Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Chapter 2
Liability and responsibilities in the case of no control agreement existing
Section 311
Limitations restricting the exertion of influence
(1) Where no control agreement exists, a controlling enterprise may not use its influence to instigate a controlled stock corporation or public partly limited partnership to enter into a legal transaction detrimental to it, or to take or refrain from measures resulting in a disadvantage, unless the disadvantages are compensated.
(2) Where the compensation has not in fact been provided in the course of the financial year, then it must be determined at the latest at the end of the financial year in which the controlled company suffered the disadvantage when and by which advantages the disadvantage is to be compensated. The controlled company is to be granted a legal claim to the advantages determined to serve as compensation.
Section 312
Report by the management board on the relations with affiliated enterprises
(1) Where no control agreement exists, the management board of a controlled company is to prepare, in the first three (3) months of the financial year, a report on the relations of the company with affiliated enterprises. The report is to set out all legal transactions that the company has entered into, in the course of the financial year expired, with the controlling enterprise or with an enterprise affiliated with the controlling enterprise, or at the instigation or in the interests of these enterprises, as well as all other measures it has taken or refrained from at the instigation or in the interests of these enterprises in the course of the financial year expired. Where legal transactions are concerned, the performance and counter-performance are to be stated, and where measures are concerned, the reasons for which the measure was taken and the benefits and disadvantages it entails for the company. Where disadvantages have been compensated, the report is to state in detail in which way the compensation was in fact provided in the course of the financial year, or to which advantages the legal claim granted to the company refers.
(2) The report is to correspond to the principles of conscientious and faithful accounting.
(3) At the end of the report, the management board is to declare whether, based on the circumstances of which the management board was aware at the point in time at which the legal transaction was entered into, or the measure was taken or refrained from, the company received appropriate counter-performance for each legal transaction and did not suffer a disadvantage by the measure being taken or refrained from. Where the company did suffer a disadvantage, the management board is to declare furthermore whether the disadvantages have been compensated. This declaration is to be also included in the management report.
Section 313
Audit by the auditor of the annual accounts
(1) Where the annual accounts are to be audited by an auditor of annual accounts, then the report on the relations of the company with affiliated enterprises is to be submitted to the auditor of the annual accounts concurrently with the annual accounts and the management report. He is to audit whether:
1. The statements as to fact made in the report are accurate,
2. The performance of the company was excessive in the case of the legal transactions set out in the report, based on the circumstances known at the point in time at which the legal transactions were entered into; if it was excessive, whether the disadvantages have been compensated,
3. Any circumstances regarding the measures set out in the report give rise to an assessment significantly different from that of the management board.
Section 320 (1), second sentence, and subsection (2), first and second sentences, of the Commercial Code (HGB) shall apply mutatis mutandis. The auditor of the annual accounts shall have the rights governed by this regulation also vis-à-vis a group member company as well as vis-à-vis a controlled or controlling enterprise.
(2) The auditor of the annual accounts is to report in writing on the results of the audit. Should he establish, in auditing the annual accounts, the management report, and the report on the relations of the company with affiliated enterprises, that this report is incomplete, he is to report on this fact as well. The auditor of the annual accounts is to sign his report and submit it to the supervisory board; prior to so forwarding the report, the management board is to be given the opportunity to state its position.
(3) Where, according to the conclusive result of the audit, no exception is to be taken, the auditor of the annual accounts is to confirm this fact by adding the following audit opinion to the report on the relations of the company with affiliated enterprises:
Following my / our audit and judgment, performed in keeping with my / our professional duties, I / we hereby confirm that:
1. The statements as to fact made in the report are accurate,
2. The performance of the company for the legal transactions set out in the report was not excessive, or that the disadvantages have been compensated,
3. No circumstances regarding the measures set out in the report give rise to an assessment significantly different from that of the management board.
Where the report does not set out any legal transaction, then no. 2 is to be left out of the certificate; should the report not list any measure, then no. 3 is to be left out. Where the auditor of the annual accounts has not established for any of the legal transactions set out in the report that the performance of the company was excessive, then no. 2 of the certificate is to be limited to that confirmation.
(4) Where exception is to be taken, or where the auditor of the annual accounts has established that the report on the relations of the company with affiliated enterprises is incomplete, he is to limit the confirmation or is to refuse to grant it. Where the management board itself has declared that the company has suffered a disadvantage by certain legal transactions or measures, without these disadvantages having been compensated, then this is to be stated in the audit opinion and the audit opinion is to be limited to the remaining legal transactions or measures.
(5) The auditor of the annual accounts is to sign the audit opinion providing the place and date. The audit opinion is to also be included in the audit report.
