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Special Representative GmbH: Tasks, Appointment and Liability
Specialist article in corporate law
In cases of conflict among shareholders or suspected breaches of duty by management, a fundamental structural dilemma arises for GmbH shareholders: the very person against whom claims are to be enforced is also the one who acts externally on behalf of the company. A legal instrument precisely designed for this situation has received only limited attention in GmbH practice to date – the special representative. With its decision of September 17, 2024 (Case No. II ZR 221/22), the German Federal Court of Justice (BGH) clarified key aspects regarding the appointment, powers, and liability of this body. This article explains what knowledge GmbH shareholders and managing directors should possess in this regard.
Special Representative GmbH: Legal Basis and Scope of Responsibilities
The special representative is a legal concept under company law whose roots lie in stock corporation law. Section 147 of the German Stock Corporation Act (AktG) clearly stipulates that the general meeting of a stock corporation may appoint a special representative to enforce claims for damages against members of the company's governing bodies. No comparable statutory provision exists for limited liability companies (GmbHs); however, case law has long applied this instrument to GmbHs because the same structural conflict of interest exists there.
The central problem is this: if the company's claims are directed against the managing director personally, the managing director is unable to effectively represent the company in this matter. They are biased – both legally and factually. In this clearly defined area, the special representative assumes the role of the managing director. They do not act as an agent of the company, but as an independent corporate body with their own power of representation. This classification as a corporate body has significant consequences: for their scope of action, their independence from the management, and their own liability.
The practical significance is considerable: In owner-managed limited liability companies (GmbHs) where the shareholders and managing directors are identical, or in situations where a shareholder paralyzes the management, the special representative opens up an orderly way to make the company capable of acting again and to assert its legitimate claims.
Appointment of the special representative: procedure and requirements
The appointment is made by resolution of the shareholders' meeting. First, a so-called enforcement resolution is required, which defines which claims the special representative is to pursue. This resolution must be formulated with sufficient precision: the facts from which the claims for damages arise must be clearly described. A specific monetary amount is not mandatory, but the claims in question must be described so precisely that the special representative can understand the scope of their mandate.
Any person with legal capacity and the capacity to conduct business can be appointed as a special representative: a shareholder, a lawyer, a tax advisor, or even a managing director not directly affected by the claims. In practice, a lawyer is often chosen, as they can both assess the legality of the claims and pursue them in court. Alternatively, a special representative can be appointed who, in turn, engages lawyers to enforce the claims.
The removal of the special representative also occurs by shareholder resolution. The representative himself can resign from his position, for example, if, after thorough examination, he concludes that the claims are unfounded or have no prospect of success. Unilateral removal by the management, however, is excluded – this would negate the function of the instrument. In such cases, the management's only recourse is through legal action via preliminary injunctions.
Thorough legal preparation is advisable before adopting a resolution to assert claims: A resolution that exceeds the powers of the shareholders' meeting is not merely contestable, but according to the Federal Court of Justice's case law, void from the outset.
Limits of jurisdiction: What content a shareholders' resolution may contain
In its decision of September 17, 2024 (Case No. II ZR 221/22), the German Federal Court of Justice (BGH) clearly defined the powers of the shareholders' meeting when appointing a special representative. The resolution may only cover claims for damages by the company against its own officers. Claims for performance, claims for surrender of assets, or claims against shareholders who are not also officers are not covered.
In the case decided by the German Federal Court of Justice (BGH), a general meeting had included claims for repayment of dividends allegedly paid out unlawfully against shareholders in its resolution. This exceeded the general meeting's authority. The BGH therefore ruled the resolution void pursuant to Section 241 No. 3 of the German Stock Corporation Act (AktG) – and not merely voidable. This legal situation applies accordingly to limited liability companies (GmbHs): A resolution exceeding the permissible scope is invalid from the outset and has no legal effect whatsoever.
This clear distinction is of central importance for practical application: Shareholders who wish to appoint a special representative must limit the resolution to pursue claims for damages against the management. Claims against other persons, even if legally justified, must be pursued through other channels.
Defective appointment of the special representative: Effects on third parties and the company
What are the legal consequences if the appointment of a special representative is defective or even void? The German Federal Court of Justice (BGH) ruling II ZR 221/22 addressed precisely this question. The appointed special representative had pursued legal proceedings for several years, engaging a law firm for this purpose – until it was determined that his appointment was void from the outset because the underlying resolution exceeded the powers of the general meeting.
The Federal Court of Justice (BGH) based its decision on the principles of defective appointment of corporate officers. This legal concept stipulates that actions taken by a defectively appointed officer are effective against third parties – as long as the officer is not removed from office or resigns. Without this provision, third parties would be unprotected: individuals who, in good faith, entered into contracts with the special representative would lose their claims, even though they had no part in the defective appointment.
In the present case, this had the following consequence: The mandate agreement concluded by the improperly appointed special representative was legally effective. The appointed law firm had an enforceable claim for remuneration against the company. The invalidity of the appointment of the officer did not release the company from this claim.
If there is doubt regarding the validity of an appointment resolution, the company may not simply disregard it. Even a special representative appointed invalidly can still act legally in external relations – with direct cost consequences for the company.
Liability of the special representative: Corporate responsibility even in case of defective appointment
While the courts protect third parties through the principles of defective appointment of officers, the special representative himself is subject to considerable requirements. The German Federal Court of Justice (BGH) has unequivocally established that, analogous to Section 43 Paragraph 2 of the German Limited Liability Companies Act (GmbHG), he is liable like a member of the company's governing body. He is bound by the same standard of care as a managing director and must be held accountable for breaches of duty – regardless of whether his appointment was legally valid.
