The ruling by the Munich Higher Regional Court (case no. 5 U 7318/22 e) is a direct response to legal uncertainties that were exacerbated by the Wirecard scandal. The collapse of the DAX-listed payment service provider led to considerable losses for investors who had relied on the accuracy of financial information. Many aggrieved parties found that their claims for compensation in the insolvency proceedings were far down the list of creditors – a practice that the Munich Higher Regional Court has now declared inadmissible.
The significance of the judgment in the context of Wirecard:
In the Wirecard case, investors were deliberately deceived by falsified financial reports and accounting tricks. These deceptions led to many investors investing their money in an insolvent company. The Munich Higher Regional Court has now clarified this:
- Shareholders’ claims for damages arising from incorrect or misleading capital market information are not to be treated as subordinated claims (section 39 (1) no. 5 InsO).
- Aggrieved shareholders must be considered on an equal footing with other creditors in insolvency proceedings.
This decision strengthens the rights of shareholders who have acted in reliance on correct company information.
Lessons from the Wirecard scandal:
The ruling by the Munich Higher Regional Court clearly shows the responsibility that companies bear when communicating their financial data. In the Wirecard case, reports were systematically manipulated in order to deceive investors – a practice that could come under even stricter legal scrutiny in the future.
Practical implications for shareholders and companies:
For shareholders:
- Greater chances of compensation in insolvency proceedings.
- Less risk of being disadvantaged by subordinated classification.
For companies:
- A greater obligation to make their financial reports transparent and correct.
- Increased liability risk in the event of breaches of capital market obligations.
The Wirecard scandal has permanently damaged the reputation of the German financial markets, but the ruling by the Munich Higher Regional Court offers an important step towards justice for aggrieved shareholders. Companies have a duty to avoid deception and accounting fraud in order to regain the trust of investors.
