Consequences of Unlawful Distribution of Assets
It is possible to distribute a company’s assets in violation of the aforementioned [Use and Distribution of a Company Assets in General] permitted distribution of assets. This may be, e.g. as cash payments, provision of products or services, waiver of debts, donations, overpriced acquisitions or undervalued sales.
In the event of distribution of the company’s assets in violation of the provisions of the Companies Act or the Articles of Association, the recipients of the distributed assets shall return the assets to the company including interest, provided that the recipient knew, or he/she should have known that the distribution of assets was unlawful. The provisions of the Companies Act regarding liability for damage caused to the company may naturally be applicable to members of the company’s management that have participated in the decision-making regarding unlawful distribution of assets or execution of such decision, or preparation or adoption of an incorrect balance sheet that has formed the basis for such decision, see further in Liability of the Board of Directors and the Managing Director [Liability of the Board of Directors and the Managing Director].
Unlawful distribution of funds in violation of the principle of equal treatment of shareholders or provisions concerning protection of creditors may also result in a conviction for company law offence, which carries a maximum sentence of one year’s imprisonment.