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Faulty Organization by a Manager of a Limited Liability Company

01-Oct-2012 | Cologne | General Article (Non-News)

Cologne, Nordrhein-Westfalen ( Newsbox ) October 1, 2012 - 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.

"According to a recent judgment by the Federal Court of Justice (BGH, II ZR 243/11 from the 19.06.2012)" [Pre-Approved Quote]

GRP Rainer Lawyers Tax Advisors, Cologne, Berlin, Bonn, Düsseldorf, Hamburg, Munich, Stuttgart, Frankfurt elaborate: 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.


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