AG | Aktiengesellschaft

BGB | Civil Code

BGH | Bundesgerichtshof

GmbH | Company with limited liability

GmbHG | Act concerning limited liability companies

HGB | Commercial Code

i. V. m. | In conjunction with

KG | limited partnership

MoMiG | Law for the modernization of GmbH law and the fight against abuses

OHG | Open commercial company

Higher Regional Court

UG | Entrepreneurship Company

Bosse, Christian | Objections against the liability of the limited partner in insolvency – BGH II ZR 175/2 strengthens the position of the claimed shareholder, NWB, No. 39, 21.09.2020, page 2877, 2020

(quoted: Bosse, NWB No. 39, 2020, p. 2877)

Engelhardt, Clemens | Die GmbH – An overview from foundation to liquidation, 1st edition, Munich, 2019

(quoted: Engelhardt, Die GmbH, 2019, p.)

Gottwald, Peter/ Ulrich Haas | Insolvency law manual, 6th edition, Munich, 2020

(quoted: Gottwald/Haas, Insolvency Law, 2020, paragraph 553)

Huber, Steffen/Rinnert, Axel | Undercapitalization and existential-destroying intervention against the background of the current trihotel decision of the Bundesgerichthof (BGH, NZG 2007, 667) and the planned reduction of the share capital at the GmbH – As well as the introduction of the liability-limited entrepreneur company (UG) according to the MoMiG, 1st edition, 2008

(quoted: Judge, Undercapitalization, 2008, p.)

Vetter, Jochen | Legal consequences of existentially destroying interventions, ZIP- Zeitschrift für Wirtschaftsrecht, 2003

(quoted: Cousin, ZIP, 2003, Rn 601)

Werner, Rüdiger | Partner liability under GmbH law – Systematic presentation taking into account MoMiG and the corporate liability laws, NWB, No. 38, 15.09.2008, page 3591

(quoted: Werner, NWB No 38, 2008, p. 3591)

Federal Labour Court

BAG, judgment of 10.02.1999 – 5 AZR 677/97

Federal Supreme Court

BGH, judgment of 24 January 1990 – IX ZR 250/89

BGH, judgment of 04.05.1977 – VIII ZR 98/75

BGH, judgment of 13.04.1994, II ZR 16/93

BGH, judgment of 13.12.2004 – II ZR 206/02

BGH, judgment of 14.11.2005 – II ZR 178/03

BGH, judgment of 16.07.2007 – II ZR 3/04

BGH, judgment of 24.06.2002 – II ZR 300/00

BGH, judgment of 25.02.2002 – II ZR 196/00

BGH, judgment of 28.04.2008 – II ZR 264/06

Higher Regional Court Celle

OLG Celle, judgment of 29.08.2001 – 9 U 120/01

As a limited liability company, the limited liability company offers in particular a significant advantage over partnerships, namely the exclusion of private liability by the GmbH shareholder. However, there are some exceptional cases in which an attack liability on a GmbH shareholder is still possible in principle. However, the conditions for this are very strict. They exist when there is an undercapitalisation, a mixture of assets, a mixture of spheres, a misuse of legal form or institution or an intervention that destroys the existence. However, some of these prerequisites are sometimes highly controversial in jurisprudence.

1st introduction

Almost all major economic activities in Germany are carried out in the form of a company. With almost 530,000 existing companies, the GmbH is the most frequently chosen legal form for companies in Germany. In comparison, only approx. 30,000 to 40,000 companies in the legal form of OHG or KG, 140,000 as GmbH & Co. KGs and only about 7,000 companies as joint stock companies. [1] One of the motivations in deciding on the right legal form is the main characteristic and privilege of corporations: shielding the shareholders from liability for company liabilities. § 13 para. 2 GmbHG expressly standardizes that for the liabilities of the company only the company assets are liable to the creditors of the same. If the company assets are not sufficient for the payment of the company debts, there is usually no liability of the partner with his private assets.

The present work is intended to clarify under which special conditions a liability attack on the private assets of the shareholders of a GmbH is possible.

