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The managing director of the GmbH: What you need to know

 

The managing director of a GmbH is the legal representative of the company and is authorized to conduct business independently and on behalf of the company. But what are the requirements to become a GmbH managing director? And how is the GmbH managing director appointed, what are his rights, tasks and obligations? Which details have to be considered in the managing director contract, such as managing director's salary or the regulation for self-dealing? How can the managing director be dismissed and what if a GmbH suddenly finds itself without a managing director? How does managing director liability work and what can the company do in the event of the managing director's personal bankruptcy? You can find answers to these and many other questions about the managing director here.

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Andreas Munck

For over 7 years I have been advising start-ups on their way to starting their own company. I would be happy to call you and help you with any questions you may have about your start-up in a personal conversation.

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  • 7 years of experience

 

Appointment of the GmbH managing director

The appointment of the managing director of a GmbH is generally made by shareholders' resolution. With the convocation, the newly elected managing director represents the GmbH in and out of court. Different scenarios are possible, one or two or more managing directors can be appointed. The managing director is not appointed until the shareholders' meeting is called.

GmbH managing director and his requirements: who is actually allowed to become a GmbH managing director?

In the GmbHG it is explicitly explained who is allowed to become the managing director of a GmbH, namely only “a natural person with full legal capacity”. This means that no legal person such as another company may become the managing director of a GmbH, but only an individual. A GmbH as managing director is therefore fundamentally excluded by law. The addition “legally competent” means that only people over 18 years of age who are allowed to manage their financial affairs themselves can be appointed managing directors: insolvent persons or minors are therefore not allowed to become a GmbH managing director.

Partner-managing director and external managing director of the GmbH

In a GmbH there are several employment options for the managing director: he can be a shareholder (partner) or an employee of the company and thus an external managing director. A managing director with shares, a so-called shareholder managing director, is particularly influential in a GmbH, because he fulfills a double function: as a shareholder, he can participate in the decision-making process and implement resolutions as a managing director. The external manager is bound by instructions and often does not count as self-employed because he has an employment contract and not a service contract. A managing director with more than 50% of the voting shares is also referred to as a “controlling director”.

 

The GmbH management contract

Before the managing director of a GmbH can begin his duties, a managing director contract must be agreed, ideally in writing. A management contract is mandatory for individual agreements, but the form is not specified. Only through this step in addition to the convening by the shareholders' meeting is the managing director appointed. Under certain circumstances, the managing director can also be employed as an employee; this is then an employment contract. If there is no employment relationship as an employee, the management contract is a so-called service contract. In addition to the points that are usual in every employment contract, the managing director's contract should contain further regulations: agreements on travel expenses, the company car and the degree of responsibility that the managing director has to bear.

GmbH managing director salary

What the salary of a GmbH managing director must and may look like is a frequent point of contention. Because although the managing director is allowed to earn more than an average employee, the remuneration must be "appropriate" and legally secure, otherwise there is a risk that the remuneration of the GmbH managing director will be viewed as a hidden profit distribution during the next tax audit. In order to avoid this, entrepreneurs must check the remuneration of their managing directors or their managing directors on the basis of the individual salary components (fixed salary, Christmas and vacation pay, pension commitments, etc.) and, at best, by means of an in-house salary comparison or a comparison with other managing director salaries in the industry and Put company size in relation.

Self-dealing of the GmbH managing director

Section 181 of the German Civil Code states that managing directors may not conclude any contracts with themselves (self-contracting), except for the fulfillment of obligations. According to this law, managing directors are also not allowed to represent multiple parties. In practice, GmbH managing directors are generally exempt from this clause in order to ensure a smooth business process. This is particularly useful if the (shareholder) managing director runs several companies. When appointing the managing director, it should therefore be considered to what extent an exemption from the restrictions from Section 181 of the German Civil Code (BGB) makes sense. Any exemption should be precisely formulated in the service contract to prevent misunderstandings.

Social security obligation of the GmbH managing director

Whether or not the managing director of a GmbH is subject to social security contributions is not always clear. A very important criterion for the social security obligation is above all being bound by instructions. As soon as a managing director gives instructions and structures, it can be assumed that he is self-employed, then the managing director would not be subject to social security contributions. However, if he is incorporated into an existing set of rules and is bound by instructions, there is no self-employed activity. Then the managing director is subject to social security contributions. The boundaries between self-employed and employment can be fluid, which can make it difficult to assess the individual case. In the case of partner-managing directors, the amount of the share in the company or its voting rights are also taken into account.

