Limitation of liability for AG executive bodies – In the event of a loss, the stock corporation as a legal entity under private law is, to a certain extent, subject to a limitation of liability, because the liability – apart from a few rare exceptions – exclusively burdens the business assets of the company. In the external relationship, therefore, only the share capital is liable for any losses. In the internal relationship, on the other hand, the liability claim can vary depending on the executive body of the AG. Here you can find all legal forms and here you can go back to the overview AG.
Limitation of liability for AG bodies
In principle, it is possible to arrange for a limitation of the liability of an AG in the internal relationship. Such a limitation is, for example, the requirement of approval by shareholders, according to which particularly risky projects are to be supported and approved by the shareholders. This spreads the liability risk and relieves members of the management board plus members of the supervisory board.
Alternatively, agreements can be made regarding the limitation of claims. However, the protection of creditors must not be violated by law, which is why this form of limitation of liability does not offer comprehensive legal certainty. In all simplicity, however, it is also possible for shareholders to express a waiver of the liability of the supervisory board and management board in a shareholders’ resolution. However, such a resolution may not be adopted before the end of the third year after the liability claim has arisen.
Limitation of liability in the internal relationship of the AG:
- Shareholder approval
- Waiver of liability by resolution
Liability of the Management Board – breaches of the duty of care
As the management body, the management board takes over the operational business and enjoys a great deal of freedom with regard to the management of the company. This requires a high degree of trust on the part of the other executive bodies, which is why the management board is subject to a duty of care as a basis for liability: After all, it works with the shareholders’ deposits and not with its own finances! Accordingly, the management board is liable for breaches of the duty of care imposed on it and for criminal offences. In the event of liability claims, the management board is held liable by the supervisory board.
Liability of the Supervisory Board – Breaches of Principle & Principle of Confidence
The supervisory board is also subject to a duty of care – more precisely: the principle of careful and orderly management – and must act in accordance with the principle of trust vis-à-vis the management board. It is liable to the stock corporation and its shareholders for damages caused by financial losses, but also to third parties insofar as they are affected by a culpable act on the part of the supervisory board.
Each shareholder is individually liable to the extent of the shares he holds. Creditors can therefore in principle not encumber his private assets should the value of his contributions be insufficient. The only exception to this rule is the so-called “pass-through liability”, in which the strict separation between business and private assets can be waived under certain circumstances. An assessment in this regard must be determined by the respective competent court.
Establish a GmbH: Legal form and alternatives
- Limited liability company (GmbH)
- Special case: Real estate GmbH
- Legal forms: List
Limited liability company (GmbH)
Limited Liability Company (Gesellschaft mit beschränkter Haftung, GmbH) – The limited liability company is a German legal form that is founded by at least one person and managed by at least one shareholder. As the name already indicates, this corporate legal form is characterized by a limitation of liability for its shareholder(s).
Special case: Real estate GmbH
Immobilien GmbH / Vermögensverwaltende GmbH / Immobiliengesellschaft – In this article you will learn the basics about real estate companies. Who would think of founding a limited liability company when buying a house or a condominium? Admittedly, this makes no sense for owner-occupation, but it does for renting.
Here you will find all the legal forms that can be chosen as a founder in Germany and a guide with a checklist:
Legal forms: List
Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.