## Facts

- A German stock corporation’s shareholders approved a resolution to double its share capital by issuing new shares.
- The resolution excluded existing shareholders’ preemptive rights and instead issued the new shares to an outside corporation and its subsidiary.
- The consideration was an in-kind contribution consisting of shares in Kali und Salz AG.
- A valuation body including accountants and company representatives assessed the contributed shares; the shareholders accepted the valuation as adequate and approved the transaction structure.
- An existing shareholder sued to annul the resolution, alleging the contributed Kali und Salz shares were overvalued and therefore inadequate consideration for the new shares.
- The trial court dismissed the challenge, and the appellate court affirmed.
- The shareholder pursued a further appeal to the Federal Court of Justice.

## Issues

1. Whether a capital increase funded by an in-kind contribution of shares in another company, coupled with exclusion of preemptive rights, is invalid or voidable when the valuation is contested.
2. In an annulment action challenging such a resolution, which party bears the burden to prove a material valuation error and inadequacy of the in-kind contribution.
3. What standard limits appellate review of a trial court’s fact-finding and evaluation of expert valuation evidence.

## Decision

- The court affirmed the lower courts and dismissed the shareholder’s appeal.
- A capital increase against an in-kind contribution, with exclusion of preemptive rights, is permissible in principle where the contributed assets are properly valued and there is no gross disproportion between contribution value and the nominal amount of shares issued.
- The challenging shareholder bears the burden of proving a concrete, material valuation error and resulting inadequacy of the contribution.
- Appellate review of valuation disputes is limited; the trial court’s evaluation of expert evidence is respected if methodologically plausible and adequately reasoned.
- The shareholder failed to demonstrate an ascertainable, material overvaluation of the Kali und Salz shares; the resolution remained effective.

## Legal Principles

- A registered or properly adopted capital-increase resolution enjoys presumptive validity; a challenger must establish grounds for annulment.
- For contributions in kind, inadequacy requires more than disagreement over valuation techniques; the challenger must prove a material misvaluation.
- Enterprise valuation may rely on business-economics methods combining asset-based (substance) value and income-based (earnings) value, so long as applied coherently.
- Trial courts have primary responsibility to weigh expert valuation results; appellate courts intervene only for clear methodological error, legal error, or insufficient reasoning.
- Exclusion of preemptive rights is not invalid per se in an in-kind capital increase if the transaction is supported by adequate consideration and not grossly disproportionate.

## Conclusion

The court upheld a capital increase financed by an in-kind contribution of shares and an exclusion of preemptive rights, holding that the challenger must prove a material valuation error and that appellate courts should not replace a trial court’s reasoned valuation assessment with their own.


Kali und Salz (II ZR 142/76), 71 BGHZ 40 (BGH 1978)