Liability of de facto managing directors

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A de facto managing director of a GmbH can be held liable on account of their conduct. Any allegations should prompt the accused to seek out a lawyer with expertise in corporate crime.

Managing directors of a GmbH must take responsibility for failing to comply with their obligations and be answerable to the company, tax authorities, public prosecutors, and other third parties. And this form of accountability applies not only to managing directors who have been registered as such but also to de facto managing directors, notes Michael Rainer, managing partner and corporate crime expert at MTR Legal Rechtsanwälte.

It is not uncommon in practice for someone else to be steering the ship alongside a registered managing director. Oftentimes there are shareholders who exert enormous influence on the operational activities of the company and effectively act as managing directors. And it is because of this reality that they can also be held liable for their actions. Should charges be brought by the DA’s office or accusations be levied by the tax authorities, it is essential to consult a legal expert who specializes in corporate crime.

De facto managers are more common in small and medium-sized family-run businesses, where it Is common for the children and grandchildren to have formally assumed responsibility for managing the company, and yet the older generation remains unofficially at the helm and has a major influence on the fate of the business. In other instances, the children may, for example, be serving on the company’s supervisory board and from this position influence operational matters. If this spills over into a de facto management role, this will have legal consequences. Under German law, de facto managing directors are just as vulnerable to prosecution as those who have been duly appointed to the position.

One of a managing director’s responsibilities is to ensure that taxes and social security contributions are duly paid. If this becomes a source of legal disputes, those concerned should reach out to a lawyer specializing in corporate crime.

Another common source of legal trouble is the failure to file for insolvency in good time. Here, too, it is advisable to have a seasoned attorney at your side, irrespective of the status of the managing director.

These are only a few examples of the many circumstances under which a de facto managing director may be held accountable, both internally vis-à-vis the company as well as externally in relation to third parties. Whatever the case may be, consulting an experienced expert in corporate crime is a must.

MTR Legal Rechtsanwälte advises on all aspects of corporate crime, including directors’ liability.

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