Last Updated on May 29, 2021 by LawEuro
Stock Corporation Act (Laws / Regulations of Germany)
Part 3
Integrated companies
Section 319
Integration
(1) The general meeting of a stock corporation may resolve to integrate the company into some other stock corporation having its seat in Germany (principal company) if all shares of stock in the company are held by the future principal company. The stipulations of the law and the by-laws regarding amendments of the by-laws shall have no application.
(2) The resolution adopted as to the integration shall enter into force only if the general meeting of the future principal company has consented thereto. The resolution adopted as to the consent shall require a majority of at least three quarters of the share capital represented at the time such resolution is adopted. The by-laws may stipulate a greater majority ratio of capital and may impose further requirements. Subsection (1), second sentence, shall apply.
(3) From the time onwards at which the general meeting of the future principal company is convened that is to adopt a resolution as to the consent to the integration, the following documents are to be kept available at that company’s business premises for inspection by the stockholders:
1. The draft resolution as to the integration;
2. The annual accounts and the management reports of the companies involved for the last three (3) financial years;
3. A detailed written report by the management board of the future principal company explaining and justifying the integration in legal and economic terms (integration report).
Upon a corresponding demand being made, each stockholder of the future principal company is to be provided, without undue delay and at no charge, with a copy of the documents designated in the first sentence. The obligations pursuant to the first and second sentences shall not be applicable if the documents designated in the first sentence are accessible, for the same period of time, via the website of the future principal company. These documents are to be made accessible at the general meeting. Should any stockholder so request at the general meeting, he is to be provided also with information about any and all matters of the company to be integrated that are relevant in connection with the integration.
(4) The management board of the company to be integrated is to file an application for entry in the Commercial Register of the integration and the business name of the principal company. The minutes of the resolutions adopted by the general meeting and their annexes are to be attached, as execution copies or as publicly certified copies, to the application for entry in the register.
(5) In filing the application for entry in the register pursuant to subsection (4), the management board is to declare that no action has been brought against the entry into force of a resolution adopted by the general meeting, or that any action brought was not filed in due time, or was dismissed by a ruling that has become final and conclusive, or that such action has been retracted; the management board is to notify the court of registration maintaining the register of these circumstances also after having filed the application for entry in the register. Where no such declaration is available, the integration may not be entered in the register unless the stockholders entitled to bring an action declare, by a notarized declaration of waiver, that they waive bringing an action against the entry into force of the resolution adopted by the general meeting.
(6) It shall be equivalent to the declaration pursuant to subsection (5), first sentence, if, once an action has been brought against the entry into force of a resolution adopted by a general meeting, the court has established by a court order, upon the petition having been filed by that company against whose resolution adopted by the general meeting the action is directed, that the fact of the action having been filed does not contravene the entry in the register. Unless stipulated otherwise, section 247 of the present Act, sections 82, 83 (1), and section 84 of the Code of Civil Procedure (ZPO) as well as the regulations of the Code of Civil Procedure applicable to proceedings of first instance before the regional courts shall apply mutatis mutandis to the proceedings. A court order pursuant to the first sentence shall be delivered if:
1. The action is inadmissible or manifestly unfounded,
2. The plaintiff has failed to provide proof by submitting the corresponding records and documents, within one (1) week of having served the petition, that he has been holding a stake of at least 1,000 euros since the notice convening the assembly was published, or
3. The prompt entering into force of the resolution adopted by the general meeting appears to take precedence because the court holds, at its discretion and conviction, that the significant disadvantages for the company and its stockholders as presented by the petitioner outweigh the disadvantages the respondent stands to suffer; this shall not apply if the violation of the law is particularly grave.
In urgent cases, the court order may be delivered without a hearing for oral argument being held. The court order should be delivered not later than three (3) months after the petition has been filed; the reasons for any delays to the decision shall be provided in a court order against which there shall be no right of appeal. The facts and circumstances brought before the court, by reason of which the court order pursuant to the third sentence may be delivered, are to be demonstrated to the satisfaction of the court. A senate of the higher regional court (Oberlandesgericht) in the judicial district of which the company has its seat shall decide regarding the petition. Transferring the matter to a judge sitting alone is precluded; no conciliation hearing is required. There shall be no right of appeal against the court order. Should good cause have been shown for the action, then the company that has obtained the court order shall be under obligation to compensate the respondent for the damages that the latter has suffered as a result of the integration having been entered in the register based on the court order. Once it has been entered in the register, any deficiencies of the court order shall not affect its implementation; no demand may be made for compensation of damages by way of cancelling the effects of entering the integration in the register.
