Corporate Law

Liability of the Managing Director of a "GmbH" in Germany

A “GmbH” is a private limited liability company under German law. The managing director (German: “Geschäftsführer”) of a GmbH is exposed to personal liability in a wide variety of ways. Managing directors can be held liable to the company for failing to exercise the standard of care owed to the company and under certain circumstances can be sued by the business partners of the company for acts of misconduct towards them. There is also the possibility of being held accountable under criminal law or under the law of administrative offences.
The following is intended as an overview - and not a complete review - of the liability of managing directors in these areas.

I. Liability towards the company (internal liability)

II. Liability towards third parties (external liability)

The managing director is an organ of the GmbH and therefore acts on behalf of the company. For this reason, the GmbH is liable to third parties for any loss caused by misconduct on the part of its managing directors. Although in principle managing directors are not themselves liable to these third parties, there are exceptions to this rule.