Recovery of fines: Are board members and managing directors liable for fines imposed on their companies?
Currently, one of the most controversial issues regarding the liability of executive bodies is whether or not board members and managing directors (so-called business executives) are liable for agency fines that have been imposed on their companies. The Higher Regional Court (Oberlandesgericht, OLG) in Frankfurt/Main recently affirmed the liability to recourse of board members for agency fines under capital market law. Previously, in an antitrust case, the Federal Court of Justice (Bundesgerichtshof, BGH) referred a question to the ECJ as to whether European regulations could preclude liability to recourse for agency fines.
Legal basis for the duty of care
The starting point for liability to recourse are the provisions under Section 93 of the Stock Corporation Act (Aktiengesetz, AktG) and Section 43 of the Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung, GmbHG). Accordingly, managing directors and board members have to exercise the due care of a prudent and conscientious manager. If they act in dereliction of their duties they will be liable to compensate the company. These duties include, in particular, ensuring that business is conducted lawfully (“duty to comply with the law”) - which also encompasses observing antitrust laws.
Facts and circumstances of the referral to the ECJ by the BGH
The BGH approved a resolution on 11.2.2025 (case reference: KZR 74/23) to refer a question to the ECJ, within the scope of the preliminary ruling procedure, that concerned whether European regulations could preclude liability to recourse for fines. In doing so, the BGH presented compelling arguments for and against seeking such recourse and expressly left the decision open.
The underlying issue concerned whether a company can seek compensation from its managing director for damages resulting from a fine imposed on the company by an agency because of the director’s participation in a price cartel. The focus here is on the question of whether the preventive and punitive purpose of the agency fine would be undermined if the company were able to internally shift the financial loss associated with the sanction to its executive body. It has hitherto not been clarified whether or not such internal burden shifting could compromise the effectiveness that is necessary under EU law for antitrust penalties.
The OLG decision on the liability to recourse
The OLG in Frankfurt/Main, in its ruling of 12.10.2025 (case reference: 31 U 3/25), decided that a board member who does not provide a responsibility statement has not observed the due care of a prudent and conscientious manager. According to the OLG, if, as a result of this failure to provide a statement, a fine is imposed on the company then it may seek recourse against its board members. Here, the court based its decision primarily on the fact that the agency fine imposed on the company constituted a financial loss that is eligible for compensation and the scope of application of Section 93(2) sentence 1 AktG should not be reduced on the basis of a teleological interpretation. A particularly crucial factor is the distinction between the system of regulatory penalties and German tort law. The appeal is pending before the BGH.
Arguments that support the liability to recourse
One argument in favour of liability for the recovery of fines is the wording of Section 43 GmbHG and Section 93 AktG, as these do not provide for any restrictions on the liability of business executives. The intention behind the liability of executive bodies, namely, to urge executives to manage their companies in compliance with the law would be largely ineffective unless the executives were also held liable for the financial losses that had resulted from their own breaches of duty.
Moreover, the sanction function of a fine would not be impeded by a recourse claim because an effective and dissuasive percentage of the respective fine can still be borne by the company. In particular, the personal lack of ability to perform of the respective business executive, limited amounts of coverage under D&O insurance policies, or liability exclusions mean that only partial recourse can be taken against the business executive.
Outlook: Further clarification on the recoverability of agency fines is expected
The ruling by the OLG has provided a clear lower court decision in favour of the recoverability of agency fines. Nevertheless, it remains to be seen what the ECJ’s position will be with respect to this legal question. Regarding the appeal that is pending, before the BGH, against the judgement of the OLG in Frankfurt/Main, it can be expected that the BGH ruling will provide further clarification of the requirements and limits of the recoverability of agency fines.
