Faulty Organization By A Manager Of A Limited Liability Company - Germany
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According to a recent judgment by the Federal Court of Justice (BGH, II ZR 243/11 from the 19.06.2012), it is the responsibility of the manager of a Ltd Company to have a decent enough overview of the financial and economic situation, in order to be able to fulfill his duties properly.
A limited liability company’s manager is legally obliged to compensate for payments that are made after entry into insolvency or after the statement of overextension is filed. The lack of responsibility of the manager is a prerequisite for the liability of the Ltd. Company manager. It is enough to prove simple carelessness; however, lacking managing skill is not an excuse for the manager.
The Federal Supreme Court ruled that the manager is responsible to check for any signs of a crisis. A Ltd. company manager has to always be aware of the economic state of the company. A big part of this responsibility is checking on the company’s insolvency state. A manager is acting negligently when he does not procure the necessary information and knowledge, which he needs in order know when to apply for insolvency.
Even the manager of a Ltd. company can be held liable for damages. As a representative organ of the company he has a duty of care according to § 43 para. 2 GmbHG. The manager is responsible for the payment of taxes and public charges – in case of insolvency – and also for submitting a timely insolvency application. If he does not meet these duties, then he makes himself liable. In this case special care needs to be taken.
The limited liability company does bear a few liability risks.
In case of difficulties within an existing company you need a lawyer who can help you in getting the necessary overview, which can help you overcome the crisis. In order for you and your Ltd. company to remain undamaged it is important to act as early as possible in these cases. A lawyer active in company law is available to you with specialized skills and knowledge.
The lawyer can help you with founding a limited liability company, writing the company contract, a company change, as well as, -if necessary- with the resolution of a company.
ABOUT THE AUTHOR: GRP Rainer LLP
Lawyers and tax advisors GRP Rainer LLP counsels on business law and commercial law, economic law, corporate law and distribution law. The law firm advises commercial and industrial companies and corporations and small- and mid-sized businesses from offices in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany and London, UK. GRP Rainer has access to a complete range of integrated and comprehensive consulting expertise at its fingertips. GRP Rainer is therefore able to offer rock-solid and well-balanced success-oriented solutions to national and international companies regardless of their size, legal form, industry sector or complexity of issues.
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More information about GRP Rainer LLP
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
The Federal Supreme Court ruled that the manager is responsible to check for any signs of a crisis. A Ltd. company manager has to always be aware of the economic state of the company. A big part of this responsibility is checking on the company’s insolvency state. A manager is acting negligently when he does not procure the necessary information and knowledge, which he needs in order know when to apply for insolvency.
Even the manager of a Ltd. company can be held liable for damages. As a representative organ of the company he has a duty of care according to § 43 para. 2 GmbHG. The manager is responsible for the payment of taxes and public charges – in case of insolvency – and also for submitting a timely insolvency application. If he does not meet these duties, then he makes himself liable. In this case special care needs to be taken.
The limited liability company does bear a few liability risks.
In case of difficulties within an existing company you need a lawyer who can help you in getting the necessary overview, which can help you overcome the crisis. In order for you and your Ltd. company to remain undamaged it is important to act as early as possible in these cases. A lawyer active in company law is available to you with specialized skills and knowledge.
The lawyer can help you with founding a limited liability company, writing the company contract, a company change, as well as, -if necessary- with the resolution of a company.
ABOUT THE AUTHOR: GRP Rainer LLP
Lawyers and tax advisors GRP Rainer LLP counsels on business law and commercial law, economic law, corporate law and distribution law. The law firm advises commercial and industrial companies and corporations and small- and mid-sized businesses from offices in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany and London, UK. GRP Rainer has access to a complete range of integrated and comprehensive consulting expertise at its fingertips. GRP Rainer is therefore able to offer rock-solid and well-balanced success-oriented solutions to national and international companies regardless of their size, legal form, industry sector or complexity of issues.
Copyright GRP Rainer LLP
More information about GRP Rainer LLP
View all articles published by GRP Rainer LLP
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
