Managing director liability

Managing director liability is a key issue in company law and relates in particular to the personal responsibility of managing directors of a limited liability company (GmbH) or an entrepreneurial company (UG). Managing directors have extensive duties and can be held liable both to the company and to third parties if these duties are breached.

Basis of liability:

1. internal liability: Managing directors are liable to the company for damages caused by the breach of their duties (§ 43 GmbHG). 2. external liability: Managing directors may also be liable to third parties, in particular creditors of the company, e.g. in the event of delayed insolvency or tax evasion.

Typical cases of liability:

1. breach of the duty of care: Managing directors must exercise the care of a prudent businessman (Section 43 (1) GmbHG). Violations can lead to liability. 2. breach of fiduciary duty: Managing directors must protect the interests of the company and may not take advantage of business opportunities for themselves. 3. breach of statutory obligations: Breaches of bookkeeping, accounting or tax obligations can give rise to liability risks. 4. delay in filing for insolvency: Managing directors must file for insolvency immediately in the event of insolvency or over-indebtedness (Section 15a InsO). Otherwise there is a risk of personal liability. 5. incorrect capital market information: Managing directors of listed companies can be liable for incorrect ad hoc disclosures or annual financial statements.

Scope and consequences of liability:

1. personal liability: Managing directors are generally liable without limitation with their private assets. 2. compensation for damages: Managing directors must compensate the company and third parties for any damages incurred. 3. criminal consequences: In serious cases, such as tax evasion or delaying insolvency, there is also the threat of criminal sanctions. 4 D&O insurance: Directors and officers insurance can mitigate the liability risk, but does not replace the diligent fulfillment of duties.

Liability avoidance and limitation:

1. careful fulfillment of duties: Managing directors should know their duties precisely and fulfill them conscientiously. 2. documentation: Careful documentation of decisions and processes can help to minimize liability risks. 3. division of responsibilities: A clear division of responsibilities between several managing directors can limit the individual liability risk. 4. early warning systems: Implementing risk management systems can help to identify problems at an early stage and avoid liability cases. 5. seeking expert advice: In complex situations, managing directors should seek advice from lawyers, tax advisors or auditors in good time.

Significance for the IT and media industry:

There are specific liability risks for managing directors of companies in the IT and media sector: 1. data protection: breaches of data protection regulations, in particular the GDPR, can lead to high fines and liability claims. 2. cyber security: managing directors must take appropriate technical and organizational measures to protect IT systems and data 3. IP law: The infringement of third-party copyright, trademark or patent rights can give rise to liability risks. 4. compliance: Managing directors must ensure that the company complies with all relevant legal regulations, e.g. in the area of youth protection or advertising regulation.

Conclusion:

Managing director liability is a complex and practical issue for companies in the IT and media industry. Managing directors should be fully aware of their obligations and liability risks and minimize them by acting carefully, organizing themselves well and seeking expert advice. Prudent management is not only required by law, but is also essential for the long-term success of the company.