(7) Upon entry of the integration in the Commercial Register kept at the seat of the company, the company shall have been integrated into the principal company.
Section 320
Integration by a resolution of the majority
(1) The general meeting of a stock corporation may resolve to integrate the company into some other stock corporation having its seat within Germany also in those cases in which the shares of stock in the company making up, in the aggregate, ninety-five (95) percent of the share capital, are held by the future principal company. Treasury shares of stock and shares of stock held by some other party for the account of the company are not to be included in determining the share capital. Besides section 319 subsection (1), second sentence, and subsections (2) to (7), the subsections (2) to (4) shall apply to the integration.
(2) The notice as to the integration shall have been duly and properly published as an item of business set out in the agenda only if:
1. It includes the business name and seat of the future principal company,
2. It is accompanied by a declaration by the future principal company in which this offers its own shares of stock to the leaving stockholders as settlement payment for the shares of stock they hold, and in which it furthermore offers, in the case governed by section 320b (1), third sentence, to pay a cash settlement.
No. 2 of the first sentence shall also apply to the notice published by the future principal company.
(3) The integration is to be audited by one or several expert auditors (integration auditor). The court shall select and appoint them upon a corresponding petition having been filed by the management board of the future principal company. Section 293a (3), sections 293c to 293e are to be applied mutatis mutandis.
(4) From the time onwards at which the general meeting is convened that is to adopt a resolution as to the consent to the integration, the documents designated in section 319 (3), first sentence, as well as the audit report pursuant to subsection (3) are each to be kept available at the business premises of the company to be integrated and of the principal company for inspection by the stockholders. The integration report is to also explain and justify, in legal and economic terms, the nature and amount of the settlement payment pursuant to section 320b; any particular difficulties encountered in valuing the companies involved as well as the consequences for the ownership interest held by the stockholders are to be indicated. Section 319 (3), second to fifth sentences, shall apply mutatis mutandis to the stockholders of both companies.
Subsections (5) to (7) (repealed)
Section 320a
Effects of the integration
Upon the integration having been entered in the Commercial Register, all shares of stock not held by the principal company shall devolve to same. Where share certificates have been issued regarding these shares of stock, they shall securitise, until they are physically handed over to the principal company, solely the claim to a settlement payment.
Section 320b
Settlement payment to former stockholders
(1) The former stockholders of the integrated company are entitled to an appropriate settlement payment. Shares of stock in the principal company are to be allotted to them as settlement payment. Where the principal company is a controlled company, then, at the election of the former stockholders, either treasury shares of stock in the principal company are to be allotted to them or an appropriate cash settlement is to be paid. Where shares of stock in the principal company are allotted by way of a settlement payment, the settlement payment is to be deemed appropriate if the shares of stock are allotted in the ratio in which shares of stock in the principal company would have to be allotted to one share of stock in the company in the case of a merger; in this context, indivisible residual amounts may be compensated by additional cash payments. The cash settlement must take account of the company’s circumstances as given at the time its general meeting adopts the resolution regarding the integration. The cash settlement as well as the additional cash payments are to accrue interest from the time at which the entry is published by notice at five (5) percentage points per annum above the respectively applicable basic rate of interest pursuant to section 247 of the Civil Code (BGB); the assertion of further-reaching damages is not precluded.
(2) The action for avoidance of the resolution adopted by the general meeting of the integrated company by which it resolved on the integration may not be based on section 243 (2), or on the fact that the settlement payment offered by the principal company pursuant to section 320 (2) no. 2 is not appropriate. Where the settlement payment offered is not appropriate, the court specified in section 2 of the Act on Valuation Proceedings under Corporate Law (SpruchG) shall establish, upon a corresponding petition having been filed, the appropriate settlement payment. The same shall apply if the principal company has not offered any settlement payment, or has not offered it duly and properly, and no action for avoidance based on that fact has been brought within the period for avoidance, or the action for avoidance has been retracted or has been dismissed in a final and conclusive manner.
