Draft law to mitigate the consequences of the COVID-19 pandemic in civil, insolvency and criminal law proceedings
Regulations under corporate law
Protective measures to prevent the spread of the COVID-19 pandemic, in particular the restriction on the possibility of holding a meeting, increasingly present companies, associations and foundations with great challenges in ensuring their own ability to act by means of required meeting resolutions. This applies both to annual general meetings, for example to pass resolutions on the appropriation of profits or the appointment of board members, and to necessary extraordinary meetings. The latter can be of particular importance in times such as those we currently find ourselves in. The draft law prepared by the German federal government therefore wishes to facilitate the holding of (general) meetings and thus enable necessary resolutions to be adopted. The modifications apply to all ordinary as well as extraordinary (general) meetings, but – subject to their possible extension – are limited in time to the year 2020.
Regulation of transformation law
Extension of the registration period with the German Commercial Register to twelve months.
In addition to the extension of the deadline for holding annual general meetings, the draft law provides that for mergers and demergers according to the German Transformation Act (Umwandlungsgesetz – UmwG), an extension of the maximum period for registration in the German Commercial Register from eight to twelve months (section 17 para. 4 sentence 2 UmwG), in relation to the preceding closing date of the closing balance sheet of the transferring legal entity, shall be possible. This applies to all applications in 2020. The draft does not contain a corresponding extension of the related transformation tax periods for contributions in kind within the meaning of the German Transformation Tax Act (Umwandlungssteuergesetz – UmwStG) (see section 20 para. 6 sentences 1 and 2 UmwStG). This is likely due to the fact that tax regulations in connection with the COVID-19 pandemic will probably be regulated in a separate law, where the deadlines for transformation tax purposes are also likely to be extended, since otherwise the extension of the deadline in section 17 para. 4 sentence 2 UmwG with regard to mergers and demergers under which the shareholders of the transferring entity receive shares of the acquiring entity that are created by way of a capital increase as consideration would have no effect.
Regulation of other types of corporate entities
GmbH – shareholders‘ resolutions in text form without the consent of all shareholders. Contrary to section 48 para. 2 of the German Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – GmbHG), resolutions in text form or by written vote will no longer require the consent of all shareholders.
Mutual insurance association (Versicherungsverein auf Gegenseitigkeit – VVaG). The above-mentioned facilitating options for AGs also apply to VVaGs (as defined in section 171 of the German Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG)) to the extent that the provisions of stock corporation law to which the exemptions relate apply to a VVaG.
Cooperatives, associations, foundations. The draft law also provides for facilitating options for cooperatives, associations and foundations during meetings and decision-making processes, e.g. by enabling electronic communication even without an authorisation in the articles of association. In addition, a member of the board should temporarily remain in office after the expiry of his term until a successor can be appointed. In this way, emergency appointments by courts are to be avoided and the ability to act is to be maintained if a successor cannot be appointed in time due to restrictions imposed by COVID-19.
Extension of the facilitating options
Regulation authorization. The draft bill contains an authorization of the German Federal Ministry of Justice and Consumer Protection to extend the above-mentioned facilitating options by statutory regulation up to 31 December 2021 at the latest, if this appears necessary due to the continuing effects of infections with the SARS-CoV-2 virus in Germany.