Voting prohibition of the controlling shareholder when initiating directors’ and officers’ liability claims in the controlled company; minority shareholders are not at the mercy of the majority company without protection.
When stock corporation board members appoint themselves as managing directors of a wholly-owned GmbH (German Limited Liability Company) subsidiary (the Company), the law may reach its limits.
In this introduction, we provide an overview of the basics of GmbHs and management, as well as the reasons for the dismissal of a managing director.
In the case of external liability, the managing directors of corporations are directly liable to third parties, who can sue the managing director directly for damages in cases of external liability.
BGH judgment from 14.04.2023 Ref. II ZR 162/21: According to the partnership agreement of a German limited commercial partnership (GmbH & Co. KG), a limited partner in the legal form of a GmbH was solely authorized to manage the company.
Handbook: Basics of liability cases and lawsuits against GmbH managing directors
Handbook managing director liability – Part 1 – Internal liability
The GmbH is the most frequently chosen legal form for start-ups in Germany. It is quick and easy to set up, well-established with investors and offers a wide range of legal structuring options.
As a publicly accessible register, the commercial register fulfills an essential purpose: it should clarify which “flesh and blood” persons are behind a corporation.
BGH (German Federal Court of Justice) strengthens the principles on the prohibition of voting in own matters – the prospects of success of legal action in liability matters are irrelevant
The GmbH law previously stipulated that shareholders had to meet in person to pass resolutions as a shareholders’ meeting.
In company law, you must separate the company’s legal issues from the shareholders’.
BFH (German Federal Fiscal Court) confirms its case law on the topic of “hidden profit distribution” for loans to controlling shareholders (BFH, the judgment of 22/02/2023 – I R 27/20 -)
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