Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Part 2
Power of direction as well as liability and responsibilities in the case of controlled enterprises
Chapter 1
Power of direction as well as liability and responsibilities in the case of a control agreement
Section 308
Power of direction
(1) Where a control agreement has been concluded, the controlling enterprise shall be entitled to issue directions to the management board of the company as regards the management of the company. Where the agreement does not stipulate otherwise, directions may also be issued that are detrimental to the company if they serve the interests of the controlling enterprise or those of the enterprises forming a group of affiliated companies together with it and the company.
(2) The management board is under obligation to comply with the directions issued by the controlling enterprise. It is not entitled to refuse to comply with the directions issued on the grounds of their not serving, in its view, the interests of the controlling enterprise or those of the enterprises forming a group of affiliated companies together with it and the company, unless they manifestly do not serve these interests.
(3) Where the management board is directed to enter into a transaction that may be so entered into only with the consent of the supervisory board of the company, and where this consent is not granted within a reasonable period, the management board is to notify the controlling enterprise of this fact. Where, following such notification, the controlling enterprise repeats its directions, the consent of the supervisory board shall no longer be required; where the controlling enterprise has a supervisory board, the directions may be repeated only with the supervisory board’s consent.
Section 309
Liability and responsibilities of the legal representatives of the controlling enterprise
(1) Where a control agreement has been concluded, the legal representatives (in the case of a sole trader: the business owner) of the controlling enterprise are to exercise, vis-à-vis the company, the due care of a prudent manager faithfully complying with his duties in issuing directions to same.
(2) Where they violate their duties, they shall be liable as joint and several debtors to compensate the company for the damage resulting therefrom. Where it is in dispute whether or not they have exercised the due care of a prudent manager faithfully complying with his duties, the onus of proof shall be upon them.
(3) The company may waive its claims to compensation, or conclude a compromise regarding these claims, only once three (3) years have lapsed since the arisal of the claim, and only in those cases in which the external stockholders consent thereto by a separate resolution and no minority, the aggregate of whose shares is at least equivalent to one tenth of the share capital represented at the time such resolution is adopted, raises an objection and has it recorded in the minutes. The limitation in time shall not apply where the party obligated to provide compensation is unable to pay his debts as they become due and concludes a compromise with his creditors in order to avert insolvency proceedings or if the obligation to provide compensation is provided for in an insolvency plan.
(4) The company’s claim to compensation may also be asserted by any stockholder. However, the stockholder may only demand that performance be made to the company. Furthermore, the company’s claim to compensation may also be asserted by the creditors of the company insofar as they cannot obtain satisfaction from same. The obligation to provide compensation will not be cancelled vis-à-vis the creditors by a waiver by the company or by its concluding a compromise. Where insolvency proceedings have been opened for the company’s assets, the insolvency administrator or the insolvency monitor shall exercise, for the duration of said proceedings, the right of the stockholders and creditors to assert the company’s claim to compensation.
(5) The claims governed by the present regulations shall become statute-barred after five (5) years.
Section 310
Liability and responsibilities of the officers of the company
(1) If the members of the management board and of the supervisory board of the company have acted in dereliction of their duties, they shall be liable as joint and several debtors in addition to the party obligated to provide compensation pursuant to section 309. Where it is in dispute whether or not they have exercised the due care of a prudent manager faithfully complying with his duties, the onus of proof shall be upon them.
(2) The fact that the supervisory board has endorsed the action does not preclude the obligation to provide compensation.
(3) No obligation to provide compensation shall be given for the officers of the company if the action causing the damage is based on a direction that was to be complied with pursuant to section 308 (2).
(4) Section 309 subsections (3) to (5) shall apply.
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