JOURNAL
Corporate law in Germany
Find out more about our advisory services.
Your lawyer for corporate law
Uwe Horwath
Certified specialist in commercial and corporate law
+49 (0)711 89 47 15 87
Legal Information
The liability of the foreign parent of a German limited liability company (GmbH)
A foreign company carrying on business activities in Germany through a German limited liability company benefits from the limitation of liability applicable to the shareholders. The German limited liability company is liable to third parties only with its corporate assets. In principle, there is no recourse to the assets of the shareholder.
There are exceptions to this principle, which are particularly relevant for foreign parent companies of German limited liability companies.
Economic connection of the assets
Liability of the shareholder comes into consideration if he has declared to third parties that he wishes to assume liability for the GmbH’s obligations. In the same way, the shareholder is liable if he mixes his own assets with the assets of his subsidiary in an impermissible manner.
Abusive use of the company's assets
The shareholders must take into account that the company must be able to service its liabilities. If this requirement is violated this constitutes an abuse of the legal form and leads to the loss of the privilege of liability. In this case, the company’s creditors are therefore generally entitled, outside of insolvency proceedings, to assert their claims directly against the shareholders involved in the interference with the company’s assets, insofar as they cannot obtain satisfaction from the company.
The granting of a loan to managing directors or other persons with executive functions may also lead to the liability of the shareholders. This is the case if the loan was initiated by the shareholders and is paid out of tied capital.
Liability in case of appointment of unqualified managing directors
Shareholders may only appoint qualified persons as managing directors. Shareholders who intentionally or through gross negligence entrust the management of the business to a person who cannot be a managing director are liable to the GmbH for any damage.
Liability in insolvency
In a case where the company no longer has a managing director, each shareholder must file for insolvency in place of the managing director in the event of insolvency or overindebtedness. If this duty is breached, the shareholder is personally liable and may even be liable to prosecution. A shareholder who is aware of the company’s lack of management must therefore check whether the company is possibly ready for insolvency.
You want to know more about the liability, rights and obligations of foreign parent of a German limited liability company ? Get in touch with us! Our specialist lawyers for commercial and corporate law will advise you on all questions concerning shareholder position in a german limited liability company (GmbH).
Meet your German corporate lawyer online
Arrange your non-binding consultation appointment via video conference.
Create your corporate legal file
With us, you have full access to your lawyer’s file. We guarantee you transparency, security and an efficient exchange of information.
Leave us a message with your request. We will get back to you as soon as possible.