Stock Corporation Law Revision - Looming Insolvency

The revision of the new stock corporation law has been in progress since 2014 and was finally passed by parliament in 2020. The main part of the new provisions will definitively come into force on January 1, 2023. New regulations will also govern the board of directors' obligations regarding impending insolvency.

Non-transferable and irrevocable tasks of the board of directors

New responsibilities include monitoring the liquidity situation and the financial position of a company, which are now among the non-transferable and irrevocable tasks of a board of directors. Impending insolvency exists when the debtor will not be able to meet its payment obligations over an extended period.

Duties of the board of directors

In addition to the existing obligations in the event of a loss of half of the capital and over-indebtedness, there are now also obligations in the event of impending insolvency. When there are indications of impending insolvency, the board of directors must take appropriate measures to ensure payment capability and, if necessary, other measures to restructure the company or possibly propose them to the general assembly. These must be validated by an authorized auditor. In the case of impending insolvency, as well as a loss of half the capital and over-indebtedness, the law requires that actions be taken with due haste.

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