DE: Wirecard annual financial statements for 2017 and 2018 void

Jun 17, 2022 Benn-Ibler Rechtsanwälte

Wirecard's financial statements for 2017 and 2018 as well as the resolutions on the appropriation of profits at the associated annual general meetings are null and void. This was the decision of the Munich Regional Court I (Landgericht München I) in its final ruling. According to the court, the considerable overvaluation of the balance sheet total was a significant error.

In the middle of 2020, the balance sheet fraud of the payment service provider and DAX-listed company Wirecard came to light. It had falsified its balance sheets, around EUR 1.9 billion did not exist. This led to the appointed insolvency administrator suing for a declaration that Wirecard's annual financial statements were null and void.

According to the court, the nullity of the annual financial statements resulted from Section 256 para. 5 sentence 1 no. 1 of the German Stock Corporation Act (Aktiengesetz, AktG). According to this, annual financial statements are null and void due to a breach of valuation regulations if items are overvalued. This is the case if asset items are stated at a higher value than permissible under the Commercial Code (Handelsgesetz). The non-existence of the Third Party Acquiring (TPA) transactions (as well as the trust balances complained of here has an impact on the capitalised liquid assets at the level of the defendant. If - as in the present case - the recognised credit balances on the trust accounts are at least largely non-existent, this leads to a significant overvaluation of the assets in the financial statements and thus to their nullity. Pursuant to Sec. 253 para. 1 sentence 1 AktG, this nullity also results in the nullity of the resolutions on the appropriation of profits. The court also denied the insignificance of the overvaluation of the balance sheet item. With an overvaluation of the balance sheet total of 39% and 41%, it can no longer be assumed to be insignificant.

Without having to decide this conclusively, the court assumes that massive reasons speak for the correctness of the insolvency administrator's submission that the trust assets in question had never existed or at least not to any significant extent. If the judgment becomes final, it will then be possible for the insolvency administrator to reclaim the dividends paid to Wirecard shareholders.

Munich Regional Court I, 5 HK O 15710/20 (05.05.2022)