Meaning
Regulatory provision that prohibits the distribution of company assets if the net assets would fall below the registered share capital. Adherence to german gmbhg section 30 prevents shareholders from draining the company’s resources at the expense of its creditors. This rule is a cornerstone of capital maintenance for companies operating under German law.
Capital Preservation
Calculation of the net assets determines whether a proposed dividend or loan to a parent company is legal. When german gmbhg section 30 is active, the managing director must verify that the company’s equity remains above the threshold of the registered share capital. This protection ensures that the business maintains its financial capability to continue manufacturing operations.
Distribution Limit
Restriction on the outflow of funds applies to any payment that is not covered by a corresponding claim for repayment or adequate security. Under german gmbhg section 30, the company cannot simply transfer cash to its owners if doing so would create a hole in the balance sheet. This boundary stops applying only when the company is in a formal profit and loss transfer agreement with its parent.
Liability Consequence
Personal responsibility for the return of prohibited payments falls on both the recipient and the director who authorized the transfer. If german gmbhg section 30 is breached, the company has a statutory right to claw back the funds to restore its capital base. The cost of calling a distribution early without proper accounting is the immediate personal liability of the board members involved.
