Geschäftsführer Duties & Personal Liability in Germany

The standard of care: the "diligent businessman" (§43 GmbHG)

§43(1) GmbHG sets the standard, and it is objective: a director must act with "die Sorgfalt eines ordentlichen Geschäftsmannes", the diligence of a prudent, orderly businessman. Crucially, that standard is not lowered for a foreigner, a part-timer or a so-called "nominee." The law measures everyone against the same yardstick.

What §43 requires day to day

In practical terms, the Geschäftsführer must:

• manage the company properly;
• keep proper books of account;
• prepare and file the annual financial statements;
• preserve the share capital (§30 GmbHG: no payouts that impair the registered capital);
• meet all statutory filings; and
• discharge the company's tax and social-security obligations.

That last duty is where the personal liabilities below attach, so it is not a formality. [GmbHG §43; handelskammer-hamburg.de; cms.law, accessed 2026-06-10]

Liability for breach: §43(2)/(3), 5-year limitation (§43(4))

Directors who breach these duties are jointly and severally liable to the company: §43(2) provides that they "haften der Gesellschaft solidarisch für den entstandenen Schaden." With several directors, each one can be pursued for the whole loss, not a fractional share.

§43(3) adds a harder-edged liability for payments made contrary to capital maintenance (§30) or for the unlawful acquisition of the company's own shares (§33). Importantly, shareholder authorisation does not discharge this liability where restitution is needed to satisfy the company's creditors, so a "the shareholders told me to" defence fails exactly when it matters.

Claims under §43 expire after five years (§43(4)). [GmbHG §43; cms.law, accessed 2026-06-10]

Representation: how a director binds the company (§35) and the §37 trap

A director represents the company in and out of court. But the internal limits a company places on a director do not protect it against outsiders, and that gap catches people out.

§35: joint vs sole representation; §181 BGB self-dealing

Under §35(1) GmbHG, "Die Gesellschaft wird durch die Geschäftsführer gerichtlich und außergerichtlich vertreten" (the company is represented by its directors in and out of court). Where there are several directors, the default is joint representation (Gesamtvertretung): they may act only jointly ("nur gemeinschaftlich") unless the articles grant Einzelvertretungsbefugnis (sole power of representation). A sole-shareholder-director who contracts with their own company engages §181 BGB (the self-dealing rule), and the transaction must be recorded in writing. [GmbHG §35, accessed 2026-06-10]

§37(2): why internal limits don't protect against outsiders

The articles or the shareholders can restrict internally what a director may do, for example "no contract over €50,000 without consent" (§37(1)). Against third parties, though, "eine Beschränkung der Befugnis der Geschäftsführer, die Gesellschaft zu vertreten, [hat] keine rechtliche Wirkung" (§37(2)), so such restrictions have no legal effect on outsiders.

So a director who exceeds an internal limit still validly binds the company in the eyes of the third party, and simultaneously breaches duty internally and is personally liable for the resulting loss. Internal limits are a liability tool, not a third-party shield. Do not assume a shareholder cap protects the company against the counterparty; it does not. [GmbHG §37, accessed 2026-06-10]

When you pay personally: liability to the state

The limited-liability shield does not protect the director against the state. Wage tax and withheld social-security contributions reach the director's private assets, and one of the two is criminal. These are the facts foreign directors most often miss, so read this section carefully.

Wage tax and other taxes: §69 AO (Haftungsbescheid, private assets)

As the company's legal representative (§§34/35 AO), the director must ensure the company's taxes are assessed and paid on time. Under §69 AO, where taxes go unpaid through the director's intentional or grossly negligent breach of that duty, the director is personally and without limit liable. The mechanism is concrete: the Finanzamt issues a Haftungsbescheid (a liability notice) and enforces it against the director's entire private assets, including late-payment surcharges (Säumniszuschläge).

This bites hardest on withheld wage tax (Lohnsteuer). That money is held in trust for the state, so failing to remit it when funds were available is regularly treated as at least gross negligence. In a cash squeeze, paying net wages while withholding the wage tax is the classic §69 trap. [AO §69; steuerkurse.de; haufe.de, accessed 2026-06-10]

Withheld social-security contributions: §266a StGB (criminal)

This one is a crime. Failing to pay over the employees' share of social-security contributions that has been withheld is a criminal offence under §266a StGB ("Vorenthalten und Veruntreuen von Arbeitsentgelt"), punishable by a fine or imprisonment up to five years (up to ten years in particularly serious cases).

