openPR Logo
Press release

Exemption from liability for GmbH managing directors

02-10-2017 09:49 AM CET | Politics, Law & Society

Press release from: GRP Rainer LLP

The managing director of a Gesellschaft mit beschränkter Haftung (GmbH), a type of private limited company in Germany, may be faced with liability claims if he breaches his obligations. That being said, it is possible under certain circumstances for him to request a full exemption from liability.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: The managing director of a GmbH can be held personally liable if, for instance, he breaches his duty of cure to the company or fails to ensure proper payment of public charges such as taxes. Personal liability looms particularly large if he does not file for insolvency on time.

However, in this regard, the managing director can also end up between a rock and a hard place. This might be the case, e.g. if he highlights the company’s impending over-indebtedness or insolvency to the shareholders, who subsequently prohibit him from filing for insolvency on behalf of the company. To see off this risk, he may then be able to request that the shareholders grant him a full exemption from liability. The Landgericht (LG) München [Regional Court of Munich] recognized this claim in its ruling of May 22, 2015 (Az.: 14 HK O 867/14).

The Landgericht München held that the managing director of a GmbH can request a full exemption from liability to see off any risks he might be faced with, particularly with reference to sec. 64 of the GmbHG (act regulating GmbHs), if the shareholders of the GmbH refuse to approve the managing director’s wish to file for insolvency at the point when insolvency is an imminent prospect. In this context, it is possible to establish “imminent insolvency” by citing evidence.

The LG München went on to say that even if insolvency is imminent, the managing director is only free from risk when filing for insolvency if the shareholders approve this motion. Failing this, he risks rendering himself liable to pay damages vis-à-vis the company. Having said that, impending insolvency can quickly progress to actual solvency. The Court stated that the managing director is then subject to unlimited personal liability, whereas the shareholders are only liable to the value of their investment.

To this extent, claiming exemption from liability offsets the constant risk of being faced with personal liability as a managing director if insolvency goes from an imminent prospect to a reality.

Agreements between shareholders and managing directors ought to be prepared in as much detail as possible and a satisfactory D&O (directors and officers) insurance policy taken out to prevent legal disputes from occurring. Lawyers who are experienced in the field of company law can advise and represent shareholders and managing directors.

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact Michael Rainer
Lawyer, Managing Partner

GRP Rainer LLP
Gürzenich-Quartier
Augustinerstraße 10
50667 Cologne
Germany

Phone: +49 221-27 22 75-0
info@grprainer.com
www.grprainer.com/en

This release was published on openPR.

Permanent link to this press release:

Copy
Please set a link in the press area of your homepage to this press release on openPR. openPR disclaims liability for any content contained in this release.

You can edit or delete your press release Exemption from liability for GmbH managing directors here

News-ID: 434259 • Views: 2887

More Releases from GRP Rainer LLP

GRP Rainer Rechtsanwälte – Experience in establishing companies
Choosing the right corporate form when establishing a company can contribute a great deal to the economic success of the business. We at the commercial law firm GRP Rainer Rechtsanwälte advise numerous businesses on company formation and takeovers as well as in the event of a change of partners or shareholders. In our experience, the partners or shareholders frequently neglect one critical point amidst all the euphoria: choosing the right corporate
OLG Köln: Will written with non-dominant hand valid
It is possible for a will to be valid even if it was written with the hand one does not normally write with. That was the verdict of the Oberlandesgericht (OLG) Köln [Higher Regional Court of Cologne] in its ruling of August 3, 2017 (Az.: 2 Wx 149/17). In addition to preparing a notarized will, a testamentary disposition can also be handwritten. To this end, the will needs to be written
OLG Köln: Only serious misconduct justifies withdrawal from contract of inherit …
Apart from a will, it is also possible to prepare a contract of inheritance as a way of organizing one’s estate. It should be noted, however, that a contract of inheritance has a significantly stronger binding effect. In the absence of a will or contract of inheritance, the rules of intestate succession apply automatically following the death of the testator. If these run contrary to the testator’s wishes, a testamentary disposition
Commercial agent’s claim for compensation following voluntary termination
A commercial agent may even be entitled to compensation if he or she voluntarily issues notice of termination. However, the company’s conduct needs to give rise to legitimate grounds for termination for this to happen. When a commercial agency agreement is brought to an end, the commercial agent often has a right to compensation. This is because the company in a lot of cases continues to profit from the client contacts

All 5 Releases


More Releases for GmbH

Snom Technology GmbH extends warranty
Berlin, 5 July 2018 – Snom, the Berlin-based specialist in IP telecommunications, continues to expand its customer service and extends its guaranteed warranty period for all products ordered after 1 July 2018 from two to three years. The IP phones from Snom have always proven to be a popular choice thanks to a variety of features, excellent audio quality, sophisticated firmware offers ¬– and last but not least, a particularly high-quality
Novaliq GmbH Exclusive Interview Released
Ophthalmic Drugs interviews Co-Founder, Chief Innovation Officer, Novaliq GmbH SMi Group’s Ophthalmic Drugs conference is thrilled to welcome Bernhard Guenther, Co-Founder, Chief Innovation Officer, Novaliq GmbH onto the speaker panel for 2017. Bernhard Guenther is the Co-Founder and Chief Innovation Officer at Novaliq. Before taking over the CIO position at the end of last year, he served for 12 years as the CEO of the company. As the CIO he is responsible
Small Hydropower Market: Voith GmbH, ANDRITZ HYDRO GmbH, Alstom S.A.
New York, February 20: Market Research Engine has published a new report titled as “Small Hydropower Market - Global Industry Analysis, Trends and Forecast 2016 - 2022” The small hydropower market is expected to exceed more than 140 GW by 2022. Browse Full Report: https://www.marketresearchengine.com/reportdetails/small-hydropower-market Hydropower is a technique of producing electricity that uses moving water to generate electricity. Small scale hydropower has been used as a common method of generating electricity in
Busch Dienste GmbH
Vacuum pumps with a variety of operating principles were exhibited on the Busch stand at Vacuum Expo in Coventry. As the leading manufacturer of vacuum pumps and systems, Busch produces models for all vacuum levels from rough to high vacuum. The main focus of the Busch stand was the COBRA screw technology – proven systems for vacuum generation to 0.01 mbar. These dry-running vacuum pumps are used as standalone vacuum
Name change: MWM GmbH to become Caterpillar Energy Solutions GmbH
Mannheim, October 08, 2013 | On November 1st, MWM GmbH will change its name to Caterpillar Energy Solutions GmbH. The name change solely affects the legal entity, the established MWM brand is being continued. This step underscores MWM's belonging to the global company Caterpillar. Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. Two years ago, MWM, the
Leiber GmbH accelerates expansion abroad
Germany, 28/02/2013 Leiber GmbH continues to grow. In order to expand their presence in the international animal feed market, additional partner locations were established in the Chinese cities of Shanghai and Tianjin. Business partners are now on hand in Benin, Belarus, Serbia and Kazakhstan to further strengthen the sales portfolio. "A comprehensive customer service network strengthens our competitiveness - especially in the increasingly important international market" says Nikolaus Jungbluth, Business Unit