An (externally hired) managing director of a GmbH acting as an employee?

Two current decisions are addressing the question, whether an (externally hired) managing director of a limited liability company [Gesellschaft mit beschränkter Haftung – GmbH] can be regarded as employee. While being denied by the Federal Labor Court [Bundesarbeitsgericht – BAG] in its decision of 21 January 2019 (file no. 9 AZB 23/18), the Federal Court […]

In for a penny, in for a pound! On the default liability of an (interim) acquirer of a GmbH share

The “proportionate default liability of the other shareholders” for uncollectible contribution debts of co-shareholders which was significantly expanded most recently by the German Federal Court of Justice [BGH] has considerably increased their risk of becoming liable beyond the amount of their original capital contribution. Acquirers of limited liability company’s [GmbH] shares should always be aware […]

Provisions in the articles of association on non-competition obligation of shareholders

A non-competition clause for shareholders is intended to prevent the success of the joint company from being jeopardized by competitive activities of one or more shareholders. Since there is no statutory non-competition clause for the limited liability company [GmbH], it is all the more important to take precautions against potential conflicts of interest in the […]

Shareholders’ resolutions with permanent effect

In its decision dated 24 August 2018 (file no. 4 Wx 4/18), the Cologne Higher Regional Court [OLG] had to deal with the effectiveness of shareholders’ resolutions breaking through the Articles of Association at the limited liability company [GmbH]. The decision is an occasion to shed light on the consequences of shareholder resolutions that have […]

Allocation of responsibilities within the GmbH management

The managing directors of a limited liability company [Gesellschaft mit beschränkter Haftung – GmbH] may in principle carry out an allocation of responsibilities and duties among each other. The Federal Court of Justice [BGH] recently substantiated in a judgment of 6 November 2018 (file no. II ZR 11/17) the requirements for an admissibility of such […]

Redemption of GmbH shares – BGH passes judgment after 18 years!

If a GmbH [limited liability company] share is to be redeemed against the will of the person concerned, it is necessary to set an important course already in statutes but also while drawing up a redemption resolution. The Federal Court of Justice [BGH] has found in its decision of 26 June 2018 the nullity of […]

New regulations on the protection of secrets

On 8 June 2016, the European Union adopted the Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (the “Privacy Directive”). Even though the implementation of German legislation has not yet been completed, there are already indications of what companies will have to take into […]

LIABILITY GAP FOR D&O INSURANCES – ADDITIONAL CONDITIONS REQUIRED!

In its decision of 20 July 2018, the Fourth Senate of the Düsseldorf Higher Regional Court [OLG] ruled as follows: D&O insurance does not cover payments made by a managing director after the company has reached insolvency maturity and for which he is held liable under section 64 German Law on Limited Liability Companies [GmbHG]. […]

Jurisdiction clauses and applicable law in business transactions

As soon as two parties are domiciled in different countries, the contract should contain terms on applicable law and jurisdiction. Using the example of company acquisitions, the following article examines the risks arising from the absence of such contract terms and outlines what needs to be taken into account when drawing up such agreements.