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Supervisory Board Members’ Personal Liability
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Federal Court of Justice (BGH): Supervisory boards must actively request information (II ZR 78/24)
\r\nA supervisory board may not limit its monitoring duties to waiting for the management board’s regular reports. If reports are not provided or are incomplete, the supervisory board must itself take action and request the necessary information. The Federal Court of Justice clarified this in its judgment of 14 October 2025 (case no. II ZR 78/24). This can have significant consequences for supervisory board members: anyone who breaches their monitoring duties may, under certain conditions, be personally liable for damages, including with their private assets.\r\n
Legal framework: Monitoring duty and reporting
\r\nUnder Section 111(1) of the German Stock Corporation Act (AktG), the supervisory board must monitor the management. To enable the supervisory board to perform this task, the management board is obliged under Section 90(1) AktG to regularly inform the supervisory board about the company’s situation as well as about material business transactions.\r\n\r\nWhat is important here is that the management board’s duty to provide information and the supervisory board’s duty to monitor are interlinked. The supervisory board is not merely a “recipient” of information; rather, it must obtain a sufficient information basis in order to be able to actually control the management.\r\n
The supervisory board’s “obligation to obtain” information: Do not wait—follow up
\r\nIn practice, it happens that management boards submit reports late or do not report at all. According to the BGH’s decision, the supervisory board must not accept this. If reports are missing, it has what is known as an “obligation to obtain” information: it must itself request the necessary information and—if required—take further measures to comply with its monitoring duty.\r\n\r\nThis includes in particular:\r\n
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- actively requesting reports and documents (including during the financial year),
- targeted follow-up questions on conspicuous or unclear points,
- convening supervisory board meetings where there is cause to do so,
- where appropriate, involving external advisers insofar as this is necessary for the proper performance of duties.
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\r\nWhich steps are required in the individual case depends on the company’s situation and risk profile. The standard is the care of a prudent and conscientious supervisory board member.\r\n
The case: Real estate transactions despite an assumed “dormant” company
\r\nIn the case decided by the BGH, a stock corporation had originally been active in trading and brokering insurance. This business activity was discontinued. The supervisory board therefore assumed that the company was no longer conducting any business.\r\n\r\nIn fact, however, the management board carried out real estate transactions: in the context of compulsory auctions, the company acquired properties and offered them for sale at public auctions. A buyer purchased two properties in this way. It later emerged that the company was unable to transfer ownership to the buyer. The transactions had to be unwound.\r\n\r\nIn civil proceedings, the buyer was awarded damages claims against the stock corporation in the amount of around 350,000 euros. Since the company was only able to satisfy these claims in part, the buyer subsequently asserted the company’s claims against its supervisory board members for breach of duty (by way of attachment of corresponding compensation claims).\r\n
Lower courts: Reduced monitoring for a “dormant” company?
\r\nIn the initial instances, the action was unsuccessful. The Berlin Higher Regional Court (Kammergericht) took the view that, in the case of a de facto dormant company, the supervisory board’s monitoring duties could be “reduced”. Although breaches of duty had occurred, they were not causally linked to the buyer’s loss. This was justified on the basis that the real estate transactions had already taken place in April 2015. Even if the supervisory board had acted in accordance with its duties, the court considered that it would only have been able to detect the events from later documents (e.g., annual financial statements or account movements), at a time when prevention would no longer have been possible.\r\n
BGH: No reduction of duties—even with restricted business activity
\r\nIn the appeal on points of law, the BGH rejected this view and clarified:\r\n
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- Neither a “standstill” of business operations nor internal organisational weaknesses justify a reduction of the supervisory board’s statutory duties.
- The management board remains subject to a reporting duty at least quarterly. If business activity is restricted, the content of the reports may change, but not the principle of regular information.
- The supervisory board must not limit itself to merely reviewing the annual financial statements. Even in the case of a supposedly dormant company, it must have itself continuously informed of the current status.
- If the management board does not report or reports only incompletely, the supervisory board must actively obtain information and establish the decision-making basis required for effective monitoring.
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\r\nThe guiding principle of the decision: until legal termination (e.g., in the context of liquidation), the supervisory board function remains fully effective—and with it the liability risk in the event of breaches of duty.\r\n
Personal liability: When supervisory board members can be held liable
\r\nIn principle, supervisory board members can be held liable for breaches of duty under stock corporation law liability rules for compensation of the damage suffered by the company. In practice, it can happen—as in the case decided—that creditors of the company attempt to economically realize corresponding compensation claims of the company against supervisory board members (e.g., by enforcement measures against such claims).\r\n\r\nLiability typically depends on the following points:\r\n
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- Breach of duty (e.g., lack of oversight, failure to respond to missing reports),
- Fault (at least negligence),
- Damage to the company,
- Causality between the breach of duty and the damage.
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\r\nWith its decision, the German Federal Court of Justice (BGH) places particular emphasis on the duty to actively obtain information. Supervisory board members should therefore document which reports were requested, which follow-up questions were asked, and how they responded to critical developments. Proper minute-taking can be decisive in the event of a dispute.\r\n
Consequences for practice: What supervisory board members should pay attention to
\r\nThe decision makes clear that “no news” is not an exculpatory argument. Even if the management board reports no activities over a longer period, supervisory board members should regularly and verifiably check whether this actually reflects the situation. Particularly advisable are:\r\n
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- a fixed reporting and meeting calendar (at least quarterly),
- standardized minimum contents of reports (liquidity, material contracts, litigation, extraordinary business transactions),
- review of bank/account information and material payment flows, as required,
- clear escalation mechanisms in cases of refusal to provide information or lack of clarity,
- early consideration of structural measures (e.g., orderly liquidation) if operational activity has been permanently discontinued.
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Note on classification
\r\nThis article provides general information and does not replace advice in a specific individual case. The assessment of duties, causality, and the scope of liability always depends on the circumstances of the respective company and the specific conduct of the supervisory board.\r\n\r\nMTR Legal Rechtsanwälte advises in corporate law. Feel free to get in contact.”