2nd Basics of Access Liability

The described separation of company assets on the one hand and shareholder assets on the other hand is referred to in literature as the separation principle. In the case of penetration adhesion, the separation principle is broken. A distinction shall be made between the following types of penetration adhesion.

2.1. Fake access adhesion

In practice, contractual liability agreements vis-à-vis institutional lenders play a role, since they often do not consider the company assets to be sufficient liability assets. In the form of guarantees, guarantees and debt joining are therefore required co-liability or Ausfallhaftung of the shareholders. [2] In recent decades, the declaration of comfort has also established itself as a further means of securing. These liability constellations all have in common that the risk of assuming personal liability is dependent on an individual contractual agreement and is therefore partially controllable. [3] These contractual or quasi-contractual liability bases are not considered in more detail below as they would not meet the thematic framework.

2.2 Genuine access adhesion

Real intervention liability is not regulated by law, but special case groups have been developed by case law and legal literature in which intervention liability is considered. In special exceptional cases, there may be liability for intervention in which the shareholders of a GmbH are held personally liable (individually or jointly and severally) for the liabilities of the company and cannot rely on the liability privilege. The separation principle is broken. In the past, however, jurisprudence has shown itself to be extremely cautious when it comes to accepting an intervention liability. [4] As a reason, it is stated in various judgments that the legal form of a legal person “cannot be ignored lightly and without barriers”. ‘[...] 5]

Even if the literature has developed numerous dogmatic and plausible approaches for the justification of an intervention liability, the jurisprudence as indicated above assumes an intervention liability only in extreme exceptional situations.

According to the abuse and standard purpose theory, the use of the GmbH as a legal form in certain constellations may already be abusive or the invocation of the shareholder to the liability privilege in individual cases contrary to the requirements of good faith. The theory is based on the interpretation of § 13 para. 2 GmbHG, which must be seen in connection with the capital conservation regulations. An appeal to the liability privilege is justified only in cases where the shareholder also respects the other provisions of the GmbH law. According to this theory of liability, it can be argued that a shareholder did not deserve the privilege of liability if the relevant rules of proper capitalisation of a company were not respected. [] 6]

Jurisdiction has largely distanced itself from this liability theory. [7] In principle, the case law now bases an intervention on the private assets of the shareholders on the fulfilment of immoral intentional damage by the shareholder in accordance with § 826 BGB. The BGH has thus not developed any basis for claims under company law, but is based on the infringement of the tort law of unlawful acts. [8] Previously, the BGH had defended the liability concept of abuse of the legal form as external liability. This legal concept was rejected with the Trihotel judgment[9] in order to avoid inconsistencies according to the older case law. The concept of interference liability is still used by the BGH, even if the interference with the shareholders is not indirectly carried out by the creditors, but by the GmbH. [10] Since this judgment, the liability concept has been equipped as internal liability vis-à-vis the company from § 826 BGB, which is not subsidiary vis-à-vis the reimbursement claims from §§ 30, 31 GmbHG. However, the BGH considers in cases of asset mixing as well as in special cases of an existential destroying intervention the external liability still permissible.[11] The typical case groups are considered in the following main part.

3rd case groups of access adhesion

Typical cases of genuine liability are undercapitalization, asset mixing, sphere mixing, abuse of institutions and existential intervention. The individual case constellations are discussed below.

3.1 Undercapitalisation

Probably the most controversial case group in the literature is the case group of undercapitalization. This should be assumed if the GmbH is not provided with the share capital necessary for operating management. The provision of the GmbH with share capital was completely inadequate for the intended operating purpose.[12] However, the terminology is not always uniform in the literature. Dogmatic approaches that have been developed aim, as in the other case groups, to ensure that the liability privilege in accordance with § 13 para. 2 GmbHG must be seen in a close connection with the provisions concerning the raising of capital, the amount of capital and the maintenance of capital. The liability privilege is not deserved if the relevant regulations are not complied with. Jurisdiction has not consistently followed this theory of liability. Thus, the BGH judgment of 04.05.1977, VIII ZR 298/75, rather approving the judgment of the BAG, judgment of 10.02.1999, 5 AZR 677/97, affirming the Federal Social Court in the judgment of 07.12.1983, 7 RAr 20/82, although the undercapitalisation liability was not the basis for the decision and was later relativized again in the judgment of the Federal Social Court of 29.10.1997, 7 RAR 80/96. Even the ambiguity of the concept and the conditions would argue against imposing a minimum capitalisation. [13] Even in recent judgments, the BGH leaves open the concrete conditions under which the fact of immoral damage pursuant to § 826 BGB justifies the breach of liability on the shareholder. [] 14]