(3) (repealed)
Section 321
Protection of creditors
(1) Security is to be provided to those of the creditors of the integrated company whose claims have arisen prior to publication by notice of the integration’s entry in the Commercial Register, provided they come forward for this purpose within six (6) months of the publication by notice, unless they are able to demand satisfaction of their claims. This right is to be indicated to the creditors in the publication by notice of the entry.
(2) Those creditors shall not be entitled to demand provision of 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.
Section 322
Liability of the principal company
(1) From the integration onwards, the principal company shall be liable to the creditors of the company, as a joint and several debtor, for the liabilities of the integrated company that have arisen prior to the integration. It shall be liable in the same manner for all liabilities of the integrated company arising after the integration. Any agreement to the contrary shall have no validity vis-à-vis third parties.
(2) Where the principal company is laid claim to for a liability of the integrated company, it may assert objections that do not have their cause in its person only to the extent the integrated company is entitled to assert such objections.
(3) The principal company may refuse to satisfy the creditors for as long as the integrated company is entitled to seek avoidance of the legal transaction on which its liability is based. The principal company shall have the same authority for as long as the creditor is able to obtain satisfaction by offsetting his claims against an amount receivable due to the integrated company.
(4) No compulsory enforcement may be pursued against the principal company based on an enforceable deed directed against the integrated company.
Section 323
Power of direction of the principal company as well as liability and responsibilities of the members of the management board
(1) The principal company is entitled to issue directions to the management board of the integrated company as regards the management of the company. Section 308 subsection (2), first sentence, and subsection (3), sections 309, 310 shall apply mutatis mutandis. Sections 311 to 318 shall have no application.
(2) Performance by the integrated company to the principal company shall not be deemed a violation of sections 57, 58, and 60.
Section 324
Statutory reserves. Profit transfer. Loss absorption
(1) The statutory regulations regarding the formation of statutory reserves, regarding their appropriation, and regarding the allocation of amounts to the statutory reserves shall have no application to integrated companies.
(2) Sections 293 to 296 and sections 298 to 303 shall have no application to a profit and loss absorption agreement, a profit pool, or an agreement as to the partial absorption of profit and loss in place between the integrated company and the principal company. The agreement, its amendment, and its cancellation must be made in writing. At a maximum, the net income accruing without the transfer of profits may be transferred as profits. The agreement shall end at the latest as per the end of the financial year in which the integration ends.
(3) The principal company is under obligation to offset any net loss otherwise arising for the integrated company insofar as this exceeds the amount of the capital reserves and of the retained income.
Section 325
(repealed)
Section 326
Right of the stockholders of the principal company to request information
Information regarding matters of the integrated company is to be provided to any stockholder of the principal company in like manner as information regarding matters of the principal company is to be provided to him.
Section 327
End of the integration
(1) The integration shall end:
1. By a resolution adopted by the general meeting of the integrated company,
2. If the principal company no longer is a stock corporation having its seat in Germany,
3. If the principal company no longer holds all of the shares of stock in the integrated company,
4. By dissolution of the principal company.
(2) Where the principal company no longer holds all of the shares of stock in the integrated company, the principal company is to notify the integrated company of this fact without undue delay and in writing.
(3) The management board of the formerly integrated company is to file, without undue delay, an application for entry in the Commercial Register kept at the seat of the company of the end of the integration, its cause, and the time at which the integration ended.
(4) Where the integration comes to an end, the former principal company shall be liable for the obligations of the formerly integrated company that have arisen up to that time, if they are due prior to five (5) years lapsing following the end of the integration and if, on their basis, claims against the former principal company have been established in a manner as set out in section 197 (1) nos. 3 to 5 of the Civil Code (BGB), or if a court enforcement action or an enforcement action by the authorities has been taken or applied for; where public-law liabilities are concerned, it shall suffice for an administrative decision to be issued. The period shall commence running on the day on which the entry of the end of the integration in the Commercial Register has been published by notice pursuant to section 10 of the Commercial Code (HGB). Sections 204, 206, 210, 211, and 212 subsections (2) and (3) of the Civil Code (BGB) applying to prescriptions shall be correspondingly applied. The establishment of claims in a manner as set out in section 197 (1) nos. 3 to 5 of the Civil Code (BGB) shall not be required should the former principal company have acknowledged the claim in writing.
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