# Managing Director Contracts with Himself > Managing director concludes a consultancy agreement with himself. Landgericht Erfurt confirms its validity in judgment of 3 September 2026. Source: https://www.mtrlegal.com/en/managing-director-contracts-with-himself/ · Language: en · Updated: 2026-10-26 --- In its judgment of 3 September 2026 – Az. (case no.) 8 O 166/26 – the Landgericht Erfurt (Erfurt Regional Court) had to rule on a corporate law dispute concerning remuneration for consultancy services. The central question was whether the managing director of a GmbH (German limited liability company), who also provides consultancy services to that company, can validly conclude a consultancy agreement with himself. The defendant was a subsidiary of T. AG, which held 58 percent of its shares. The claimant was both a member of the management board of T. AG and one of two managing directors of the defendant GmbH, each authorised to represent the company individually. He had expressly been exempted from the restrictions under § 181 BGB (German Civil Code). By the time of the court’s decision, he had resigned from both offices. ## Consultancy Agreement Concluded On 28 August 2019, the claimant and the defendant had already entered into a framework agreement for ongoing consultancy services. In autumn 2025, the claimant provided further consultancy services, for which he invoiced the defendant. However, the defendant refused to pay. ### Agreement Invalid? It argued that the claimant had not been validly engaged to provide the consultancy services. In particular, it claimed that his authority to represent the company had been restricted by rules of procedure for the management board of T. AG. According to the defendant’s submissions, these rules of procedure were also intended to apply to the management bodies of the subsidiaries. They stipulated that transactions between the parent company or one of its group companies, on the one hand, and a member of the management board or a related party, on the other hand, required the approval of the supervisory board. The defendant took the view that, due to the corporate group relationship, this approval requirement was also binding on the claimant in his capacity as managing director of the subsidiary. It therefore argued that he could not validly conclude the consultancy agreement without the required approval. The claimant originally sought payment of EUR 12,384.37 plus interest at nine percentage points above the base interest rate from 5 March 2026. The defendant applied for the dismissal of the action. ## The Court’s Decision The Landgericht Erfurt upheld the claim in documentary proceedings. It ordered the defendant to pay EUR 12,284.37 plus interest at nine percentage points above the applicable base interest rate from 5 March 2026. The defendant was also ordered to bear the costs of the proceedings. The judgment was declared provisionally enforceable. The defendant was permitted to avert enforcement by providing security amounting to 110% of the enforceable sum, unless the claimant first provided security in the same amount. The defendant’s rights in the subsequent proceedings were reserved. ## Authority to Represent the Company Not Restricted In particular, the court found that the claimant’s authority to represent the subsidiary in his capacity as managing director had not been validly restricted by the parent company’s rules of procedure. The claimant was therefore able to validly conclude the consultancy agreement with himself. As the agreed consultancy services had been duly provided and the defendant was unable to prove any specific loss, he was entitled to the remuneration claimed. ## Exemption from the Restrictions under § 181 BGB A key aspect of the decision concerned the application of § 181 BGB. As a general rule, this provision prohibits an agent from entering into a legal transaction with himself on behalf of the principal or from acting simultaneously as the representative of both contracting parties. Its purpose is to prevent conflicts of interest and disadvantages to the principal. An exemption from this prohibition may be granted. In the present case, the claimant, as managing director of the defendant, had expressly been exempted from the restrictions under § 181 BGB. The Landgericht stated that the consultancy agreement had been validly concluded. It was irrelevant whether the agreement had been concluded by the defendant’s other managing director at the time or by the claimant himself in his capacity as managing director. Due to the exemption from § 181 BGB, the claimant was, in principle, authorised to enter into such a self-dealing transaction with binding effect for and against the GmbH. ## No Direct Effect of the Parent Company’s Rules of Procedure A central issue was whether the rules of procedure for the management board of T. AG could also restrict the authority of the subsidiary’s managing director to represent the company. The court held that they could not. Rules of procedure adopted at parent-company level do not automatically apply to the management bodies of a legally independent subsidiary. The parent company and the subsidiary are separate legal entities. Although T. AG held a majority interest in the defendant through its 58% shareholding and was therefore able to exercise a controlling influence, this did not mean that all of the parent company’s internal rules could automatically be extended to the subsidiary. In particular, the court clarified that the mere existence of a de facto corporate group is not sufficient to restrict the authority of the management of a subsidiary GmbH by means of the parent company’s rules of procedure. ## Requirement for Implementation under Corporate Law In the court’s view, any restriction on the claimant’s authority to represent the company would have required a corresponding legal basis at the level of the defendant GmbH. Under § 37(1) GmbHG (German Limited Liability Companies Act), restrictions on authority to represent a company may arise, in particular, from the articles of association or from valid internal corporate rules. In the