In the case at hand, the special representative had pursued claims that, upon careful examination, were clearly without merit from the outset. The Federal Court of Justice (BGH) affirmed his liability to the company for the resulting legal costs. The special representative may not execute the resolution to assert claims schematically without independently verifying whether the claims in question actually exist and are likely to be enforceable. If he arrives at a negative assessment, he must insist on an amendment to the resolution or resign from his position.
This liability regulation has a direct impact on practice: Anyone who accepts the office of special representative bears full corporate responsibility. Adequate liability insurance is therefore essential and should be considered from the outset when agreeing on remuneration.
When is legal advice advisable in connection with the special representative of the GmbH?
Appointing a special representative is a specifically tailored means of managing conflict situations that cannot be resolved using the standard instruments of a limited liability company (GmbH). For this very reason, meticulous preparation is essential. Defective appointment resolutions can render them invalid, although an improperly appointed special representative can still legally incur costs.
Legal counsel is recommended for both parties: Shareholders who wish to appoint a special representative require a legally precise drafting of the resolution to assert their claims. The resolution must be limited to the permissible scope of authority and clearly define the claims to be enforced. Managing directors against whom a special representative is taking action should also seek legal advice in a timely manner – especially if the resolution contains defects or the asserted claims appear unfounded.
Conclusion: Special representative in the GmbH – an effective tool with strict due diligence requirements
The special representative is an often overlooked, yet highly effective tool in the corporate law of limited liability companies (GmbHs). With its help, claims against the management can be enforced even when the usual representation mechanisms are no longer functioning. The German Federal Court of Justice (BGH) ruling of September 17, 2024 (Case No. II ZR 221/22) clarified its legal position in key aspects: While improperly executed appointments protect third parties from disadvantages, they do not release the special representative from its liability as an officer of the company.
For the shareholders of a GmbH (limited liability company), this means that the appointment must be both within the scope of the appointed person's authority and precise in its content. A resolution to assert this authority that exceeds the permissible limits is invalid from the outset and can still result in financial burdens. The person assuming the position bears the full responsibility of a corporate body and must make their decisions independently and autonomously – regardless of the shareholders' expectations.
Anyone who, as a shareholder of a GmbH (limited liability company), wishes to enforce claims against the management or is contacted as a possible special representative, should familiarize themselves with the legal requirements and, if necessary, seek legal assistance promptly.
TURGERLEGAL advises GmbH shareholders and managing directors on all matters of company law – from the preparation and execution of shareholders' meetings to shareholder disputes and the enforcement of claims in court.
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FAQs – Frequently Asked Questions about the Special Representative in the GmbH
A special representative constitutes an independent corporate body appointed by the shareholders' meeting to review and enforce the GmbH's claims for damages against its own board members. Since the management is not authorized to act as its own representative in such situations, the special representative assumes this function within its clearly defined area of responsibility. Its activities are not based on a contractual relationship but rather on its own power of representation.
There is no explicit statutory provision for a special representative in German limited liability company (GmbH) law. However, case law has transferred this instrument from stock corporation law (§ 147 AktG) to GmbHs, as the same conflict of interest exists. The German Federal Court of Justice (BGH), in particular through its judgment of September 17, 2024, has further specified the legal status and the requirements for appointment of such a representative.
In principle, any legally competent natural person can be appointed as a special representative – this includes shareholders, lawyers, tax advisors, and managing directors who are not directly affected by the claims. Lawyers are frequently chosen, as they can both assess the legal claims and enforce them in court. Legal entities are generally excluded from being appointed as special representatives according to Section 14 of the German Civil Code (BGB).
The special representative is exclusively authorized to enforce the company's claims for damages against its own officers – primarily claims for compensation arising from breaches of duty by the management. However, their powers do not include claims for performance, claims for surrender of assets, or claims against shareholders who do not hold officer positions. According to the German Federal Court of Justice (BGH), any resolution exceeding this scope is void.
The resolution to assert claims refers to the resolution of the shareholders' meeting that specifies which claims the special representative is to enforce. It must describe the underlying facts with sufficient specificity so that the special representative can clearly understand the scope of their mandate. A precise specification of the amount is not mandatory. If the resolution exceeds the powers of the shareholders' meeting, it is immediately void – it is not merely contestable.
According to the principles governing defective appointments of corporate officers, the actions of a defectively appointed special representative remain valid in external relations until their removal or resignation. Third parties who have entered into contracts with them in good faith retain their claims against the company. The company is not entitled to invoke the invalidity of the appointment against these third parties.
Yes. The special representative is liable in accordance with Section 43 Paragraph 2 of the German Limited Liability Companies Act (GmbHG) by analogy, comparable to a managing director, if he breaches his duties while in office. This liability exists regardless of whether his appointment was legally valid. He is obligated to independently verify whether the claims to be pursued are actually justified and enforceable with realistic prospects of success. If he asserts claims that are clearly hopeless, the company can hold him liable for the resulting costs.
No. The removal of the special representative is solely the responsibility of the shareholders' meeting. Independent removal by the management is not permitted, as this would contradict the purpose of the instrument – the independent assertion of claims specifically against the management. If the management wishes to prevent actions by the special representative, its only recourse is through preliminary legal protection.
A special representative is entitled and obligated to resign from office as soon as, after careful review, he determines that the claims to be pursued are either unfounded or have no realistic prospect of success. Since, as a corporate body, he acts exclusively in the company's interest – not as an agent of the shareholders' interests – he has no duty to implement a resolution whose legal basis he considers untenable.
Legal advice is useful at every stage: for shareholders who wish to appoint a special representative and need to ensure that the resolution to assert their claim complies with the scope of authority and is legally valid; for managing directors who learn of an appointment and want to have its legality reviewed; and for persons who are intended to assume the office of special representative and need to be clear about the scope of duties, limitations, and liability risks of their corporate function.
