Director duties mapping in Germany: what the rules require

Director duties mapping in Germany sets out which obligations attach to the Geschäftsführer personally, which attach to the GmbH or AktG itself, and where German company law departs from the generic template a multinational group might otherwise apply across its subsidiaries. The exercise identifies the standard of care a managing director is held to, the register entry that fixes a change in office, and the forum in which a breach is litigated. For a group running the same governance checklist across several jurisdictions, Germany is one of the places where the checklist has to be rewritten, not translated.

A holding company appoints the same regional director to run its German subsidiary as it uses in three other jurisdictions. The German entity's articles are amended, a new signatory is registered, and the group treats the filing as a formality completed by local counsel. Six months later a creditor claims against the managing director personally, and the group discovers that the standard applied to that decision in Germany is not the one it assumed from the parent's home jurisdiction.

This page sets out the test German law applies to a managing director's conduct, the register entry that fixes it, and where the firm's advisory role in Germany stops.

What changes in Germany

The general framework this exercise assumes is set out in director duties mapping across jurisdictions; what follows is where Germany's version of that exercise differs. Mapping director duties for a German subsidiary is not a translation exercise. The standard a managing director is measured against, the register that records changes to the role, and the court that hears a claim for breach are each set by German company law and do not track assumptions carried over from an English, BVI or Guernsey structure.

A managing director of a GmbH must manage the company with the diligence of a prudent businessperson conducting business on his own account, and a departure from that standard exposes the director to personal liability for the resulting loss. 01 The test is objective: it asks what a careful manager in that industry and that company's position would have done, not what this particular director subjectively believed was reasonable. A group running the same mapping exercise in Guernsey will find a different standard applied to the same underlying decision, which is precisely the point of doing this jurisdiction by jurisdiction rather than once.

The local requirement or test that drives the work

Director duties mapping for Germany starts from a single question: was the decision taken on a basis that meets the standard above, and can that basis be reconstructed after the fact. This is the core of directors' duties and personal liability work in Germany: identifying where the standard bites before a claim forces the question, rather than after. The mapping exercise identifies, decision by decision, who inside the German entity is expected to satisfy that standard, and what a court applying it would look for as evidence that the process, not just the outcome, was sound.

A licensing question can also surface here that a group did not expect. Where the same individual is mapped as director across several affiliates without separate consideration of the German seat, acting as director for another person's benefit can itself be a licensed activity in the jurisdiction supplying that person. Once the appointment becomes visible on the commercial register the classification is fixed, and the option to restructure it before a third party relies on that entry ceases to be available.

What the mapping produces in practice is not a restatement of German company law. It is a decision log: which board or shareholder resolutions the managing director needs before acting, which of those resolutions must be minuted, and which categories of decision the German entity's constitution reserves to the shareholders rather than the management. A group that keeps this log current has an answer ready before a claim is made; a group that reconstructs it after a dispute starts is proving its case from memory. Where the group needs a single reference point for how personal exposure differs across its portfolio, the comparison of personal director liability across jurisdictions sets the German position next to the others.

A holding company whose German managing director resigns without a successor named presents two problems at once, and only one of them is fixable after the register entry is filed: the board seat can be refilled, but the period during which the company had no registered managing director cannot be erased from the record.

Assess your director exposure. Write to info@hreithlaw.com with the jurisdiction and the structure.

The filing, register or forum consequence

Three consequences follow directly from how the German entity is structured and none of them is optional. A change of managing director, or of the company's registered office, must be notified to the German corporate register without undue delay, and the register entry, not the internal resolution, is what a counterparty relying on the company's representation is entitled to check. 02 That register entry functions as a regulatory filing that third parties are entitled to rely on, whatever the board minutes say privately.

The GmbH's managing directors are responsible for keeping the shareholders' list current and for filing an updated list with the commercial register whenever the shareholding changes. 03 An outdated list is not a paperwork lapse. Whoever appears on the filed list is treated as the shareholder for the purposes of exercising shareholder rights against the company, whether or not that reflects the underlying transfer.

