When establishing or increasing the capital of a GmbH, the concealed contribution in kind represents a risk that should not be neglected. However, since this legal institution, in particular legal laypersons, is usually unknown, unforeseen problems regularly occur in the context of the above-mentioned processes. In order to prevent this, an early recognition of the factual constellations is necessary. If, after a cash start-up or capital increase, the GmbH uses the financial resources made available to it for the acquisition of a service from the same depositing partner, this is a hidden contribution in kind. This can lead to both civil and criminal consequences.

1. Definition of hidden contribution in kind

A concealed contribution in kind within the meaning of § 19 paragraph 4 GmbHG exists if a cash contribution is agreed for the founding/capital increase of a GmbH, but the GmbH is to receive a material object from the affected shareholder on economic consideration on the basis of an agreement previously made with material and temporal connection. In this context, the existence of such an agreement is presumed by case-law if there is a time interval of less than six months between the cash contribution and the counterpart transaction.

2 Exemplary constellations of the concealed contribution in kind

One of the most common cases in practice is the purchase of property from a shareholder. The shareholder initially makes a cash contribution in the agreed amount as part of the formation/capital increase. Subsequently, the GmbH acquires from the shareholder, with the funds available through the cash contribution, an object in kind (in principle, all assets that have an ascertainable value, for example, shares in a GmbH). This process constitutes a concealed contribution in kind.

Another area of application of the hidden contribution in kind is the repayment of a shareholder loan. If the GmbH repays a shareholder a loan debt (or any other old debt) before a capital increase and the shareholder makes the contribution owed by him due to the capital increase from these funds after prior agreement, there is also a concealed contribution in kind.

The qualification of these and other comparable processes as a concealed contribution in kind entails various legal consequences. First, in the context of the formation/capital increase, the cash contribution obligation of the affected shareholder pursuant to § 19 (4) sentence 1 GmbHG is deemed not to be fulfilled. The obligation to deposit money thus continues and can in principle be demanded by the GmbH once again. However, according to § 19 (4) sentence 3 GmbHG, the value of the asset that the company has received from the shareholder in the context of the concealed contribution in kind must be offset against the GmbH's contribution claim under certain conditions. This leads to a relativization of the civil consequences of a concealed contribution in kind. Insofar as the shareholder transfers a valuable (amount of the cash contribution) asset to the GmbH, at least a double claim of the shareholder’s cash contribution obligation is excluded in this respect. However, the burden of proof regarding the value of the property transferred shall be borne by the shareholder.

3.2. Criminal consequences of a concealed contribution in kind

The legal consequence of the concealed contribution in kind, which is less noticeable in the GmbHG but clearly more relevant for GmbH managing directors, can be found in §§ 8 paragraph 2, 9a, 82 paragraph 1 GmbHG. If the managing director of a GmbH indicates in the context of the registration of the GmbH for entry in the commercial register, with knowledge of the concealed contribution in kind, that the cash deposits paid on the share capital are finally in the free disposal of the managing directors, these are deliberately made false statements. These result, on the one hand, in personal civil liability of the Managing Director towards the GmbH in accordance with § 9a GmbHG and, on the other hand, in criminal liability of the Managing Director in accordance with § 82 (1) no. 1 GmbHG, the penal framework ranging from a fine to imprisonment of up to three years.

At this point, due to the severity of the legal consequences, it should be explicitly pointed out once again that § 82 GmbHG is a criminal offence, not merely an administrative offence. The criminality of course presupposes an intentional commission of the managing director. However, this is usually the case if false information is deliberately communicated for the purpose of entering the GmbH in the commercial register.

4th Conclusion

Due to the legal consequences explained above, it is of enormous importance to recognize a threatening hidden contribution in kind in good time. Especially in cases in which a further transaction between one or more shareholders and the company is planned in connection with a cash start-up of a GmbH, a legal counsel expert in company law should be consulted as a preventive measure. After the facts have been analyzed accordingly, it is possible to assess which alternative courses of action are suitable for the GmbH and the affected shareholders. In many cases, the safe way through a lawful creation of capital in kind or increase of capital in kind due to the imminent legal consequences of a concealed contribution in kind will make more sense. On the other hand, in other case constellations, all-clear can possibly be given quickly. This is the case if the counterparty may not concern any eligible services at all.