Stock Corporation Law Revision - Reserves and Repayments

The revision of the new stock corporation law has been underway 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. Among other things, the changes affect the reserves of a corporation.

Statutory Capital Reserves

Repayment of the statutory capital reserve to shareholders is permitted as long as the capital and profit reserves, minus the amount of any losses, exceed half of the share capital registered in the commercial register. For the repayment to shareholders to be permissible, confirmation from an approved audit expert is required, based on the balance sheet, that after the repayment neither the fulfillment of creditors' claims is at risk nor is there justifiable concern of insolvency within the next twelve months.

Statutory Profit Reserves

As before, 5 percent of the annual profit, until capital and profit reserves together reach 50% of the capital registered in the commercial register, must be allocated to the statutory profit reserves. The second allocation due to the distribution of a super dividend according to previous law is omitted.

Voluntary Profit Reserve

If the continuous prosperity of a company, considering the interests of all shareholders, justifies it, a voluntary profit reserve can be formed. The general assembly decides on the use of this reserve, whereby the legal sequence of offsetting for the loss allocation must be strictly observed.

• Further Information
   
• Calculate Offer for Fiduciary