Wirecard scandal could see shareholders face claims to claw back dividends
Munich“s regional court – the Landgericht (LG) München – has declared Wirecard AG“s annual financial statements from 2017 and 2018 null and void. The group“s shareholders could now be facing claims brought by the insolvency administrator to claw back dividend payments.
The verdict comes following the revelation that around 1.9 billion euros has either disappeared without a trace or never existed in the first place. The formerly DAX-listed company was found to have inflated its balance sheets with bogus accounting entries, with the 2017 and 2018 balance sheets showing profits of around 600 million euros and commensurate dividend payouts to shareholders in the eight-figure range.
We at the commercial law firm MTR Rechtsanwälte note that the insolvency administrator could now go on to reclaim these dividend payments from shareholders if the Munich court“s ruling from May 5, 2022, according to which Wirecard AG“s annual accounts for 2017 and 2018 are void and the action filed by the insolvency administrator was upheld, becomes legally binding.
This means that any resolutions on the distribution of profits for those years are also null and void, thus paying the way for the insolvency administrator to potentially reclaim the dividends paid to shareholders for both years.
Whether the shareholders would then have to repay the dividends is, however, questionable. While it is true that shareholders do have to return benefits that they have wrongfully received, Section 62(1) Sentence 2 of Germany“s Stock Corporation Act (AktG) clarifies that this is only the case if the shareholders knew, or were negligently unaware, that they were not entitled to receive the dividends.
This does not look to have been the case here, especially considering that the auditors had issued an audit certificate for the annual financial statements. The shareholders therefore have a good chance of being able to resist any attempts by the insolvency administrator to claw back the dividends.
The LG München“s confirmation that the balance sheets are void means that the shareholders are also better placed to assert claims for damages, with the auditors having issued an unqualified opinion for the 2017 and 2018 annual accounts.
Wirecard shareholders can assert their claims for damages individually or join an investors“ class action lawsuit pursuant to Germany“s Act on Model Proceedings in Capital Market Disputes (KapMuG), which is expected to be heard in the summer.
Lawyers with experience in the fields of stock corporation law and capital markets law can advise Wirecard investors on their legal options.
https://www.mtrlegal.com/en/legal-advice/capital-markets-law.html
MTR lawyers www.mtrlegal.com/en/ is an international full service law firm. The lawyers counsel on corporate and commercial law, business law, tax law, IT law and IP law and distribution law. The law firm advises international companies, corporations, mid-sized businesses and private clients worldwide. MTR Rechtsanwaelte can be found in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany
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