The Federal High Court (BGH) made clear by its decision of 06.02.06 that the investor of a closed participation must recognize from the folder without further, to which extent its contribution flows into the plant object. We had already published the judgement in the investor protection report No. 18/06 of 15.05.06 (www.anlegerschutzauskunft.de/a_as_report_06/0605018.htm). Attorney Johannes Fiala, Munich, (www.fiala.de) has again highlighted and discussed the important BGH ruling.
Excerpt from the judgment brief:
Misleading soft cost claims:
If the investor cannot recognize, which part of its own means for expenditures outside of the acquisition and production costs for the actual investment object flows, then a relevant folder lack is present. The prospectus is then considered incomplete and unclear. Reversal because of misleading: So that the investor can get an accurate picture of the investment object, all circumstances, which are important for the investment decision, must be represented correctly and completely. Therefore, the information in the investment and financing plan or the information on the origin and use of funds must be complete. It is not sufficient if the investor would first have to carry out additional calculations and a comparison of different prospectus information. In accordance with the established case law of the Federal Court of Justice, it is life experience that errors in the prospectus are causal for the investment decision, even if this presumption can be refuted in individual cases.
Guiding principles of the BGH:
a) A legally relevant lack of prospectus is present, if “soft” costs result in an investment model in not insignificant height and an investor cannot infer from the prospectus without further ado, to which extent the contribution funds paid in by it do not flow into the investment object, but for expenditures outside of the acquisition and production costs are used. b) If the prospective investor is not informed in the prospectus that a parcel of land adjacent to the company’s property must be acquired for the planned parking spaces, this is also a defect in the prospectus; this also applies if it is clear that the company will not be burdened with additional costs through the purchase of the parcel of land. c) The question as to whether the investor must allow tax advantages to be offset against his claim for damages arising from prospectus liability depends on the examination of the individual case in accordance with the concrete submissions of the parties as to how the financial position of the aggrieved party would have developed if he had refrained from investing. The general assumption alone that the aggrieved party would normally have made a different tax-privileged investment cannot justify the non-crediting of the advantages (connection to BGH, judgement of 17 November 2005 – III ZR 350/04, WM 2006, 174).
(DA No. 11B/07 of 19.03.2007, p. 4)
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Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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