The managing director plays a central role in the GmbH. After all, the GmbH Managing Director is responsible for managing the regular business operations. Due to this essential function, the GmbH Managing Director has to fulfill various duties towards the company. If he neglects these obligations or there is a breach of duty, there is a considerable risk of personal liability of the managing director for the damage incurred. Thus, the takeover of a managing director in a GmbH inevitably also represents a risk for private assets. Therefore, this fact must always be aware of prospective and active GmbH managing directors. Therefore, this article gives an overview of some important liability risks of a GmbH managing director.

As long as the GmbH Managing Director acts in matters of the GmbH, he has to apply the care of a regular businessman, § 43 (1) GmbHG. To put it more precisely, he has to orient himself on the actions of a fictitious businessman in a responsible management position, in the independent exercise of third-party property interests. For the assessment of the extent of the duty of care, both the nature and size of the GmbH’s business operations must be taken into account. The same applies to the concrete action of the management. However, personal characteristics of the managing director play no role in assessing whether the managing director has complied with his due diligence. This applies, for example, to (lack of) professional experience. Similarly, liability due to a violation of the duties of care for voluntary GmbH managing directors is in principle neither limited nor excluded.

1.2. Individual duties of care for GmbH Managing Directors

The due diligence obligations to be observed by the managing director of a GmbH can relate to numerous different situations. Violations of these obligations may lead to liability of the managing director. In detail, due diligence obligations include the following obligations.

1.2.1. Compliance with legally prescribed conduct obligations

Therefore, a violation of the legal system of the Federal Republic of Germany by the managing director of a GmbH leads to a violation of his duty of care. In addition, the GmbH Managing Director continues to have the ("Compliance") duty to prevent such violations of the law of the GmbH and / or its employees. However, the scope of the required compliance measures can only be assessed for the specific individual case.

1.2.2. Compliance with the general meeting’s instructions

Due to the comprehensive obligatory nature of the managing director, they are in principle obliged to implement the shareholder resolutions, § 37 (1) GmbHG. This obligation also applies to contestable resolutions of the general meeting. In contrast, the managing director does not have to implement null shareholder resolutions. In this respect, the managing director is responsible for deciding whether implementation of the affected decision appears compatible with his due diligence obligations. Corresponding obligations exist with regard to compliance with provisions of the articles of association, rules of procedure and employment contract (if any).

1.2.3. Compliance with the general duty of fidelity

In addition to the shareholders of a GmbH, the managing director of the GmbH is also obliged to loyalty. Due to the general duty of fidelity, for example, the managing director is usually prohibited from competing with the GmbH.

1.2.4. Compliance with organisational obligations

As far as the scope of the GmbH’s business activities so requires, the Managing Director must introduce sufficient supervisory and control mechanisms. These serve primarily to monitor persons to whom the managing director has delegated tasks that he would otherwise have to personally perform. Therefore, failure to establish appropriate supervisory mechanisms can lead to personal liability of the managing director.

1.3. GmbH Managing Director: the "Business Judgement Rule"

In connection with entrepreneurial decisions, it should always be noted that a subsequent evaluation of the meaningfulness is much easier. In order to do justice to this circumstance, managing directors are generally given extensive discretion in exercising the company’s economic interests. This applies in particular to the financial consequences of entrepreneurial decisions. Accordingly, the basis for the decision is particularly relevant for the assessment of the existence of a breach of due diligence in the context of business decisions. In this respect, it is expected that GmbH managing directors make their business decisions on the basis of appropriate information for the benefit of the GmbH.

2. GmbH Managing Director: special capital-related breaches of duty

The GmbH Act is standardized in §§ 30 ff. GmbHG essential provisions for the maintenance of the company’s share capital. Since share capital is one of the most important aspects of creditor protection, infringements by the director of such obligations are considered to be particularly serious. Therefore, liability due to violations of (common) capital-related obligations is specifically regulated in § 43 paragraph 3 GmbHG.

2.1. Payment of capital stock

The payment of assets required to cover the share capital of the GmbH to shareholders is fundamentally prohibited, § 30 paragraph 1 GmbHG. Therefore, the managing director must refrain from such payments. A payment is only considered insofar as the statutory exceptions are fulfilled, § 30 (1) sentence 2 and 3 GmbHG. However, the managing director must always carefully check the exceptions before a payment.

2.2 Acquisition of own shares

In order to protect the share capital, a GmbH may only acquire its own shares if they are fully paid up and sufficient reserves are available to the GmbH, § 33 GmbHG. The managing director must also carefully examine these requirements before acquiring his own shares on behalf of the GmbH.

2.3. Insolvency of the GmbH

If the GmbH is either insolvent or over-indebted, payments of any kind must be refrained from in principle, § 64 (1) GmbHG. The same can also be transferred to payments causing insolvency. Something else applies only insofar as the payments made are compatible with the care of a regular businessman, § 64 (1) sentence 2 GmbHG.

2.4. Existence destroying intervention

Interventions in the assets of the GmbH that directly threaten their existence must always be refrained from.

2.5 Monitoring of other managers/representatives

In the meantime, a GmbH Managing Director should be aware that even the insufficient supervision of other Managing Directors or representatives of the GmbH can lead to personal liability.

If the GmbH Managing Director violates his obligations, he assumes in principle the liability for the compensation of any property disadvantage of the GmbH, which would not have been without the breach of duty. However, the GmbH or its shareholders can usually freely decide whether they want to make the managing director liable for the damages in individual cases. The use of the GmbH Managing Director is by no means mandatory. Therefore, as a rule, a resolution of the shareholders' meeting is required for the assertion of claims for damages against the managing director, § 46 no. 8 GmbHG.

However, the use of the GmbH Managing Director is exceptionally not at the discretion of the shareholders. If the GmbH Managing Director violates one of the special capital-related obligations (cf. 2.), liability for the damage incurred cannot be waived. The GmbH must make personal use of the managing director for the purpose of creditor protection, § 43 (3) sentence 2 and 3 GmbHG. The liability of the managing director for a capital-related breach of duty is also not excluded by a corresponding instruction by shareholder resolution. The damage is in the cases of § 30 GmbHG to the full inadmissible payment amount, in the cases of § 33 GmbHG to the full purchase price.

Further liability risks for GmbH Managing Directors

In addition to the liability risks listed above, there are also other obligations of the GmbH Managing Director, which can trigger personal liability in the event of a breach. This includes, among other things, the liability of the managing director for tax liabilities of the GmbH (§§ 34 and 69 AO) and for non-payment of the due employee contributions to the social insurance (§ 823 paragraph 2 BGB in conjunction with §§ 14 and 266a paragraph 1 StGB). In particular, the payment of employee contributions must be paid special attention in the event of insolvency or over-indebtedness of the GmbH.