At the latest since the deregulation of the equity substitute right in the context of the change of law by the MoMiG[15], this case group is highly controversial in the literature. Against the background of the introduction of UG as a special form of GmbH with a permissible minimum capital of only one euro, an undercapitalisation would be considered objectively for any conceivable business purpose.

The literature divides the undercapitalization into different subgroups: a distinction is made between the material undercapitalization (total insufficient capital stock) on the one hand and the nominal undercapitalization (insufficient capital stock) on the other hand: The material undercapitalisation is characterised by a complete lack of necessary financial resources. There is often a subdivision into four different forms: the initial, subsequent, simple and qualified material undercapitalization. The initial undercapitalisation is present if the necessary equity capital is already lacking for the start of business and therefore a negative continuation forecast is to be assumed from the outset. Subsequent undercapitalisation exists if this situation occurs as a result of losses or withdrawals or even as a result of business expansion. Simple and qualified undercapitalisation differ in terms of the extent and evidence of undercapitalisation. The qualified undercapitalisation is assumed if the financial resources of the GmbH are “clearly and clearly inadequate for insiders”. 16]

A nominal undercapitalisation, on the other hand, should exist in cases where the shareholder of a GmbH makes the necessary share capital of the company available not in the form of equity, but as a loan or comparable shareholder liabilities. The following example discusses the chances of a creditor for a breach of liability for undercapitalisation.

Example of oil tanker: Entrepreneur S is the sole shareholder of a GmbH that has a share capital of €25,000. As managing director, the C is used. The GmbH owns a tanker fleet with six super oil tankers, which have a time value of 30 million €. A ship that has loaded oil from the buyer K is damaged on the high seas and the cargo is completely lost as a result. The cargo had already been paid in advance by the K, but due to a mistake of the management, the cargo was not insured. S files for insolvency. The buyer K claims back the full purchase price of S and believes that the S is personally obliged because his GmbH, which deals with such high values, is absolutely insufficiently equipped with a share capital of € 25,000. The S personally rejects all claims against Him. [] 17)

The legislature writes in § 5 para. 1 GmbHG stipulates that “[d]as share capital of the company [..] must amount to at least twenty-five thousand euros.” In addition, the legislator does not specify how or to what extent the shareholder has to finance the business operation. Against the background of the BGH jurisprudence, the chances of the K to hold the S personally liable for the damage incurred with his argument are low. Until now, it has been rejected in the case-law that the mere fact that a GmbH is provided with insufficient share capital can be regarded as an offence for an intervention liability for undercapitalisation. In a 1977 judgment, the BGH developed the official guiding principle: “The fact that a GmbH, whose sole shareholder is also a legal person, is provided with a share capital that is disproportionate to its statutory purpose [undercapitalization], does not justify for itself, nor then without further a liability attack of its creditors against the sole shareholder, if the GmbH is financially, economically and organizationally integrated into it.” ‘[18] The possibility of a liability breach on the Managing Director C because of his failure to take out insurance for transport is not considered in this work.

3.2.

