BGH on Legal Tech When the software replaces the lawyer

Status: 06/17/2021 6:46 a.m.

Anyone who wants to draw up an individual contract goes to a lawyer. That’s how it was before. In the meantime, however, this can also be done online, without legal assistance. The BGH is now examining whether this is permissible. What are the sticking points?

By Kerstin Anabah and Pia Brandsch-Böhm

What is the specific case about?

The publisher Wolters Kluwer offers the legal document generator “Smartlaw”. With the help of the software, private individuals and companies can create and then purchase individual legal documents, such as rental agreements. To do this, customers have to answer 30 to 40 questions. The whole thing was “modeled on the conversation with the lawyer”, according to the original advertisement.

Wolters Kluwer is not admitted to the bar and is not licensed to provide legal services. The Hamburg Bar Association has therefore sued the publisher (Az. I ZR 113/20). She sees the Legal Tech offer as an anti-competitive violation of the Legal Services Act. It regulates who is allowed to provide legal services – for example lawyers or debt collection companies.

How have the courts decided so far?

The Cologne Regional Court gave the Bar Association in law. It saw in the contract generator a violation of the Legal Services Act. Wolters Kluwer appealed against this to the Cologne Higher Regional Court – with success. According to the Cologne Higher Regional Court, this is not a legal service, as there is no human (service) performance. The documents would be created by software. There is no customer contact because the customer operates the software himself. In addition, no legal examination of the individual case is necessary, since the program runs according to a fixed routine and a situation is only inserted into a given grid.

Have there already been judgments in similar cases?

As early as 2019, the Federal Court of Justice ruled on a legal aid program in the ruling on “kleineermiete.de”. At that time the question was whether a rental price calculator represents a collection or a legal service. With this online calculator, customers could see by entering their data whether they were paying too much rent and immediately defend themselves against it. For this purpose, the program directly commissioned the company behind it to enforce the rights. The BGH has declared this rental price calculator to be permissible.

How the first civil senate decides in the case of the contract generator is open. The industry for such offers is booming. The ruling is therefore likely to be another important step towards greater legal certainty.

Produced | Sohu Finance

Author | Tianlun Chen

A few days ago, WuXi AppTec, the leader of CRO, broke a big thunder, and its shareholders illegally reduced their holdings to cash out by nearly 3 billion, which aroused public outrage among shareholders.

On the evening of June 11, WuXi AppTec issued an announcement regarding shareholders’ violation of their commitments to reduce their shareholding in the company and an apology through the company. From May 14th to June 8th this year, the company’s shareholder Shanghai Yingyi Investment Center (hereinafter referred to as “Shanghai Yingyi”) reduced its holdings by approximately 17,249,700 shares, accounting for 0.6962% of the company’s total share capital. The price range for the reduction is From 143.49 yuan/share to 176.88 yuan/share, the total amount of reduction is 2.894 billion yuan.

After the reduction, as of the announcement date, Shanghai Yingyi only held 4,174,600 shares of WuXi AppTec, accounting for approximately 0.1419% of the total share capital.

Since May 10 this year, WuXi AppTec’s stock price has continued to rise, from 140.31 yuan/share (without restoring rights) to 180.99 yuan/share (without restoring rights), an increase of nearly 30%. The reduction of Shanghai Yingyi happened during the period when the stock price soared.

Before the implementation of this reduction, as a delegated voter, Shanghai Yingyi did not notify WuXi AppTec in advance, nor did it disclose relevant procedures such as the announcement of the implementation of the reduction plan through the company 15 trading days in advance.

WuXi AppTec said that after the company obtained the latest shareholder register sent by China Securities Depository and Clearing Co., Ltd. on June 8 due to the implementation of the 2020 equity distribution, it noticed the change in the number of shares held by Shanghai Yingyi and immediately approved the issue. Check with Shanghai Yingyi by letter and telephone inquiry and remind the relevant rules and the commitments it has made.

The feedback given by Shanghai Yingyi was that before the reduction, Shanghai Yingyi’s shareholding accounted for 0.8381% of the company’s total share capital, which was less than 1% of the total share capital. When the A-shares were listed, the commitment to reduce the shareholding of the company was made, and relevant regulations of the China Securities Regulatory Commission should be applied, which led to this violation of the commitment to reduce the shareholding. At present, the share reduction has been stopped, and I sincerely apologize for the impact on the company and all shareholders of the company due to the violation of the commitment.

