29. Jul 15

BGH on GmbH managing director’s obligation to provide information in insolvency proceedings

If insolvency has been filed against a GmbH, the managing director of the company has extensive obligations to provide information. He is not, however, obliged to furnish information regarding his personal assets (BGH IX ZB 62/14).

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: In its judgment of March 5, 2015, the German Federal Court of Justice (Bundesgerichtshof (BGH)) took a stance on the managing director of a GmbH’s obligation to provide information (IX ZB 62/14). According to this, the managing director does have extensive obligations to provide information, but the Karlsruhe judges ruled that this does not include information concerning his personal assets. They stated that if insolvency is filed against a GmbH, the managing director is obligated to furnish information with respect to the company’s legal and financial situation as well as other factual circumstances pertaining to the company, including regarding the partners and claims lodged against him personally. He does not, however, have to give details concerning his personal financial circumstances and the feasibility of potential claims against him.

That being said, the obligation to provide information does encompass possible damages claims by the GmbH against the managing director and even crimes that have potentially been committed by the managing director which are connected with the insolvency.

If a managing director has breached his obligations, he may be liable in relation to the company (internal liability) or even third parties (external liability). In this context, he may be liable not only with his private assets; in serious cases, there is also the threat of a custodial sentence as well. The obligations of a managing director are regulated, inter alia, in the German Limited Liability Company Act (GmbH-Gesetz (GmbHG)).

Essentially, the managing director is obliged to exercise the level of care of a prudent businessman (sec. 43 para. 1 GmbHG). This applies to, among other things, managing the economic and financial affairs of the business. Even if this is delegated to third parties, the managing director must stay on top of things. If he breaches this obligation, he may render himself internally liable vis-à-vis the company. Fault based on intention or negligence constitutes a breach of duty. This does not encompass business decisions that do not lead to the desired outcome.

He may render himself subject to external liability if, for example, he has not duly paid social security contributions or failed to file for insolvency in due time.

With respect to claims arising from internal liability, a managing director can afford himself some protection and contractually exclude liability for “simple” or “ordinary” negligence. Lawyers who are competent in the field of company law can advise you when drafting agreements and dealing with liability issues.

For more informations: http://www.grprainer.com/en/legal-advice/company-law.html

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