Amending the company's articles requires a three-quarters majority of the votes cast at the shareholders' meeting. 04 Where a group plans to restate a German subsidiary's constitution to bring it in line with a group-wide template, that threshold, not the parent's own governance practice, decides whether the amendment passes.

A claim against a managing director for breach of duty is brought before the regional court with jurisdiction over the company's registered seat. 05 That forum question decides which procedural rules govern disclosure and evidence long before it decides who is right, and it is fixed by where the company is registered, not by where the group's other disputes are usually litigated. The forum question is explored further in the Germany dispute forum and procedure brief, which sets out how that regional court jurisdiction operates in practice. The board or shareholder resolutions a managing director should hold before acting are catalogued in board resolutions required for director duties mapping.

Where mapping reveals that the person appointed as managing director in Germany is acting on instructions from an entity in another jurisdiction without disclosing that relationship, the appointment can amount to arranging for another person to act as director, an activity requiring a licence in several of the jurisdictions the group operates from. That exposure closes off the option to restructure the appointment once the filing is made, not once a regulator asks about it.

What this service does not include in Germany

Director duties mapping in Germany does not include acting as, supplying, sourcing or arranging a managing director, a company secretary function, a nominee shareholder or a trustee for the German entity. It also does not include any activity for which a trust or corporate service provider licence is required in Germany or in the jurisdiction from which a proposed appointee would be sourced. That boundary sits alongside the register and regulatory filing questions above; it is set by licensing law, not by the scope the firm would otherwise choose to offer.

The reason for the boundary is straightforward. Arranging for a person to act as another entity's director is, in a number of the jurisdictions this practice covers, itself a regulated activity, and holding that licence carries obligations that sit outside legal advisory work. Keeping the two separated means the mapping the firm produces can be relied on as an independent assessment, not as a document written to support an appointment the firm has an interest in placing.

What the engagement does produce for the German entity:

• The duty and standard-of-care requirement mapped against the specific decision the managing director is being asked to take.
• The register and filing consequence identified before the filing is made, not after.
• The constitution's shareholder-reserved matters set out so the board knows what it cannot decide alone.
• An assessment of where personal exposure attaches, so the appointment can be reviewed before it is accepted, not after a claim is brought.

Assess your director exposure. Write to info@hreithlaw.com with the jurisdiction and the structure.

Frequently asked questions

What does director duties mapping in Germany require in practice?

It requires reconstructing, for each significant management decision, whether the process the managing director followed meets the diligence standard German company law applies, and identifying which of those decisions the constitution reserves to the shareholders rather than the board.

Who inside the company is responsible for director duties mapping in Germany?

The exercise is usually commissioned by whoever answers for the company's governance, typically the parent's general counsel or finance director, but the standard being mapped attaches personally to the managing director named on the German commercial register, not to the group.

What evidence should the board keep on director duties mapping in Germany?

A contemporaneous record of the basis for each significant decision, covering what information was available, what conflicts were checked, and what the managing director reasonably believed served the company, carries more weight than a policy document written afterward.

What happens if director duties mapping in Germany is not addressed?

The standard still applies whether or not it has been mapped. What changes is the group's ability to show, if a claim is brought, that a decision was taken on a defensible basis rather than reconstructed from memory once a dispute has already started.

How often should director duties mapping in Germany be reviewed?

It should be revisited whenever the managing director changes, whenever the shareholding or the articles are amended, and whenever the group's own governance template is updated, since a template written for another jurisdiction rarely transfers without adjustment.

Klara Voss, expert author. Klara focuses on cross-border director liability and board governance for multi-jurisdiction groups, advising on how duties, registers and filing consequences differ once a director's role crosses a border, and on the licensing boundary that limits how an advisory firm may assist with that role.