Retroactive entitlement to dividends on new shares: Munich Higher Regional Court contradicts capital market practice

In its ruling of 28 May 2026 (31 Wx 82/26e), the Munich Higher Regional Court has, for the first time at higher court level, ruled on the question of whether new shares issued from authorised capital can be granted retrospective entitlement to dividends for a financial year that has already ended – and has ruled that this is not the case in the context of a simplified exclusion of subscription rights. In doing so, the court is directly interfering with a well-established practice on which listed companies and investors have been structuring their capital market transactions for years.

Retroactive entitlement to dividends as the norm in transaction practice

In capital market practice, the retrospective entitlement to dividends for new shares is the norm, in order to ensure a uniform ISIN and thus the fungibility of the new shares with the existing ones. Without this equivalence, the new shares would be tradable only to a limited extent until the next annual general meeting – a serious restriction for investors participating in the capital increase.

Point of criticism: focus on legal protection rather than substantive justification

The Senate’s decision is based largely on the lack of adequate legal protection and compensation options for existing shareholders. However, the central preliminary question remains unanswered: under what conditions can retroactive entitlement to dividends be objectively justified, even within the framework of a simplified exclusion of subscription rights? In this context, legal protection or compensation for existing shareholders would, for example, be dispensable in cases where no dividend can be distributed for the past financial year or where the dilution of profits is taken into account when determining the issue price.

Dogmatic ambiguity regarding the simplified exclusion of subscription rights

The criticism levelled by the Munich Higher Regional Court that there has been no examination of the objective justification for the exclusion of subscription rights misses the point – and thus fails to recognise the structure of the simplified exclusion of subscription rights under section 186(3), fourth sentence, of the German Stock Corporation Act (AktG). According to established case law, it is precisely this simplified exclusion of subscription rights that is not to be assessed against the ‘Kali und Salz’ principles.

Finally, the refusal to grant leave to appeal to the Federal Court of Justice (BGH) is also questionable, as the decision concerns a matter of fundamental importance and there are significant dissenting views in the legal literature.

Implications for practice

In terms of transaction practice, the ruling means that, in the case of PIPE transactions and accelerated bookbuilding procedures, early consultation with the competent registry court becomes de facto mandatory.

From a legal policy perspective, the decision shows that the flexibility previously enjoyed regarding dividend entitlement for new shares under German company law is coming under pressure. From a capital markets perspective, it would be desirable to maintain this flexibility so that the German public limited company does not lose further appeal as a capital markets vehicle in an international comparison.

You can read the full article in Neue Zeitschrift für Gesellschaftsrecht (NZG), including an in-depth analysis of the ruling, here (German only).