102	3  Limited Liability Company (GmbH)

3.4.2.6  Liability to Tax Authorities and Social Insurance Agencies

A managing director is also liable for any willful or grossly negligent violation of the company’s duties to pay taxes and social insurance contributions. The managing director incurs liability, for example, if she/he fails to file the company’s tax returns in a timely manner or if she/he fails to pay payroll taxes. The managing director is also liable if she/he fails to satisfy outstanding tax liabilities in the same proportion as other liabilities of the company in the event of the GmbH’s insolvency.

The managing director is also liable for failing to pay social insurance contributions owed by employees to social insurance agencies. In addition, a failure to do so is considered a serious criminal offense.

3.4.3  Joint Responsibility/Joint and Several Liability

If several managing directors have been appointed, they are jointly and severally liable,92 provided that each managing director meets the respective requirements for liability.93 This is usually the case if a duty is breached by joint action or joint omission of the managing directors. If the managing director did not personally breach a duty, she/he is generally liable only if she/he has breached her/his duty of supervision with regard to the remaining managing directors. Each managing director has a duty to supervise the remaining managing directors in the performance of their responsibilities within their area of responsibility. Thus, each managing director is required to ascertain on a regular basis whether the other managing directors are properly performing the responsibilities assigned to them. If the reliability of one managing director is in doubt, each of the other managing directors is required to intervene and to return the relevant areas to the management board as a whole. To the extent that particular duties fall within the area of responsibility of one particular managing director, the other managing directors are, nevertheless, subject to particularly stringent and extensive duties of supervision and control. If they realize that a legal duty has been breached, they must immediately take the initiative and solve the problem.

If there is more than one managing director, there will often be a case assignment plan (Geschäftsverteilungsplan) describing the scope of duties and activities for each managing director. Such a case assignment plan may limit the liability risks of a managing director as long as she/he adheres to the duties described therein. However, she/he may still be liable for other duties if she/he has violated her/his duty of control regarding the performance of the other managing directors.

92  See Sec. 43 para 2 GmbHG.

93  E.g. in case of a liability under Sec. 826 BGB the respective shareholder would be required to have acted intentionally.