If a managing director of a GmbH fails to properly comply with their business management obligations then, according to general principles, they would be liable for the breach of their managing director employment contract or their service agreement towards their contractual partner in this respect. Besides the Komplementär-GmbH itself, this could also be the KG. With regard to the obligations that have to be complied with by the managing director, Section 43(1) of the Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung, GmbHG) contains a general catch-all provision (“due care of a prudent business person”). The duties of a managing director include the obligation to comply with legal requirements (duty to act lawfully), the obligation to properly manage the business as well as corporate fiduciary duties.
Moreover, under the legal rules of Section 43(2) GmbHG, the managing director is liable to a GmbH on the basis of their corporate position as the managing director of the company. Section 43(2) GmbHG is the key liability provision for managing directors of a GmbH. However, losses that arise because of a breach of duty do not normally arise at the Komplementär-GmbH but rather at the KG.
Extension of the liability towards a KG
In case law, the liability provision under Section 43(2) GmbHG has been extended, if certain conditions are met, to include the relationship between the managing director and a KG so that Section 43(2) GmbHG will, in practice, not be ineffective for a GmbH & Co. KG and, moreover, a KG without a contractual agreement between the managing director and the KG will ultimately not be left without any possibility to claim compensation (cf. Federal Court of Justice [Bundesgerichtshof, BGH] ruling of 18.6.2013, case reference II ZR 86/11). At any rate, according to the above ruling, where the “sole or principal duty” of a Komplementär-GmbH consists in managing the business of a KG then the scope of protection of the special legal corporate relationship between the Komplementär-GmbH and its managing director, which is established when they are appointed, will extend to the KG with respect to the liability under Section 43(2) GmbHG in the event of management without due care (BGH ruling of 22.9.2020, case ref: II ZR 141/19).
The ruling by the Hamburg OLG of 17.9.2021
The Hamburg OLG, in its ruling of 17.9.2021 (case reference: 11 U 71/20; appeal lodged, BGH case reference II ZR 162/21) clarified that the BGH case law on the liability of a managing director of a Komplementär-GmbH may be transferred to the managing director – according to the partnership agreement – of the managing limited partner company. In the case under dispute, a GmbH & Co. KG or an insolvency administrator had claimed compensation for damages pertaining to the assets of the GmbH & Co. KG against both the managing director of a Komplementär-GmbH as well as the managing director of the managing limited partner GmbH (the managing limited partner was a GmbH). Both of the managing directors had been accused of breaching due diligence obligations in the context of loans granted with insufficient collateral.
Drawing upon the BGH ruling, the 11th senate of the Hamburg OLG clarified that the liability provision under Section 43(2) GmbHG, through analogous application, would also have to be applied to the managing limited partner. What matters is that the managing limited partner GmbH has to likewise be under obligation to the GmbH & Co. KG to manage the business with due care and diligence. In any case if, in connection with the purported breach of duty, there was no conflict of interest for the managing director of the managing limited partner GmbH then it would not matter that they are still deployed as a managing director in other companies. A managing director who takes no action whatsoever when an agreement for the provision of a dubious loan is concluded cannot, at the same time, argue that nobody would have listened to them anyway.
Please note: The Hamburg OLG granted permission for this case to be referred to the BGH for an appeal in respect of the question of whether or not the defendant, as the managing director of the managing limited partner, was liable towards the GmbH & Co. KG even though this limited partner was also responsible for managing other KGs.