The mixture of assets is a behavioral liability, not a state liability. The shareholder is accused that he has so confused the sphere of wealth of society with his own, so that objectively it is no longer possible to identify what belongs to the private assets of the shareholder and what belongs to the company assets. This case of liability is not uncontroversial in the literature. In the BGH judgment of 14.11.2005[19], the case law made it possible for an insolvency administrator of a GmbH to intervene for the liabilities of companies (§ 128 HGB analogue) because of asset mixing. If the mixture of assets between the company and the shareholder reaches such an extent that a meaningful demarcation of both areas is no longer possible, parts of the assets of the shareholder may be added to the assets of the company in terms of liability. The judgment clarified that the absence of a double bookkeeping system is not sufficient to fulfil the facts of the mixture of assets, as long as the inflows and outflows of assets and the separation of the shareholders’ and private assets can be traced on the basis of other existing documents. The duty of presentation and proof for the existence of an uncontrollable mixing of the company and the private assets of the shareholders has in principle the plaintiff insolvency administrator, but the shareholder has a secondary burden of presentation for the opposite.[20] Indications that are indicative of a mixing of assets (for example, that there are no staff who are able to maintain proper accounting, do not use external help or even draw up balance sheets). [] 21]

The literature criticizes the fact that it is unsystematic to link this to a shareholder liability, since the accounting of the company is basically responsible for the managing director according to § 41 GmbHG. It is suggested that instead the managing director be delictically informed about the basis of entitlement according to § 823 para. 2 BGB i.V.m. § 41 GmbHG into liability. [22] Instead, § 128 HGB (analog) is used as a basis for liability. [] 23]

The BGH has ruled in a judgment that the intervention due to asset mixing cannot affect the influential minority shareholder, even if he is managing director, since he usually does not have it in his hands that a careful delimitation of the asset spheres is guaranteed. [24] In the literature, it is also discussed that if the minority shareholder additionally acts in the role of managing director of the company, he must ensure that the assets of the GmbH are orderly, so that as a minority shareholder due to the special entrepreneurial position he should then again meet a liability for asset mixing.[25] Finally, it should be noted that in the insolvency of the company not every creditor can sue himself, but the claim must be enforced by the insolvency administrator according to § 93 InsO. [] 26]

3.3. Liability due to sphere mixing

Another similar case, which can justify an intervention liability, is the so-called mixing of spheres at the organizational level. Personal liability arises here from the consideration of legal appearance. If the shareholder imputable to third parties gives the impression that he is personally liable for the GmbH of which he is a shareholder, an intervention liability for this appearance comes into consideration. If, for example, a sole commercial company of the shareholder and his GmbH with the same staff at the same address appears in the same business premises and the person concerned does not sufficiently clearly indicate his will to act for a specific legal entity, he may be personally obliged. [] 27]

3.4 Abuse of Legal Form and Institution

An abuse of an institution is spoken of if the GmbH is abused for harming creditors. In the literature it is discussed whether for this constellation a separate claim basis is needed at all, or whether the general norm of § 826 BGB is already sufficient for a claim. Paragraph BGB states that “Whoever intentionally inflicts damage on another in a manner contrary to morality is obliged to compensate the other.” As already explained in the other liability cases, convictions are rare because the conditions for them are difficult to prove in practice.

The abuse of institutions is to be further clarified by the following example, in which it is obvious that the company was founded solely for the purpose of harming creditors:

Example Scam-Haus-GmbH: The shady “Steffan Skrupellos” founds Scam-Haus-GmbH, which promises buyers to build turnkey single-family houses at extremely favorable conditions. Jonas Fiasco is appointed as managing director, who is personally destitute and receives some money for taking over the management. However, the calculation of the business model is doomed from the outset, as the acquisition costs for the single-family houses significantly exceed the selling prices. The shareholder S never had to sell single-family houses, rather he would like to receive only commissions for successful contracts from the GmbH he founded himself. S has made a commission agreement with the GmbH, according to which he receives 10% commission from the selling price for each house sold. This corresponds exactly to the deposit that the GmbH requires from the buyers when concluding the contract. According to the agreement with the GmbH, S can pay the commission from the company assets. The company remains inactive and subsequently goes bankrupt and the buyers lose their deposit. [28] As a result, an access adhesion to the S must be affirmed, since the latter has intentionally caused damage in a manner contrary to good morals.

