The managing director plays a central role in every GmbH. He is responsible for managing the daily operations of the company. For the handling of ordinary transactions, the GmbH Managing Director has certain rights granted by the company. In contrast, the position as managing director entails numerous duties. The proper fulfilment of these obligations is elementary, since a breach of duty can result in the personal liability of the managing director.
Every GmbH must have at least one managing director, § 6 Abs. 1 GmbHG. Thus, managing directors are one of two necessary action bodies of the GmbH (in addition to the shareholders’ meeting). The tasks of the GmbH Managing Directors include in particular the management of ordinary business operations (basic business transactions are in principle the responsibility of the shareholders’ meeting) and the representation of the GmbH in legal transactions. However, the managing director is always bound by instructions to the shareholders’ meeting. Therefore, he must strictly adhere to the requirements made to him. Since the principle of external organization applies to the GmbH, persons who are not shareholders of the GmbH may also be appointed as managing directors. This distinguishes the GmbH from the partnerships (GbR, OHG, KG). Although GmbH managing directors can be provided by the company with a service or employment contract, such a contract is by no means absolutely necessary.
Due to the numerous rights and above all duties (and personal liability!), the law places various requirements on permitted managing directors of a GmbH (cf. § 6 Abs.2 GmbHG). First of all, only living people can fill the organ position. Thus, companies are inadmissible as managing directors. Furthermore, the potential managing directors must have unlimited legal capacity (cf. §§ 104 ff. BGB), i.e., in particular, legal age. On the other hand, there are in principle no restrictions on nationality or residence (at least for EU countries). In addition, the law regulates additional grounds for exclusion, in particular in connection with professional prohibitions and crimes, § 6 para. 2 S. 2 GmbHG. Meanwhile, the shareholders of a GmbH can individually extend the requirements for potential managing directors in the social contract. However, it is not permissible to fall below the minimum legal requirements.
2. The representation of the GmbH
In order to fulfill their tasks, GmbH managing directors have the right to effectively represent the company in legal transactions. Thus, they have the possibility to conclude legally valid contracts on behalf of the GmbH and with effect for and against it. It should be noted that the shareholders’ meeting may internally limit the powers of the managing directors. However, the representative power of the managing directors vis-à-vis contractual partners (in the external relationship) is not limited, § 37 para. 2 GmbHG. Notwithstanding this fact, GmbH Managing Directors are legally obliged to comply with the requirements made to them, § 37 Abs. 1 GmbHG. Therefore, a breach of this obligation towards the Company may lead to personal liability for damages.
If the company has appointed more than one managing director, according to the statutory guiding principle, total representation power, § 35 para. 2 S. 1 GmbHG. Accordingly, the managing directors are exclusively jointly entitled to represent the GmbH. However, the consent of the other managing directors is usually sufficient for the joint representation. In this respect, an authorization of a director by the other directors to carry out certain types of transactions is also considered. The same applies to the subsequent approval of a legal transaction carried out in individual representation. However, there is a risk of personal liability for GmbH managing directors who conclude contracts on behalf of the GmbH under pretenses of an actually non-existent individual representative power, § 179 para. 1 BGB. Due to the freedom of contract, the shareholders may grant individual representation power to the directors in the articles of association or by resolution. This option is widely used in practice. Similarly, a combination of individual and total representative power is permissible.
Numerous legally regulated obligations towards the GmbH are imposed on the GmbH Managing Director. Individuals of these, not exhaustively listed, duties of the managing director are presented below.
3.1. Registration requirements (§ 78 GmbHG)
The GmbH Managing Director is obliged to make the legally provided registrations to the commercial register on behalf of the GmbH. If more than one managing director exists in the GmbH in individual cases, registration by one of them is usually sufficient. However, in individual, particularly important cases (e.g. registration of the GmbH, capital increases) it is necessary that all managing directors of the GmbH make the application for registration in the commercial register. The obligation to register always applies exclusively to current managing directors of the GmbH. As facts subject to registration, for example:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.