insofar as they have been specified in the resolution as the purpose for which the share capital is being reduced.
Section 231
Limited allocation to the capital reserves and to the statutory reserves
The allocation of the amounts obtained from the reversal of other revenue reserves to the statutory reserves, and of the amounts obtained from the capital reduction to the capital reserves, shall be permissible only insofar as the capital reserves and the statutory reserves, taken together, do not exceed ten (10) percent of the share capital. The share capital shall be deemed to be the nominal amount resulting from the reduction, at a minimum, however, the minimum nominal amount stipulated in section 7. In calculating the amount permissibly allocable, those amounts that are to be allocated to the capital reserves in the period following the adoption of the resolution as to the capital reduction shall not be taken into account, also not in those cases in which their payment is based on a resolution that was adopted concurrently with the resolution as to the capital reduction.
Section 232
Allocation of amounts to the capital reserves in the case of losses having been overestimated
Should it become apparent in the course of drawing up the annual balance sheet for the financial year in which the resolution as to the capital reduction was adopted, or for one of the two (2) subsequent financial years, that impairments in value and other losses in fact have not occurred in the amount estimated at the time the resolution was adopted, or were offset, the difference is to be allocated to the capital reserves.
Section 233
Distribution of profits. Protection of creditors
(1) Profits may not be distributed before the statutory reserves and the capital reserves, taken together, have reached ten (10) percent of the share capital. The share capital shall be deemed to be the nominal amount resulting from the reduction, at a minimum, however, the minimum nominal amount stipulated in section 7.
(2) The payment of a participation in the profits amounting to more than four (4) percent shall be permissible only for a financial year commencing no earlier than two (2) years after the resolution as to the capital reduction was adopted. This shall not apply if the creditors whose claims have arisen prior to publication of the notice as to the entry of the resolution in the register have been granted satisfaction or provided security, insofar as they have come forward for this purpose within six (6) months following the date on which those annual accounts have been published by reason of which the distribution of profits has been resolved. Those creditors need not be provided security who are entitled to preferred satisfaction of their claims, in the event of insolvency, out of covering funds that were created for their protection pursuant to the stipulations of the law and that are monitored by the state. The satisfaction or security is to be indicated to the creditors in the publication by notice pursuant to section 325 (2) of the Commercial Code (HGB).
(3) The amounts obtained from the reversal of the capital reserves and the retained income, as well as from the capital reduction, may not be distributed as profits, also not pursuant to these regulations.
Section 234
Retroactive effect of the capital reduction
(1) The subscribed capital as well as the capital reserves and the retained income may be recognised in that amount, in the annual accounts drawn up for the financial year last expired prior to the resolution as to the capital reduction being adopted, that they are to have after the capital reduction.
(2) In such event, the general meeting shall resolve as to the approval and establishment of the annual accounts. The resolution should be adopted concurrently with the resolution as to the capital reduction.
(3) The resolutions shall be null and void unless the resolution as to the capital reduction has been entered in the Commercial Register within three (3) months of its having been adopted. The period shall be tolled for as long as an action for avoidance or an action for annulment is pending.
Section 235
Retroactive effect of a concurrent capital increase
(1) If, in the case governed by section 234, an increase of the share capital is resolved upon concurrently with the capital reduction, then the capital increase as well may be itemised in the annual accounts as having been completed. The resolution may only be permissibly adopted if the shares of a new issue have been subscribed, if no contributions in kind have been specified, and if that payment has been made towards each share that, pursuant to section 188 (2), must have been made at the time at which an application is filed to have the fact entered in the register that the capital increase has been implemented. Proof of the subscription and of the payment is to be submitted to the notary recording the resolution adopted as to the increase of the share capital.
(2) The resolutions shall be null and void in their entirety unless the resolutions as to the capital reduction and the capital increase, as well as the implementation of the increase, have been entered in the Commercial Register within three (3) months of their having been adopted. The period shall be tolled for as long as an action for avoidance or an action for annulment is pending. The resolutions and the increase of the share capital should be entered in the Commercial Register only jointly.
Section 236
Disclosure
The annual accounts may be disclosed pursuant to section 325 of the Commercial Code (HGB), in the case governed by section 234 only after the resolution as to the capital reduction has been entered in the register, in the case governed by section 235 only after the resolutions as to the capital reduction and the capital increase, and the implementation of the increase, have been entered in the Commercial Register.
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