In the years following the financial crisis, legal disputes concerning potential breaches of duty by former board members in companies operating in the field of capital investment became increasingly frequent. Against this backdrop, a lawsuit against several former directors of Accessio AG (formerly “GFE Gesellschaft für Europäische Kapitalanlagen AG”, later “Accessio Wertpapierhandels AG”) was also pending before the Higher Regional Court of Schleswig-Holstein. The claimant, an international investment company, sought millions in damages due to alleged deficiencies related to the allocation and management of proprietary trading transactions.
Legal standard of review for director liability
Duties of former board members
Members of the management board of a stock corporation are personally liable to the company pursuant to Section 93 (2) of the German Stock Corporation Act (AktG) for damages resulting from culpable breaches of duty within the context of their position as board members. A fundamental prerequisite is the legally required proof that there is a causal connection between a specific breach of duty and the asserted damage.
Requirements regarding the burden of presentation and proof
The Higher Regional Court reaffirmed the strict requirements regarding the burden of presentation for the claimant company. For each alleged breach of duty, it is necessary to set out in a comprehensible manner exactly how the respective board member is alleged to have violated statutory or constitutional obligations, which specific conduct is to be objected to, and how this resulted in damage to the company. General assertions or unclear descriptions of the facts are therefore not sufficient.
Reasons for the decision in the present case
Assessment of the factual presentations
In the present proceedings, the court carefully evaluated the submitted documents and arguments. The claimant relied on various accusations regarding the handling of proprietary positions and the board’s supervisory duties. However, the court did not find sufficient substantiated allegations of violations that could give rise to the personal liability of the defendants:
The characteristics of capital market regulation and the framework conditions of Accessio AG were thoroughly examined, but key allegations such as inadequate corporate supervision or erroneous investment decisions were not sufficiently specified.
Furthermore, in the court’s view, there was no conclusive explanation as to which specific allegation could actually be individually attributed to which former board member.
No evidence of loss resulting from breach of duty
The court emphasized that a possible occurrence of losses in the company’s proprietary trading alone does not provide sufficient grounds for a liability-creating breach of duty. Such liability rather requires a clear link between misguided decisions and a culpable violation of internal or statutory duties of care. In this specific case, the court found no sufficient indications to this effect.
Moreover, the Higher Regional Court pointed out that the general economic distress of a company does not in itself allow a direct inference of wrongful conduct by board members. Rather, the circumstances of each individual case must always be examined and assessed separately.
Consequences and practical implications
The decisions of the Higher Regional Court of Schleswig-Holstein, Ref. 5 U 14/12 et al. (judgment of May 14, 2013), make it clear that the personal liability of former board members is subject to high formal and substantive requirements. The company is obliged to present breaches of duty systematically and clearly, and to specifically prove causality with respect to the asserted damage. In particular, it is not sufficient to merely point to a negative business development or general irregularities.
For companies, their entitled parties, or potentially affected board members, this provides important guidance on how to deal with possible cases of director liability. Careful review and documentation of internal processes as well as precision in asserting claims are gaining in significance.
Notes on ongoing proceedings and legal situation
The claims asserted by the claimants were dismissed by this decision on the basis of the facts and dispute status presented. It should be noted that all facts of the case remain subject to the presumption of innocence, and that final clarification in comparable cases always requires a thorough judicial assessment.
(Source: Higher Regional Court of Schleswig-Holstein, judgments of May 14, 2013, Ref. 5 U 14/12, 5 U 33/12, 5 U 42/12)
Legal issues in the context of director liability
The complex requirements of stock corporation law and the evolving case law on director liability regularly present companies as well as affected board members with considerable challenges. Against the background of increasing volume of claims and growing regulatory requirements, adequate strategic support is crucial.
If questions arise regarding the enforcement or defense of claims for director liability, liability in the capital investment sector, or related areas of law, the lawyers of MTR Legal, with their comprehensive knowledge of corporate and commercial law, will be pleased to serve as your point of contact.
