Liability of GmbH managing directors in the case of phishing emails

The liability of the managing director relates exclusively to the violation of his or her specific duties as a director. This also applies to the liability of board members of a stock corporation under Section 93 of the German Stock Corporation Act (AktG). The same applies to the liability of managing directors under Section 43 (2) of the German Limited Liability Companies Act (GmbHG), which is modeled on Section 93 of the German Stock Corporation Act (AktG).

The distinction between the various grounds for liability can have significant practical implications. There are differences in the standard of care and the allocation of the burden of proof. While liability under general rules requires compliance with the "due care required in business," corporate liability under Section 43 (1) of the German Limited Liability Companies Act (GmbHG) requires the "due care of a prudent businessman." Furthermore, in liability under Section 280 (1) of the German Civil Code (BGB), the managing director bears only the burden of proof regarding fault, whereas in liability under Section 43 (2) of the German Limited Liability Companies Act (GmbHG), he or she must also exonerate himself or herself regarding breach of duty.

Interestingly, in this case, the Higher Regional Court of Zweibrücken also applied the principles of internal company compensation to the managing director's breach of a non-board-specific duty. The managing director was not required to pay the resulting damages, even though she had acted with slight negligence. Internal company compensation is a mitigation of liability under labor law, developed by case law for work-related activities of employees. In the case of only slight negligence, the employee is not liable. Whether these principles are also transferable to managing directors or board members is discussed in the literature. The prevailing view rejects this. However, the Higher Regional Court of Zweibrücken wishes to apply the labor law liability privilege to managing directors in individual cases. A transfer is all the more likely the more the managing director is bound by his or her actions, for example, as managing director of a group-dependent GmbH. Since no appeal has been filed, there will be no clarifying supreme court decision in this case.

This decision highlights the complexity of directors' liability and should be taken as an opportunity to take a closer look at D&O insurance for directors. Typically, D&O insurance coverage is designed to cover only those breaches of duty that arise from the directors' activities. This means that a director whose breach of duty is not classified as a directors' activity may not be covered by the insurance. The individual classification could therefore lead to problems with the insurer's liability.