Share Purchase Agreements (SPA) usually contain a – negotiated in detail, more or less extensive – catalog of guarantee declarations of the seller in connection with agreements on the legal consequences in the event of an incorrectness of a guarantee declaration. The statutory liability of the seller which generally exists in addition is usually excluded within the legally permissible framework. The decision of the German Federal Court of Justice [Bundesgerichtshof – BGH] of 26 September 2018 (file no. VII ZR 187/17) shows that it is important to focus in particular on the contractual exclusion of liability, especially its scope.
In the recent past, decisions of the EU Commission as well as the European Court of Justice (ECJ) pertaining to so-called gun-jumpings (pre-merger coordination) within M&A transactions drew attention, in particular at European level.
The managing directors of a limited liability company [Gesellschaft mit beschränkter Haftung – GmbH] may in principle carry out an allocation of responsibilities and duties among each other. The Federal Court of Justice [BGH] recently substantiated in a judgment of 6 November 2018 (file no. II ZR 11/17) the requirements for an admissibility of such an allocation of responsibilities between several managing directors of a GmbH and the duties of a managing director associated with that. The decision was based on the liability of a managing director of a GmbH for payments after the company’s insolvency.
By resolution of 29 March 2017 the Federal Constitutional Court [Bundesverfassungsgericht – BVerfG] decided that the proportionate forfeiture of tax losses pursuant to section 8c para. 1 sentence 1 German Corporation Tax Act [Körperschaftsteuergesetz – KStG] old version is unconstitutional and called on the legislator to pass new regulations by 31 December 2018 which should eliminate the infringement of the constitution retroactively as of 1 January 2008. The legislator implemented this by removing without replacement the regulations on proportionate forfeiture of tax losses retroactively as of 1 January 2008 by passing the “Law for the Avoidance of Sales Tax Losses when Trading Goods on the Internet and for the Amendment of Further Law Regulations” ([Gesetz zur Vermeidung von Umsatzsteuerausfällen beim Handel mit Waren im Internet und zur Änderung weiterer steuerlicher Vorschriften – UStAVermG], also known under its original name “Annual Tax Act 2018”).
Finally, the European Court of Justice (ECJ) clarified the situation with its judgment of 19 December 2018 on the “group clause” relating to real estate transfer tax: the tax relief pursuant to section 6a German Real Estate Transfer Tax Act (RETTA) is not an illicit aid within the meaning of Art. 107 TFEU, since this tax relief is not associated with any selective advantages.
In its judgment of 19 February 2019 (file no. 9 AZR 541/15) the Federal Labor Court [Bundesarbeitsgericht – BAG] ruled that an employee’s entitlement to paid annual leave shall as a rule only expire at the end of a calender year if the employer did not previously instruct the employer about the concrete leave entitlement and time limits and if the employee did not take the leave voluntarily nonetheless. With this judgment, the BAG implemented the jurisdiction of the European Court of Justice which means that the expiration regulation under section 7 para. 3 Federal Holiday Benefits Act in its current form no longer applies.