Corporate law distinguishes between the official position of the managing director and his employment relationship. This must also be considered when separating from the managing director.
Corporate law provides that the shareholders’ meeting appoints the managing director. However, this only concerns his official position. The regulation of the employment relationship also requires a service or managing director employment contract. If the company wishes to separate from its managing director, he must both be dismissed by the shareholders’ meeting and the employment contract must be effectively terminated, according to Attorney Michael Rainer, contact person for corporate law at MTR Legal Rechtsanwälte.
If no coupling clause was agreed upon, the dismissal and termination of the managing director must be carried out separately. A lawyer experienced in corporate law knows the requirements to effectively end the collaboration with the managing director on all levels.
The dismissal only ends the official position of the managing director. He may no longer represent the company externally but still has claims from his employment contract, including remuneration. This can become a financial burden for the company. To prevent this, it is advisable to consult a lawyer with expertise in corporate law. It must also be noted that while the dismissal of the managing director is generally possible at any time, notice periods usually need to be observed for termination. This means that the managing director’s claims remain until the end of the notice period. However, other arrangements can be agreed upon in the employment contract. Therefore, it is advisable to consult a lawyer experienced in corporate law when drafting contracts.
The dismissal of the managing director is usually carried out by a majority resolution of the shareholders’ meeting. This can become problematic if the managing director is also the majority shareholder. Dismissal against his will is hardly possible unless there is an important reason. Important reasons can be, for example, gross breaches of duty, inability, or behavior damaging to the business. When dismissing for an important reason, a lawyer experienced in corporate law should definitely be consulted. Additionally, the employment contract must also be terminated even in the case of dismissal for an important reason.
MTR Legal Rechtsanwälte advises on Managing Directors, Board of Directors, Supervisory Board and other topics of corporate law.
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