WuXi AppTec’s prospectus shows that, as shareholders of the company, companies such as Shanghai Yingyi have made promises regarding the lock-up and reduction of the company’s shares:

“If the company reduces its holdings of the company’s shares issued before the company’s initial public offering, if the company uses a centralized bidding transaction method, it will disclose its shareholding reduction plan in advance 15 trading days before the first shareholding reduction, and reduce its holdings by other means. The company’s stocks will be announced three trading days in advance. The company is willing to bear the legal liabilities arising from the violation of the above-mentioned commitments. In the event of a situation that requires compensation to investors, the company shall bear the full liability for compensation.”

Public information shows that the executive partner of Shanghai Yingyi is Jiangsu Ruilian Investment, and its legal representative, Chen Zhijie, was the head of the M&A business and investment banking department of Huatai United Securities. Such professionals are not familiar with market rules, and this apology is naturally unacceptable to investors.

Attorney Zhang Yuanzhong, director of Beijing Wentian Law Firm, said that Shanghai Yingyi’s approach has clearly violated the provisions of Article 8 of the “Regulations on Share Reduction of Shareholders of Listed Companies, Directors, Supervisors, and Senior Executives” on the disclosure of information on reductions: “Listing The company’s major shareholders, directors, supervisors, and senior executives plan to reduce their shareholdings through a centralized bidding transaction on the stock exchange, and they shall report to the stock exchange 15 trading days before the first sale and disclose the share reduction plan in advance, and the stock exchange shall put it on record.”

Regarding this incident, Zhang Yuanzhong stated that relevant provisions of Article 197 of the Securities Law should be applied to impose fines and warnings. Since it is the shareholder’s own behavior to reduce shares in violation of regulations, listed companies do not need to bear the responsibility.

Article 197 of the “Securities Law” stipulates that if the information disclosure obligor fails to submit the relevant report or fulfill the information disclosure obligation in accordance with the provisions of this law, it shall be ordered to make corrections, be given a warning, and impose a penalty of more than 500,000 yuan and 5 million yuan. The following fines; the directly responsible persons in charge and other directly responsible persons shall be warned and imposed a fine of not less than 200,000 yuan but not more than 2 million yuan.

But in fact, incidents of illegal shareholding reduction are not uncommon. There are many reasons for violations, and the ultimate punishment is mostly thunder and rain.

In February of this year, Marumi’s third largest shareholder and largest tradable shareholder, L Capital Guangzhou Beauty Ltd., reduced its holdings by 260,000 shares in violation of regulations. The reason was that its staff changes were not handed over in time before and after the Spring Festival, and it was mistaken that it was still in the implementation period of the reduction plan. .

In early June, the incident had a result, and shareholders who violated the regulations received only one warning letter.

Attorney Zhang Yuanzhong said that the increasing number of shareholders’ illegal shareholding reductions is due to insufficient law enforcement, which is difficult to achieve from the perspective of prevention. The key is that follow-up punishments must be implemented in order to truly play the role of “killing chickens and monkeys.”

It is worth mentioning that at the same time that Shanghai Yingyi’s illegal shareholding reduction incident was announced, WuXi AppTec’s report on changes in equity disclosed that 22 companies including actual controllers, persons acting in concert, and delegated voting parties were involved as information disclosures. Obligors still have plans to reduce their holdings of WuXi AppTec’s shares in the next 12 months. They will reduce their holdings of WuXi AppTec’s shares according to market conditions and perform relevant information disclosure obligations; and they will not increase their holdings in the next 12 months. Mingkangde shares plan.

The announcement showed that after Shanghai Yingyi reduced its holdings, WuXi AppTec’s actual controllers Li Ge, Zhao Ning, Zhang Chaohui, and Liu Xiaozhong collectively controlled 25.16% of WuXi AppTec’s voting rights through these 22 institutions.

As of midday’s close, WuXi AppTec’s stock price fell 1.37% to close at 144.02 yuan, with a total market value of 423.5 billion yuan.

Internet photo

Losing money for many years

Vietnam Industrial Construction Joint Stock Corporation (Vinaincon, VVN code – UPCoM transaction) was established in 1998, with charter capital of 550 billion VND, and 82.75% of state capital represented by the Ministry of Industry and Trade. The company specializes in construction and installation, basic construction.