specific case, however, there was neither a corresponding provision in the articles of association nor the required resolution of the subsidiary’s shareholders’ meeting. The rules of procedure of T. AG could not substitute for this absence of implementation. Nor was it sufficient that the parent company could have procured corresponding resolutions by virtue of its majority shareholding. The court thus emphasised the importance of the legal independence of the individual group companies. Internal corporate restrictions must be validly introduced at the level of the company concerned in each case. ## No Evidence That the Rules of Procedure Had Been Adopted Furthermore, the defendant had been unable to prove that the alleged rules of procedure had been validly adopted at all. The minutes of the supervisory board meeting of 15 May 2025 recorded neither a vote nor the result of a vote. In the court’s view, the minutes were therefore unsuitable as evidence that a valid resolution had been adopted. The court also referred to the particular features of documentary proceedings. Under § 598 ZPO (German Code of Civil Procedure), defences that cannot be proven using the forms of evidence admissible in documentary proceedings must generally be rejected. The testimony of the chair of the supervisory board offered by the defendant was not an admissible form of evidence in this respect. However, the court expressly clarified that the validity of the rules of procedure was ultimately irrelevant. Even if they had been validly adopted, they could not have directly restricted the authority of the subsidiary’s managing director to represent the company. ## No Abuse of Authority The court also examined whether the claimant had abused his authority to represent the company. In this respect, the Landgericht Erfurt followed the judgment of the Bundesgerichtshof (BGH, Federal Court of Justice) of 18 October 2017 – I ZR 6/16, according to which no rights may be derived from a transaction that is formally covered by the authority to represent if that authority has been abused. The validity of the authority to represent and the abusive exercise of that authority are therefore separate issues. Restrictions on authority to represent may, in principle, be relevant to the internal relationship. In dealings with third parties, however, such restrictions generally have no effect under § 37(2) GmbHG. Exceptions may apply, in particular, where a managing director deliberately disregards a known restriction to the detriment of the company and the other contracting party likewise has actual knowledge of this breach of duty or where the breach must have been obvious to that party. In the present case, there was no valid restriction on the claimant’s authority to represent the company in the first place. He therefore could not have knowingly breached such a restriction. ### No Proven Loss Moreover, there was no evidence that the consultancy agreement had caused the defendant any loss. It was undisputed that the claimant had duly provided the agreed consultancy services. The defendant had neither specifically demonstrated nor proven that it had suffered any disadvantage as a result of the agreement. The court also took into account that the defendant had acted on the contractual relationship, which had existed since 2019, for an extended period. It had used and paid for consultancy services without raising any fundamental objection to the contractual relationship. In the court’s view, the mere fact that it may have been difficult to distinguish between the claimant’s activities as managing director and his consultancy work did not constitute sufficient evidence of loss. ## Legal Significance of the Judgment The decision illustrates the limits of group-wide organisational rules and approval requirements. A parent company cannot, merely through its own internal rules, restrict the authority of the managing directors of a legally independent subsidiary to represent that subsidiary. If an approval requirement is also intended to apply to the management of a subsidiary GmbH, it must be validly implemented under corporate law at the level of that subsidiary. This may be achieved, in particular, through a corresponding provision in the articles of association or a valid resolution of the shareholders’ meeting. At the same time, the judgment highlights the importance of a valid exemption from § 181 BGB. A managing director who is exempted from the restrictions under this provision may, in principle, also enter into legal transactions between the company and himself. However, such an exemption does not preclude every conceivable objection: an abuse of authority or another validly established restriction may still be legally relevant. In practice, this means that parent companies should not regulate their compliance and approval systems exclusively at parent-company level. Instead, they must ensure that corresponding requirements at the respective subsidiaries are based on a valid corporate law foundation. ## Conclusion In its judgment of 3 September 2026, the Landgericht Erfurt clarified that rules of procedure for the management board of a parent AG (German stock corporation) do not automatically restrict the authority of the managing director of a legally independent subsidiary GmbH to represent that subsidiary. Neither a majority shareholding nor inclusion in a de facto corporate group is sufficient for this purpose. As the claimant was exempted from the restrictions under § 181 BGB, his authority to represent the company had not been validly restricted, and the agreed consultancy services had been duly provided, the court upheld his claim for remuneration. The decision therefore underscores the independence of subsidiaries under corporate law and demonstrates that group-wide approval requirements must be validly implemented at the level of the company concerned in each case. MTR Legal Rechtsanwälte advises companies, shareholders and investors on corporate law matters; further information is available under [Corporate Law Advice](https://www.mtrlegal.com/rechtsberatung/gesellschaftsrecht/).