Tasks and duties of the GmbH-managing director

The central task of the managing directors of the GmbH is to realize the company purpose of a limited
liability company or to take all necessary measures in order to reach their defined enterprise goals. This
central task includes numerous duties, including the exercise of the interests of the Company, the
administration of corporate assets, the confidentiality of trade secrets and the general representation of
the Company, both judicially and out of court. Moreover, it is his duty not to harm society and avert
harm to it.

In this case, the managing director does not have to be a shareholder himself. It is appointed by the
shareholders’ meeting, can be obtained from these directives and can be recalled by their resolution.
The powers of the managing director may also be limited in the management contract. The general
meeting of shareholders may reserve the right to make the settlement of individual transactions
dependent on their approval. The employment contract between the managing director and the
shareholder can also be used to lay down certain restrictions on his personal responsibility and liability;
this also applies to his power of representation in the internal relationship of the company. But beware:
The power of representation to the outside can not be limited. All legal transactions concluded by the
managing director in the name of the GmbH – even if he overrides his restrictions – are binding on the
GmbH. If the managing director acts against arrangements agreed in the shareholders’ meeting or in the
articles of association, he can be held liable with his private assets.

Duty to manage

The basic obligation of GmbH managing directors is the management of the current business operations
of a company, which include:

  • Fulfillment of the actual company object according to statute
  • Administrative tasks and organization
  • Information obligation to the partners
  • Execution of shareholder resolutions
  • Representation of the company in the external relationship duty of care

In principle, managers are allowed to delegate tasks to employees, but they are obliged to monitor
these tasks carefully. The areas of responsibility can be shared between several managing directors, but
the legal obligations of the managing directors are to be observed by all – including areas of
responsibility that were assigned internally to other managing directors.

Obligation to maintain the share capital

The managing director undertakes to “preserve the share capital of the company”. This means that he
must request all shareholders to pay the share capital, monitor all deposits and balance sheets and, if
necessary, prevent hidden profit distributions.

In addition, the managing director is personally liable for all payments that endanger the share capital.

Accountability

The proper execution of the accounting is also part of the duties of the managing director. In the first
three months of the financial year, he must prepare the annual financial statements and the
management report for the previous year and is obliged to submit this annual report to the
shareholders without delay.

Further obligations of accounting:

  • The proper and timely preparation of the tax return
  • The payment of taxes due
  • Timely submission of sales and employment tax filing
  • Retention of payroll tax and transfer to the tax office
  • The notification of all changes and events relevant for the tax office
  • Duties on employment of employees

The managing director is also responsible to employees. This includes the measures for occupational
safety and health, compliance with applicable employment law (eg working hours laws, youth
employment protection law, etc.) as well as other organizational activities, such as the registration of
employees with the health insurance funds or the withholding and deduction of social insurance
contributions. The managing director is obliged to check the driving licenses of the employees if they are
given a company vehicle.

loyalty

By law, the duty of loyalty is not expressly regulated, but it is recognized as a general rule of law.
“Fiduciary duty” means the duty to promote the “purpose of the enterprise”, ie the company objective
specified in the articles of association. This includes the confidentiality of all trade secrets and the
general non-competition clause. For example, the manager may not conduct his own business with
which he competes with the company’s business. This does not only apply to the areas in which the
company currently operates, but also those mentioned in the service contract between the managing
director and the partner. The misuse of his position for self-serving reasons and to the detriment of
society is also a violation of the manager’s duty of loyalty.

Incidentally, the non-competition clause can continue beyond the term of office of the managing
director. This is determined in advance in the management contract.

Duty to convene the shareholders’ meeting

The general meeting is convened by the managing director or the management. It should be noted that
the convocation by letter to all shareholders has to be made with a notice period of at least one week,
provided that no deviation from this statutory provision in the shareholders agreement or the statutes
has been agreed. A summons must be personally signed by the managing director and include the
following items: venue, date of meeting and agenda.

The convocation of the shareholders’ meeting is required by law if one or more of the following are
pending for the GmbH:

  • Claiming the full deposit of the capital contributions of all shareholders amendment
  • Request by one or more shareholders holding at least 10% of the common shares
  • Approval of the annual financial statements
  • Dissolution and liquidation of the GmbH
  • Notification to shareholders if only half of the share capital remains
  • Information of the shareholders in particularly risky transactions
  • All resolutions of the shareholders are generally adopted in the shareholders’ meeting. The managing director is obliged to ensure the implementation of those resolutions.