The audited financial statements of the parent company 2020 have just been announced by VVN, showing that the total assets of the company is 987 billion VND. Revenue from goods sold and service provision in 2020 will reach 313 billion VND but COGS is 314 billion VND, so gross profit is negative 724 million VND.

Revenue from financial activities is 48.4 billion VND. The cost of business management is 30 billion. Net profit reached 9.3 billion. Thereby, after-tax profit reached 13.2 billion.

According to the note, the revenue from financial activities mainly comes from deposit interest, interest of 18.4 billion dong, and dividend of 29.9 billion dong.

It is known that VVN invests in many subsidiaries and associates. These companies are mostly profitable, the highest profit is from Thu Duc Centrifugal Concrete JSC (13 billion VND) and An Giang Centrifugal Joint Stock Company (6.1 billion VND).

Up to this point, VVN has not yet released its 2020 consolidated financial statements. In early April 2021, VVN also submitted a request to extend the time to hold the 2021 Annual General Meeting of Shareholders for the reason that results were summarized. The Corporation’s production and business have not been completed yet because the work-in-progress valuation and debt comparison with the investors are difficult and prolonged.

According to the annual report of 2019, although the total revenue and other income in 2019 increased by 126.7% compared to 2018, reaching more than 4,443 billion VND, but the cost of goods sold was high. In addition, the investment from Quang Son Cement Company Limited lost a loss (minus 126 billion VND), making the company’s profit in 2018 and 2019 all negative numbers.

In 2020, the company has a decision to dismiss Mr. Hoang Chi Cuong – General Director, instead appointing Mr. Do Chi Nguyen.

Please clarify the role of Vinaincon

From April 12, Hanoi City People’s Court brought to trial with 19 defendants who are leaders of Vietnam Steel Corporation – VNS, Thai Nguyen Iron and Steel Joint Stock Company – TISCO on wrongdoing in this project with behavior like Adjusting the investment structure, signing the contract appendix, separating part c from the EPC contract, signing subcontracting contract with Vinaincon according to unit price, leading to breaking the EPC contract principles …

Vinaincon is a subcontractor involved in Thai Nguyen Iron and Steel Phase 2 project. In 2009, the EPC contract between Thai Nguyen Iron and Steel Joint Stock Company – TISCO and Chinese contractor MCC had problems due to consecutive MCC. contract breaking.

On April 29, 2009, Vinaincon sent a document to the Ministry of Industry and Trade, Vietnam Steel Corporation – VNS (granting investment decision) and TISCO to register as a subcontractor.

On May 14, 2009, on the basis of the request of Vinaincon, the Ministry of Industry and Trade sent a document 4320 to VNS, TISCO with the content that the Ministry of Industry and Trade commented, “Vinaincon is a capable and experienced unit in the field. construction and installation of industrial construction works. Request VNS, TISCO to consider and approve Vinaincon to be the subcontractor to perform Part C ”.

On June 26, 2009, Mr. Mai Van Tinh – former Chairman of the Board of Directors of VNS signed a written agreement to allow Vinaincon to be a subcontractor. After that, TISCO, Vinaincon and MCC signed the contract.

However, in 2010, Vinaincon returned his job to TISCO due to insufficient capacity. TISCO had to subcontract with 13 other companies, but the project was still incomplete, capitalized and caused a loss of more than VND 830 billion to the state.

Some defendants admitted that they accepted Vinaincon because of the above document from the Ministry of Industry and Trade.

Defending defendant Tran Trong Mung (former General Director of TISCO), lawyer Truong Anh Tu said that in the conclusion of the project, the Government Inspector has determined that the Ministry of Industry and Trade has introduced and proposed VNS, TISCO to accept It is not the right authority for Vinaincon to be a subcontractor.

Lawyer Nguyen Thi Minh Yen, defending defendant Dong Quang Duong (former deputy director of TISCO), stated that: TISCO’s approval of Vinainco as a subcontractor for MCC must first mention the responsibility of the Ministry of Industry and Trade in the issue of introducing Vinainco and confirming Vinainco’s capacity to lead to a tripartite contract between TISCO – MCC and Vinaincon. Next, the fact that Vinainco voluntarily stopped implementing part c was due to the subjectivity of Vinaincon.

Therefore, the lawyer proposed to return the file to investigate and review the responsibility of the Ministry of Industry and Trade; Collect documents and evidence of Vinaincon’s performance of the contract, clarify how Vinaincon appoints 13 subcontractors? …