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Liability of all managing directors of German GmbHs (CEO, COO, CFO, CTO, CREATIVE, HR) in cases of over-indebtedness and insolvency

17/4/2019

 
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After the occurrence of insolvency or the determination of over-indebtedness of a German GmbH, all managing directors are personally liable in principle for all payments of the GmbH, which are made by the GmbH after that date. (art. 64 GmbHG, German Companies Act) The non-financial managing directors (CEO, COO, CTO, CREATIVE, HR) are therefore liable together with the CFO for faulty financial transactions.
However, non-financial directors can be exempted from personal liability under the following conditions:
1) A clear division of responsibilities between the managing directors - in written form - is in existence.
2) The non-financial directors have fulfilled their supervisory duties.
These financial supervisory duties are - in fact - not limited to the regular review of bank statements or common conferences with the CEO or CFO. In particular, they include plausibility checks of the information obtained by comparison of the commercial evaluations (BWA) with the bank account statements. Particular attentiveness is expected from all managing directors. Precisely in cases when they should notice a financial imbalance, they are obliged to carry out more thorough checks. Likewise ruled the German Federal Supreme Court on 06.11.2018 (Az II ZR 11/17).

Emergency management of corporations in Germany

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    FRANK LEHMANN

    MBA for Finance and Financial Services (UK), Steuerfachwirt (GER)

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