Legally Secure Leadership: Duties and Rights of Managing Directors and Board Members in Germany

As a managing director, board member, or authorized signatory in Germany, you bear enormous responsibility. You have extensive decision-making authority, but you must also comply with strict legal requirements. In this article, you will get a clear overview of your legal framework – with exact references to the German GmbHG and AktG. Use this guide to effectively exercise your rights and fulfill your duties.

Managing Directors in the GmbH

In German GmbH law, the management is the central body of the company. The essential rights and obligations of managing directors arise from the following provisions:

• Authority to Represent: According to § 35 GmbHG you are authorized as managing director to represent the company in court and out of court. This authority allows you to enter into contracts and act on behalf of the company – always observing legal limits and shareholder resolutions.
• Due Diligence and Responsibilities: § 43 GmbHG specifies your duty for diligent management. You must safeguard the interests of the company and the shareholders with the care of a prudent and conscientious business manager, recognize risks early, and initiate appropriate measures to minimize risks.
• Liability Issues: Breach of duties – whether through gross negligence or intentional misconduct – can lead to personal liability. Careful documentation and transparent corporate management are therefore essential.

Boards in the Stock Corporation

The tasks and responsibilities of boards in a stock corporation are regulated by the Stock Corporation Act (AktG) . Important aspects include:

• Management Authority: According to § 76 AktG the board is responsible for the management. You have comprehensive powers to run the business of the stock corporation – both operationally and strategically – with the welfare of the shareholders and the company always in mind.
• Due Diligence and Organizational Responsibility: § 93 AktG requires you as a board member to act with the care of a prudent and conscientious business manager. This duty applies not only to daily operations but also to the long-term strategic orientation of the company.
• Liability and Accountability: Violations of statutory or internal duties can lead to personal liability. Regular consultations and close cooperation with the supervisory board help minimize this risk.

2. Contractual Arrangements and Internal Guidelines

In addition to legal requirements, contractual arrangements and internal company guidelines also play a significant role:

• Articles of Association and Statutes: Your scope of action is defined by the articles of association (for GmbH) or the statutes (for AG). These documents often contain detailed regulations on decision-making powers, control mechanisms, and other rights and obligations.
• Internal Compliance Regulations: A structured compliance policy helps you comply with all legal requirements. Internal guidelines regulate the handling of conflicts of interest and the documentation of decisions, allowing you to act in compliance with the law in complex situations.
• Cooperation with the Supervisory Board: Particularly in stock corporations, close coordination with the supervisory board is essential. Open communication and regular reporting help build the trust of shareholders and external stakeholders. Use targeted training opportunities, such as supervisory board and board seminars.

3. Corporate Governance and Liability Issues

Corporate Governance provides the framework in which you operate as a leader and ensures transparent, responsible, and sustainable corporate management:

• Transparency and Disclosure: Both the GmbHG and the AktG place great emphasis on transparency. You are obliged to document relevant decisions and processes transparently – this strengthens the confidence of shareholders, shareholders, and external stakeholders.
• Risk Management: Effective risk management is essential. By conducting regular reviews and identifying risks early, you minimize liability risks and ensure the company’s long-term success.
• Minimizing Liability Risks: To avoid personal liability risks, it is crucial to make all decisions carefully and document them comprehensively. Targeted training opportunities, such as managing director seminars, provide practical insights into legal and strategic issues.

➡️ 9-point Checklist for Managing Directors and Authorized Signatories

To give you a quick overview and ensure you cover all important aspects, we have created the following 9-point Checklist for you:

1. Comply with competence regulations: Regularly review the competency rules set out in the statutes and bylaws and ensure you act exclusively within your assigned mandate to avoid personal liability risks.
2. Observe Business Judgment Rule: Always make your decisions based on a comprehensive and reasonable information basis and in good faith – fulfilling the requirements of the Business Judgment Rule.
3. Establish systematic risk management: Conduct regular risk inventories and use a limit system to identify and control potential risks early.
4. Critically evaluate decisions: Create a pro-contra overview for significant decisions and use AI-based tools as an additional research source to ensure a well-founded and reasonable information basis in line with the Business Judgment Rule.
5. Actively live compliance: Ensure that internal compliance regulations not only exist but are actively lived – through regular and demonstrable training, for example via eLearning programs.
6. Promote open communication culture: Ensure that all significant decisions and company developments are communicated transparently to strengthen internal trust and collaboration.
7. Comply with legal requirements: Strictly observe the legal requirements, as anchored in the Stock Corporation Act (AktG), and maintain close coordination with the supervisory board.
8. Conduct regular internal audits: Implement a structured audit system to continuously review compliance with internal guidelines and the effectiveness of risk management.
9. Include external advice: When making complex or critical decisions, bring in external experts and legal advisors to ensure an objective assessment and additional security.

Conclusion

Your role as a managing director, board member, or authorized signatory is characterized by extensive rights and strict duties. The legal basics in the German GmbHG and AktG give you clear guidelines on how to fulfill your tasks. Supplemented by internal contractual arrangements and consistent corporate governance, this guide supports you in acting legally secure.

Use this overview and the 9-point Checklist, to always maintain the balance between your rights and obligations. With a solid understanding of legal requirements and targeted training opportunities – for example through Managing Director Seminars and supervisory board and board seminars – you are well equipped to master future challenges with confidence and lead your company sustainably to success.