Three points that matter in practice:

• It applies to the director as a formal and a de-facto (faktischer Geschäftsführer), so you cannot escape it by acting informally.
• It carries personal civil liability for the unpaid contributions on top of the criminal exposure.
• In a cash crisis, courts require the director to prioritise remitting the contributions. Paying other creditors instead is the classic route to a §266a conviction.

If there is not enough cash to pay everyone, the employees' social-security contributions go to the front of the queue. [StGB §266a; zametzer-law.de; borgelt.de, accessed 2026-06-10]

The insolvency-filing duty: §15a InsO (CRIMINAL deadline)

When the company becomes illiquid (Zahlungsunfähigkeit) or over-indebted (Überschuldung), the director must file for insolvency "ohne schuldhaftes Zögern" (without culpable delay) and at the latest within three weeks of illiquidity or six weeks of over-indebtedness (§15a(1) InsO). The duty rests on the representative organ, on liquidators, and (for a leaderless company) on the shareholders.

Missing the deadline is Insolvenzverschleppung (delayed filing), and the consequences are serious:

• Criminally: imprisonment up to three years or a fine for an intentional breach (§15a(4)), or up to one year or a fine for a negligent one (§15a(5)).
• Civilly: personal liability to creditors for the loss caused by trading on past the filing point.
• Disqualification: on conviction, a five-year ban on serving as a director (§6(2) GmbHG).

The trap for foreign directors is the clock. The 3-week / 6-week clock runs from the moment the condition objectively arises, not from when you became aware of it. If you are not watching the German bank balance in real time, the deadline can already be running before you know there is a problem. [InsO §15a; GmbHG §6(2); cms.law, accessed 2026-06-10]

D&O insurance: what it does and doesn't cover

German companies commonly take D&O insurance to cover the director's civil liability for management errors, and it is a sensible §43 backstop. But read the limits. D&O typically does not cover intentional breaches or criminal fines and penalties, which means it is little help for §266a or a wilful §15a breach. And it protects the wallet, not your liberty: no policy buys you out of a custodial sentence. Treat D&O as a backstop for honest mistakes, not a licence to relax on the duties above. [cms.law, accessed 2026-06-10]

What foreign / non-resident directors must know

There is no nationality or residency requirement to be a German director (§6 GmbHG is silent on the point, as cms.law confirms). But distance changes none of the duties. The key realities:

• The duties are objective and non-delegable. "Head office handles the books, taxes and filings" is not a defence; §69 AO, §266a StGB and §15a InsO attach to the office, not to whoever physically does the work.
• A hidden controller who really runs the company can become a liable faktischer Geschäftsführer: informality is no escape, and there is no "nominee" relief. German law knows only the Geschäftsführer, with the full statutory burden. (For why a figurehead arrangement buys nothing, see nominee director liability in Germany.)
• The 3-week / 6-week insolvency clock runs whether or not you are watching, so you need real-time solvency visibility of the German entity.
• Some register courts want evidence that a foreign director can enter Germany when needed, for example to sign before a notary.
• A board of only non-resident directors can shift the company's tax domicile, so raise that with a Steuerberater before you structure it.

In short, taking the office from abroad gives you the full exposure with less day-to-day visibility, which is the worst combination unless you build proper oversight. [cms.law; GmbHG §6; AO §69; StGB §266a; InsO §15a, accessed 2026-06-10]

The liability map at a glance

Liability strand	Statute	To whom	Personal?	Criminal?
Breach of duty of care	§43 GmbHG	the company	Yes (joint & several)	No
Unpaid taxes / wage tax	§69 AO	the Finanzamt	Yes (private assets)	No (tax liability)
Withheld social-security contributions	§266a StGB	the state	Yes	Yes (up to 5 yrs)
Late insolvency filing	§15a InsO	creditors + state	Yes	Yes (up to 3 yrs) + 5-yr ban (§6(2))

The pattern is clear: the office is personally exposed across the board, and criminally exposed on social security and on late insolvency filing. [GmbHG §43/§6(2); AO §69; StGB §266a; InsO §15a, accessed 2026-06-10]

Next step

The office of Geschäftsführer is objective, non-delegable, and personally and criminally exposed; living abroad does not change that. For the practical side, route to the commercial pages: appoint a German managing director (Geschäftsführer) covers defining and registering the role, nominee director liability in Germany covers the figurehead and de-facto angle, form a German GmbH covers appointing the first director on formation, and register a managing-director change covers registering an appointment, resignation or removal. Defer tax-domicile and PE questions to a Steuerberater. gmbh-germany.com is not a law firm and uses counsel framing for any advisory step.

Author: Anna Müller, Legal Consultant, gmbh-germany.com.