A Critical View of the GASB (German Accounting Standards Board) Draft 'White Paper' on the Future of European Creditor Protection

Abstract:     
Regulations that limit dividend payouts, made by limited liability companies in order to safeguard the interests of creditors, represent important legal constraints as they ensure a minimum level of protection. Hereby, this task, which is performed in Germany by annual financial statements according to German Commercial Code (HGB), is an important part of the European regulatory framework. But these capital maintenance regulations are under close scrutiny now. The annual non-consolidated financial statements following HGB are in danger of being replaced by the IFRS accounting supported by a solvency test. However, it is questionable if this combination of IFRS and a solvency test in general can provide a “double safeguarding”.

According to a draft of a German Accounting Standards Board (GASB) “white paper” on the future of European creditor protection, presented and discussed on its 127th meeting, the GASB supported the implementation of non-consolidated financial statements following IFRS accounting without additional research on this topic. Given the obvious support of the “IFRS solution”, it can only be assumed that the GASB has already established a political position.

This paper aims to analyse the draft of a GASB “white paper” in the light of the objective of adequate creditor protection. The economic analysis should serve as a starting point for further academic and legal policy discussions.

Keywords: German Accounting Standards Board, Capital maintenance, Creditor protection, Solvency test, IFRS, German Commercial Code, Dividend payouts

JEL Classification: K20, M41, M48, G35

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