Section 314
Audit by the supervisory board
(1) The management board is to submit the report on the relations of the company with affiliated enterprises to the supervisory board without undue delay after it has been drawn up. This report and, where the annual accounts are to be audited by an auditor of annual accounts, the audit report prepared by the auditor of the annual accounts are to be forwarded also to each member of the supervisory board or, if the supervisory board has so resolved, to the members of a committee.
(2) The supervisory board is to audit the report on the relations of the company with affiliated enterprises and is to report on the results of its audit to the general meeting (section 171 (2)). Where the annual accounts are to be audited by an auditor of annual accounts, the supervisory board is to furthermore state its position in its report regarding the results obtained by the auditor of the annual accounts in auditing the report on the relations of the company with affiliated enterprises. An audit opinion issued by the auditor of the annual accounts is to be included in the report, and any refusal of such audit opinion is to be expressly stated therein.
(3) The supervisory board is to declare at the end of its report whether exception is to be taken, based on the conclusive result of its audit, against the declaration made by the management board at the end of the latter’s report on the relations of the company with affiliated enterprises.
(4) Where annual accounts are to be audited by an auditor of annual accounts, said auditor is to participate in the deliberations of the supervisory board or of the committee on the report on the relations of the company with affiliated enterprises and is to report on the substantial results of his audit.
Section 315
Special audits
Upon a corresponding petition having been filed by a stockholder, the court is to appoint special auditors who are to audit the business relations of the company with the controlling enterprise or with a company affiliated with same if:
1. The auditor of the annual accounts has issued the audit opinion on the report on the relations of the company with affiliated enterprises only with restrictions, or has refused to issue it,
2. The supervisory board has declared that exception is to be taken regarding the declaration by the management board at the end of the report on the relations of the company with affiliated enterprises,
3. The management board itself has declared that the company has suffered a disadvantage as a result of certain legal transactions or measures without these disadvantages having been compensated.
Where other facts are given that justify the suspicion that disadvantages have been caused by way of dereliction of duties, the petition may also be filed by stockholders whose shares of stock in the aggregate are at least equivalent to the threshold value set out in section 142 (2), if they demonstrate to the satisfaction of the court that they have been the holders of the shares of stock for at least three (3) months prior to the date on which they have filed the petition. That regional court (Landgericht) in the judicial district of which the company has its seat shall decide on the petition. Section 142 (8) shall apply mutatis mutandis. A complaint may permissibly be lodged against the decision taken. Where the general meeting has appointed special auditors who are to perform an audit of the same actions and events, any stockholder may file the petition pursuant to section 142 (4).
Section 316
No report on relations with affiliated enterprises where a profit and loss absorption agreement has been concluded
Sections 312 to 315 shall not apply where a profit and loss absorption agreement is in place between the controlled company and the controlling enterprise.
Section 317
Liability and responsibilities of the controlling enterprise and its legal representatives
(1) Where a controlling enterprise instigates a controlled company, with which no control agreement is in place, to enter into a legal transaction causing a disadvantage to it, or to take or refrain from taking a measure and this causes a disadvantage to the controlled company, without the controlling enterprise in fact compensating it for this disadvantage by the end of the financial year or granting to the controlled company a legal claim to an advantage intended to serve as compensation, then the controlling enterprise is under obligation to compensate the company for the damage resulting therefrom. The controlling enterprise 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) The obligation to provide compensation shall not arise where even a conscientious manager faithfully complying with his duties of an independent company would have also entered into the legal transaction or would have taken, or refrained from taking, the measure.
(3) Besides the controlling enterprise, those of the legal representatives of the enterprise shall be liable as joint and several debtors that have instigated the company to enter into the legal transaction or to take the measure.
(4) Section 309 subsections (3) to (5) shall apply mutatis mutandis.
Section 318
Liability and responsibilities of the officers of the company
(1) If the members of the management board of the company have failed, in dereliction of their duties, to set out the disadvantageous legal transaction or the disadvantageous measure in the report on the relations of the company with affiliated enterprises, or have failed to state that the company suffered a disadvantage by the legal transaction or the measure and that the disadvantage was not compensated, they shall be liable as joint and several debtors besides the parties obligated to provide compensation pursuant to section 317. 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) If the members of the company’s supervisory board have failed, in dereliction of their duties, to audit the report on the relations of the company with affiliated enterprises as regards the disadvantageous legal transaction or the disadvantageous measure and have failed to report on the results of their audit to the general meeting (section 314), they shall be liable as joint and several debtors besides the parties obligated to provide compensation pursuant to section 317; subsection (1), second sentence, shall apply mutatis mutandis.
(3) The obligation to provide compensation shall not arise vis-à-vis the company, nor shall it arise vis-à-vis the stockholders, where the action taken is based on a lawful resolution adopted by the general meeting.
(4) Section 309 subsections (3) to (5) shall apply mutatis mutandis.
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