If the shareholder-managing director has a blocking minority, i.e. a share of at least 25.1%, this affects his social security obligation. With a blocking minority it is possible for the shareholder to block resolutions and decisions of the shareholders' meeting. If a partner-managing director holds such a blocking minority, he will definitely not be classified as an employee and therefore not subject to social security contributions. In case of doubt, entrepreneurs can apply for a status determination procedure in order to provide clarity for themselves and their managing director.

 

GmbH managing director: duties and obligations

The central tasks of the GmbH managing director include the realization of the company's business purpose and the support and taking of all measures to achieve the company's goals. The interests of society must be safeguarded and company assets must be managed. A managing director represents the GmbH both out of court and in court. Furthermore, it is the duty of the managing director not to cause any damage to the GmbH and to prevent damage from it.

Further duties of the GmbH managing director

  • Accounting obligation
  • Duty to maintain the share capital
  • Notification obligation to the commercial register
  • Obligations when employing employees
  • Loyalty Duty
  • Obligation to convene the shareholders' meeting
  • Disclosure and information obligation

 

Liability of the GmbH managing director

In the event that a managing director does not meet his obligations adequately or in the worst case not at all (negligence or similar), he is personally liable for the damage incurred. A distinction is made here between internal liability and external liability: internal liability exists towards the GmbH and the shareholders, external liability exists towards third parties, for example customers, suppliers or even authorities. For the GmbH managing director, his position can be associated with risks.

Dismissal of the GmbH managing director

The position of the executive body as well as the employee relationship of the managing director of the GmbH can be stipulated in the managing director contract both for a limited period and for an unlimited period. In the case of a limited period, no further notice of termination is required after the period has expired. In addition, the appointment as managing director can be withdrawn at any time and thus the removal can take place. In addition to the dismissal, there must be an ordinary notice of termination to end the relationship with the managing director.

Extraordinary termination is also possible in order to remove a GmbH managing director, but there must be appropriate reasons, according to § 626 BGB so-called "important reasons". In doing so, however, the legal separation of the position in the body and the employment contract must also be observed, as well as their deadlines and framework conditions.

GmbH without managing director

What happens if the GmbH suddenly finds itself without its managing director? Can a GmbH even continue to exist without a manager? If the managing director of the GmbH has resigned or has been dismissed, an emergency management is usually appointed to temporarily take over the tasks of the GmbH managing director. Special conditions apply to the appointment of an emergency managing director by court, for example the location of the GmbH must be urgent, the amount of the threatened damage must be detrimental to the business or the authorized representative must be prevented. Representation by procuration is also possible, but should only be used in an emergency due to the limited rights and possibilities. The GmbH with two managing directors is a special case: the fact that both managing directors have to vote for a dismissal can lead to discrepancies and delays. Another special case is the 1-person GmbH, whose managing director cannot simply resign as this would be tantamount to giving up a business; the prerequisite for the appointment of a replacement managing director is not given here.

Change of managing director at the GmbH

If the current managing director is to be dismissed, a new managing director should already be available in the best case. For a change of managing director there are always costs for legal services and possibly even a severance payment for the old managing director. A change of managing director must always be certified by a notary and reported to the registry court.

The GmbH managing director in personal bankruptcy

If the managing director of a GmbH is threatened with or already has personal bankruptcy, changes to his position do not necessarily have to be made, as the GmbH is usually not affected by the managing director's private insolvency proceedings. The employment relationship and the position of the managing director do not necessarily have to be terminated, but can be terminated by the managing director's trustee. The working income of the managing director can be attached due to the bankruptcy; in exceptional cases, existing company shares can also be attached.

Managing director despite bankruptcy?

Persons who have been legally convicted of insolvency offenses (Sections 283 to 283 d StGB), including what is known as “delayed insolvency”, are not allowed to become managing directors of a GmbH within the next five years.

 

The information published on our site is all written and checked by experts with the greatest care. However, we cannot guarantee the correctness, as laws and regulations are subject to constant change. Therefore, always consult a technical expert in a specific case - we will be happy to put you in touch.

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