Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Chapter 2
Nullity of the annual accounts as approved and established
Section 256
Nullity
(1) In addition to being null and void in the cases governed by section 173 (3), section 234 (3), and section 235 (2), annual accounts as approved and established are null and void if:
1. They violate, by their content, regulations that exclusively or primarily were instituted for the protection of the company’s creditors,
2. In the case of a statutory obligation to have an audit performed, they have not been audited pursuant to section 316 subsections (1) and (3) of the Commercial Code (HGB);
3. In the case of a statutory obligation to have an audit performed, they have been audited by persons who, pursuant to section 319 (1) of the Commercial Code (HGB) or pursuant to Article 25 of the Introductory Act of the Commercial Code (EGHGB), are not auditors of annual accounts or who have not been appointed as auditors of the annual accounts for other reasons than the following:
a) Violation of section 319 subsection (2), (3), or (4) of the Commercial Code (HGB),
b) Violation of section 319a subsection (1) or (3) of the Commercial Code (HGB),
c) Violation of section 319b (1) of the Commercial Code (HGB),
d) Violation of Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC (OJ L 158 of 27 May 2014, p. 77, L 170 of 11 June 2014, p. 66),
4. At their approval, the provisions of the law or of the by-laws regarding the allocation of amounts to capital reserves or retained income or regarding the withdrawal of amounts from the capital reserves or the retained income have been violated.
(2) In addition to being null and void in the cases set out in subsection (1), annual accounts approved and established by the management board and the supervisory board shall be null and void only if the management board or the supervisory board did not duly and properly cooperate in and assist with their approval and establishment.
(3) In addition to being null and void in the cases set out in subsection (1), annual accounts approved and established by the general meeting shall be null and void only if the approval
1. Was resolved upon at a general meeting that was convened such that section 121 subsections (2) and (3), first sentence, or subsection (4) was violated,
2. Was not recorded by a notary pursuant to section 130 subsections (1) and (2), first sentence, and subsection (4),
3. Has been finally and conclusively declared null and void by a judgment handed down upon an action for avoidance having been brought.
(4) The annual accounts shall be null and void for a violation of the regulations governing the layout of the annual accounts as well as for the non-compliance with forms according to which the annual accounts are to be laid out only if this has significantly impaired their clarity and structure.
(5) The annual accounts shall be null and void for a violation of the valuation rules only if
1. Items have been overstated or
2. Items have been understated so that the assets and the revenue situation of the company have been intentionally depicted inaccurately or have been concealed.
Assets items are overstated if they have been stated at a higher value than that permissible pursuant to sections 253 to 256a of the Commercial Code (HGB), while liabilities items are overstated if they have been stated at a lower amount than that permissible pursuant to said provisions. Assets items are understated if they have been stated at a lower value than that permissible pursuant to sections 253 to 256a of the Commercial Code (HGB), while liabilities items are understated if they have been recognised at a higher amount than that permissible pursuant to said provisions. In the case of credit institutions or financial services providers as well as in the case of capital management companies in the sense of section 17 of the Investment Code (KAGB), no violation of the valuation rules shall be given insofar as the deviation is permissible pursuant to the regulations applying to them, in particular pursuant to sections 340e to 340g of the Commercial Code (HGB); this shall apply mutatis mutandis to insurance companies subject to the regulations applying to them, particularly sections 341b to 341h of the Commercial Code (HGB).
(6) The nullity pursuant to subsection (1) nos. 1, 3, and 4, subsection (2), subsection (3) nos. 1 and 2, subsections (4) and (5) no longer can be asserted if, since publication of the notice pursuant to section 325 (2) of the Commercial Code (HGB) in the cases governed by subsection (1) nos. 3 and 4, by subsection (2), and by subsection (3) nos. 1 and 2, six (6) months have lapsed, in the other cases three (3) years. Where, at the time the period expires, an action for a declaratory judgment as to the nullity of the annual accounts is pending, the period shall be extended until that point in time at which the final and conclusive decision has been taken regarding that action or it has been conclusively dealt with and terminated in some other way.
(7) Section 249 shall apply mutatis mutandis to the action brought against the company for a declaratory judgment as to nullity. Where the company has issued securities in the sense of section 2 (1) of the Securities Trading Act (WpHG) that are admitted to trading on a regulated market at a stock exchange within Germany, then the court is to inform the Federal Financial Supervisory Authority (BAFin) of any action brought with it seeking a declaratory judgment as to nullity; the court is to likewise inform BAFin of any final and conclusive decision it may hand down with regard to such action.
Section 257
Action for avoidance of the approval of the annual accounts by the general meeting
(1) The approval of the annual accounts by the general meeting may be challenged pursuant to section 243. However, the action for avoidance cannot be based on the fact that, by their content, the annual accounts violate the law or the by-laws.
(2) Sections 244 to 246, 247 to 248a apply to the action for avoidance. The period for avoidance shall commence running on the date on which the resolution is adopted also in those cases in which the annual accounts are to be audited anew pursuant to section 316 (3) of the Commercial Code (HGB).
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