The most significant changes in corporate law in 2016

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The most significant changes in corporate law in 2016

Prohibition of performing a feature

The amendment to the Commercial Code in the new § 13a of the Commercial Code introduces the possibility to impose on a natural person, by a court decision, the prohibition to perform the function of the statutory authority, member of the supervisory authority, organizational unit of the company or authorized person.

A decision to exclude can only be a decision expressly provided for by the law. Such decisions are currently a decision under Section 74a 6 of the Bankruptcy and Restructuring Act and the decision pursuant to Section 61 10 of the Criminal Code.

Individual exclusion actions are therefore not admissible. An excluded person is obliged to report the decision to all companies concerned by him.

From the lawful validity of the exclusion decision, the  excluded person is automatically excluded to be in all of those functions, even if he did not notify this to all the companies concerned.

Whoever would act for a company, despite a lawful validity on exclusion, becomes a guarantor of the obligations of all legal acts that he acts as a excluded representative.

Another amendment, which was to establish a register of persons excluded from the exercise of the above mentioned functions, was vetoed by the President.

Repayment of principal

The amendment to the Commercial Code annuls the obligation to insert cash deposits into the emerging company into a special bank account established in the bank, as well as the obligation to attach a statement from the bank showing the payment of the money deposit for registration of the company.

In order to prove the repayment of the deposits upon filing the application for registration of the company in the business register, a written statement by the administrator of the deposit will be sufficient for its payment. In this respect, the provisions of § 60 shall be deleted. 2, which provided for the obligation to deposit cash deposits into a special bank account set up by the administrator of the deposit.

Acquisition of property by the founder or associate

The amendment to the Commercial Code narrows the scope of application of the provisions relating to the acquisition of assets by a commercial company under a contract concluded with its founder or a shareholder in the amount of at least 10% of the share capital (Section 59a of the Commercial Code) exclusively to public limited-liability companies. Therefore, these provisions will no longer apply to other types of companies

Company in crisis

The new Commercial Code is introducing a new concept, a company in crisis where the amendment sets new rules for managing some sources of funding.

A business company becomes a company in crisis when: it is in bankruptcy under the Bankruptcy and Restructuring Act or threatens its bankruptcy under the Commercial Code

According to the amendment to the Commercial Code, the company is in danger of bankruptcy if the ratio of its own capital and liabilities is less than eight hundred (8: 100).

Businesses will have to monitor not only whether they are in bankruptcy, but also there is threat of a bankruptcy in the sense of the provisions of the Commercial Code.

The fact that a company is in crisis is essential, especially for the purposes of assessing the payment of payments that replace the own sources of funding, which, in the sense of the amendment, must not be reversed during the crisis.

An amendment to such performance shall be deemed to be a credit or equivalent transaction which is economically equivalent to that provided by the persons defined in §67c 2 Commercial Code during the crisis or before the crisis, if its maturity was postponed or prolonged during the crisis.

No refund

The new wording of the Commercial Code annuls not only the return of the asset itself as a contribution by the associate to a trading company but also any performance provided by the company without adequate consideration under a legal transaction negotiated with the associate or in its favor, regardless of the form of the arrangement or validity.

In practice, therefore, any transactions that take place at the expense of the company in favor of the associate under conditions not normally customary in the ordinary course of trade (such as a gift or a non-interest-bearing loan provided by a partner company).

The amendment stipulates that a former member is also considered as a partner for such purposes if such performance occurred within two years of being discontinued or a person who has become a member within two years of such performance.

The amendment also specifies when performance is deemed to be provided to the associate.

The value of the deposit returned in violation of the law must be returned to the company, jointly and severally liable by the members of the statutory body performing the function at the time of the return of the contribution contrary to the law as well as those who performed the function in the period in which the company is entitled to he did not apply the refund back and knew or assumed all the circumstances. With regard to the systematic placement of provisions for the ban on returning deposits under the law, these, in our opinion, only concern companies in crisis.

One person limited company

In Section 105a of the Commercial Code, paragraph 2 is deleted, which authorizes the founding of a new company, in the event that its company has been declared bankrupt, after one year from settling the liabilities that are connected to the assets subject to bankruptcy according to the lawful resolution of the court. Deletes with and also paragraph 3, which permitted the formation of a new company to the person who deliberately caused the company to decline or extend the company 10 years from the settlement of the liabilities of the company being wound up if the insolvency or prolongation that gave rise to the bankruptcy proceedings was committed by deliberate conduct. The current wording of Section 105a of the Commercial Code is therefore the following:

Contractual fine for failure to submit a petition for bankruptcy

The amendment to the Commercial Code introduces a fiction that the bankrupt and the person who is obliged to file a bankruptcy petition on his behalf have negotiated a bankruptcy fine in favor of the bankrupt the half of the lowest value of the share capital of the joint stock company, currently € 12,500.

The obligation to pay a contractual fine accrues in relation to the bankrupt, individually, to every person required to file a bankruptcy petition.

Entitlement to compensation beyond the contractual penalty is thus not affected. In the context of proceedings for the exercise of the right to a contractual fine, the burden of proof is countervailed, the defendant may prove that there are facts excluding his liability.

The court in the present proceedings is not entitled to reduce the contractual penalty.

The amendment to the Bankruptcy and Restructuring Act is to amend the position of leasing tenants who do not have the possibility to terminate the contracts on the basis of which the debtor has the item with himself.