Order of loss offsetting

The new stock corporation law specifies a clear sequence for offsetting losses:

1. Offsetting against the profit carried forward
2. Offsetting against voluntary reserves.

Both cases are prescribed by law and do not require a resolution by the Annual General Meeting. Any other utilisation must therefore be decided by the Annual General Meeting (e.g. loss carried forward to new account)!

If further losses remain, these can be carried forward to the new account, or

– first with the statutory retained earnings and then

– with the statutory capital reserves

be offset against the statutory capital reserves.

In these cases, the Board of Directors must propose offsetting or carry forward the loss to the Annual General Meeting.

Instead of offsetting against the statutory reserves, the loss can also be carried forward to the new year.