Duties of the management of a GmbH
If you are a managing director (Geschäftsführer/in) of a GmbH, you must manage the affairs of the company with the diligence of a prudent business person. Your duties include, for example, actively promoting the company's purpose based on the instructions of the shareholders and averting damage from the GmbH. Do you act contrary to duty, are you liable for damages.
Accordingly, you are liable personally. A prerequisite for this is Breach of duty, a Damage (any impairment of the corporate assets) and any contributory causation by you as managing director. You are also obliged to prove that you are not at fault for the damage
Your duties as managing director, which to Liability Risks can be broken down as follows:
Obligations During the Start-up Phase:
- Business registration,
- Correct information on the business document,
- Register employees with health insurance funds,
- Set up accounting,
- Liability for False Statements in HR Registration.
Liability risks when operating the GmbH:
- Requirements regarding form and deadlines for convening a shareholders' meeting,
- Liability for prohibited competitive activity (non-compete clause),
- Liability arising from the conclusion of a contract that has not yielded any measurable benefit to the company but has resulted in significant costs,
- Entering into excessively risky credit transactions,
- Allowing enforceable claims to become time-barred and waiving them,
- Engaging in business activities that are inconsistent with the company's purpose,
- Liability for the unlawful repayment of capital contributions.
Liability Risks During the Crisis:
- Liability for filing for bankruptcy late,
- Liability because the shareholders' meeting was not informed of the 50%-related loss of share capital,
- Liability for payments made after the company has become insolvent or after over-indebtedness has been established,
- Liability in an entrepreneurial company (with limited liability) if the shareholders’ meeting is not convened as soon as insolvency becomes imminent,
- Liability if payments were made to the company that necessarily led to its insolvency.
Liability of the Management Board to the Limited Liability Company (GmbH)
If you breach one or more of the statutory obligations listed below, you may be held liable by the GmbH in the internal relationship and even to criminal liability be used.
To avoid liability and, consequently, an obligation to pay damages, it is important that you Duties and those based upon it Know the liability provisions.
Civil liability
- Duty to conduct all affairs of the company with Diligence to exercise the care of a prudent businessperson and the resulting liability,
- Obligation to convene a Shareholders' meeting in the event of a loss of half of the share capital,
- Liability for false information upon the incorporation of the company,
- Duty to Filing of the list of shareholders at the commercial register and corresponding liability,
- Duty to maintain the Custom insoles and liability for unlawful repayment of capital contributions,
- Duty to proper Bookkeeping,
- Duty of presentation and Situation report and obligation to Publication of the annual financial statements from the operator of the Federal Gazette
- Duty to act within the Power of representation in the event that the managing directors' authority to represent the company is restricted by the articles of incorporation or by a resolution of the company,
- Duty to filing for insolvency. In the event that the company becomes overindebted or insolvent, you, as managing director, and the managing officers or authorized representatives of other companies, to the extent that they are responsible for management, or—in the absence of management—the shareholders themselves, must file a petition to open insolvency proceedings. The petition must be filed within 3 weeks. Under the provisions of the Insolvency Code, this obligation applies not only to German corporate forms but also, for example, to foreign ones.
- Liability for payment after the occurrence of Insolvency or determination of Excessive debt. If the management acts contrary to the obligation to file for insolvency, it shall be liable to the company for damages for payments made after this point in time. The same applies if payments were made to shareholders, to the extent that these contributed to the company's inability to pay its debts.
- Prospectus Liability for the accuracy of the information provided in the prospectus by investment companies,
- Liability in case of Breach of a contractual non-compete clause.
Criminal liability
In addition to civil liability, you can also be held criminally responsible for breaches of duty.
The following criminal offenses may be relevant:
- Liability for failure to provide information concerning the loss of half of the share capital,
- Liability for failure to apply upon opening of insolvency proceedings,
- Liability for delayed filing for insolvency, bankruptcy and other breaches of duty in insolvency cases,
- Criminal Liability for Fraud or Infidelity,
- Liability for Withholding and Embezzlement from Social Security contributions,
- Liability for Breach of confidentiality, for example in the event of unauthorized disclosure of trade or business secrets.
Liability of the management towards third parties
Externally, you can also be held liable for damages toward third parties.
The following offenses may be applicable for this:
- Liability due to Legislation, for example, if you do not make it clear that you are acting for a GmbH,
- Liability as Representation without authority, for example, if you fail to comply with a limitation on the power of representation registered in the commercial register,
- Liability from culpa in contrahendo. This is the case when you enjoy special trust among your business partners and, as a result, the contract negotiations are strongly influenced and shaped by your person. If this is used to claim a kind of personal guarantee for the statements made and this was of decisive importance for the decision to enter into the contract, liability for fault in contract negotiations may be considered.
Economic self-interest
Economic self-interest is present when you, as a managing director, have a strong economic self-interest in the conclusion of the contract and pursue personal gain from the transaction with the GmbH, or have claimed a special degree of personal trust. This is particularly relevant in cases of credit transactions.
- Liability from tort like fraud, subsidy fraud, breach of trust,
- Tax liability at Intent and gross negligence,
- Liability for entering into transactions despite the company's insolvency maturity due to intentional infliction of damage contra bonos mores,
- Liability towards creditors in delayed filing for insolvency for damages.
Liability for damages caused by following shareholder instructions
Your liability can Excluded being, if you due to binding instructions of the shareholders' meeting acted. Since you are legally bound by the instructions of the shareholders' meeting, no claim for damages can arise from complying with a legal duty. However, you generally remain liable if the instruction was not effective. This can be the case, for example, if the resolution of the shareholders' meeting was flawed. However, then the contributory negligence of society to be duly taken into account.
Liability through the allocation of duties among multiple managing directors
If several persons have been appointed to the management of a GmbH, each of them is generally subject to the unrestricted duty of management. If several managing directors are responsible for damage, they are liable to the company as joint and several debtors. This means that the company can hold any one of them fully liable. The managing directors may then, under certain circumstances, have to settle accounts among themselves.
Even if a provision in the Articles of Association of the company or a corresponding resolution by the shareholders exists, by which the responsibilities within the management are divided among the managing directors, does not mean that managing directors are only liable to a limited extent for the department assigned to him or her. Such a regulation of responsibilities within the management is called Allocation of duties. It is also part of the diligence of a prudent businessperson to ensure that the actions of another department do not sustainably harm the company. This includes a mutual, cross-departmental oversight among the management board. The managing directors are therefore also generally under an obligation to ensure a functioning information system. Consequently, the defense that one could not have known about the actions of another business division cannot lead to an exclusion of liability.