3.5 Existence of destructive intervention

An existential destruction intervention means that the shareholder of a GmbH withdraws the assets of the company to such an extent that there is no longer any possibility that the company can still meet its liabilities to creditors. In a judgment, the BGH defined existenz-destroying interventions as “abusive, leading to the insolvency of the company or these deepening non-compensatory interventions in the company assets serving for purpose-limitation for the priority satisfaction of the company creditors”. 29]

If the shareholder violates the norms of §§ 30, 31 GmbHG to properly pay up the share capital of the company and to leave it in the company as a liability fund, he can be personally liable to the company (internal liability). The legislator had apparently not seen the gap that the legal liability does not include any actions and measures of the shareholders, which can cause significant and at the same time insolvency-causing damage to the GmbH, but are not to be qualified as repayment of the share capital. For this reason, case law has been trying to close this gap in protection for years. [30]

The principles of the existence-destroying intervention due to intentional and abusive damage to the company assets were developed by the BGH in the “Trihotel judgment” in 2007[31], as well as previously in 2004[32]. However, the hurdles to accepting an existential-destroying intervention are high: According to the judgments, it is a prerequisite that the intervention can be seen as intentional immoral damage according to § 826 BGB. Pure management errors and entrepreneurial measures of shareholders do not constitute liability according to the principles of the destruction of existence. The following examples are given in the literature: “Closure of speculative transactions” or initiation of otherwise risky measures and transactions by the shareholders; failure to take advantage of business opportunities, such as lucrative orders at the instigation of the parent company; the deduction of qualified personnel, know-how, intangible unrecognised assets (e.g. self-created software); Deduction of liquidity above the capital ratio, planned deduction of the company assets. ‘ [] 33

Cases in which courts have actually affirmed an extermination of existence are therefore rare.[34] The BGH recently summarized its jurisprudence in 2018 as follows: According to the jurisprudence of the Senate, there is a subsistence-destroying intervention obligatory for damages pursuant to § 826 BGB if the company is deprived of the assets necessary for the repayment of its debts in an immoral manner and thus causes or deepens insolvency. The shareholders must act with at least conditional intent. The burden of presentation and proof shall be borne by the company or the insolvency administrator. ‘ [] 35

Creditors cannot rely on the principles recently developed by the BGH, since the developed basis of Ausfallhaftung constitutes internal liability because of an intervention that destroys existence. Specifically, this means that the claim is usually enforced within the framework of the insolvency administrator. A direct attachment of the claim by a creditor would have to be fought in the context of an individual foreclosure. [] 36]

It is still unclear in jurisprudence whether the private liability of the shareholder in the event of the existence-destroying intervention is unlimited or limited to the damage incurred. If the liability for penetration is based on § 826 BGB, it will normally only be possible to compensate for the damage caused by the intentional and immoral damage. [37]

Finally, the liability of co-shareholders who participated in the intervention must be clarified. It would be conceivable, for example, to have signed shareholder resolutions which prepared or made possible a damaging measure. Whether this liability of the participating partners in accordance with § 31 Abs. 3 GmbHG (analog) is only subordinate, however, the BGH has left open in a judgment in which it dealt, among other things, with the Ausfallhaftung of co-shareholders. The judgment merely stated that the level of solidarity liability covered by that standard is limited to the share capital ratio. [] 38]

Critical appreciation and final consideration

The present work makes it clear that the abstract structure of penetration liability has been revised and broken several times in historical development. Due to the fact that intervention liability has so far been understood as judicial law and that no uniform concept has been developed so far, this topic seems complex. The “classical” case groups of intervention liability are therefore to be regarded in particular as guidance, since individual questions are legally controversial. Therefore, it should be noted that when checking whether an attack liability is to be affirmed, it must always be based on the individual case. Against this background, a clarification of legal codification would be desirable in principle, even if the practical relevance is low.

Furthermore, it is to be welcomed that the case law assumes a liability for intervention only in special exceptional situations and has so far ruled less rigorously. It can be assumed that it would be harmful to the national economy if risky business ventures were excluded in advance by an overly restrictive jurisprudence. Jurisdiction should only provide the framework and intervene as little as possible in the economic fortunes of the individual actors. The difficulty in jurisprudence is to weigh economic interests on the one hand and the protection of creditors on the other. This has been a success so far.