Managing Director in Germany (Geschäftsführer): Role, Eligibility & Liability

Who can be a managing director? (§6 GmbHG eligibility)

Eligibility is narrow in one respect and wide in another. Section 6 GmbHG requires that "Geschäftsführer kann nur eine natürliche, unbeschränkt geschäftsfähige Person sein": only a natural person with full legal capacity can serve. A company or other legal entity cannot be a Geschäftsführer.

Several grounds disqualify a person. A person under property-guardianship (§1825 BGB), or subject to a professional ban (Berufsverbot) covering the company's field of business, cannot serve. So can a relevant criminal conviction: there is a five-year bar, running from the date a conviction becomes final, for intentional offences including failure to file for insolvency (Insolvenzverschleppung), insolvency crimes (§§283 to 283d StGB), false statements (§82 GmbHG, §399 AktG) and certain fraud offences (§§263 to 264a, 265b to 266a StGB) that carry at least one year's imprisonment. EU/EEA-equivalent convictions and comparable foreign convictions count. The bar is specific to these offences and time-limited; it is not a blanket "any criminal record" rule.

Can a foreigner or non-resident be a managing director?

Yes. There is no nationality or residency requirement. Section 6 GmbHG is silent on residency, and practitioners confirm the point: "Managing directors are not required to be German citizens and do not need to be resident in Germany" (source: cms.law; see also wwkn.de, "no nationality or residency requirements", accessed 2026-06-10). A non-resident, including a non-EU resident, can hold the office.

Two caveats matter in practice. First, some commercial registers will ask a foreign director to show they can enter Germany when required. Second, a board of only foreign-resident directors can shift the company's tax domicile abroad, because the place of management may move with them. The first is a registration-practice point; the second is a genuine tax-substance question to flag for a Steuerberater. Where a foreign owner needs a local appointee for these reasons, see our page on the nominee managing director in Germany, which sets out what a legitimate resident appointment can and cannot do.

How is a managing director appointed and registered?

Appointment follows a clear chain:

1. Shareholders appoint by resolution. The managing director is appointed by a shareholders' resolution (Gesellschafterbeschluss); the appointment may also be made directly in the articles of association.
2. The appointment is filed with the Handelsregister. The application to the commercial register is made via a notarised filing.
3. The director gives a self-disclosure (Versicherung). The director formally declares that no §6 disqualification grounds apply to them. This is a legal requirement, and a false declaration is itself an offence under §82 GmbHG.

Each step is mandatory. The appointment becomes externally effective through the register, which is why the notarised filing and the §6 Versicherung cannot be skipped.

Appointment vs service contract (Organstellung vs Dienstvertrag)

One distinction the English field repeatedly blurs: the corporate appointment and the employment-style contract are two separate relationships.

The corporate appointment, the Organstellung, is revocable at any time by the shareholders under §38 GmbHG. The service agreement, the Dienstvertrag or Geschäftsführer-Anstellungsvertrag, is a separate contract under §611 BGB governing salary, term and notice. These run on independent tracks: revoking the appointment does not automatically terminate the service contract, and terminating the service contract does not automatically remove the person as an organ. A director can be dismissed as an organ under §38 while their salary contract continues on its own terms until it is separately ended.

This also explains the employment status. A managing director is generally not an employee in the labour-law sense: the role is governed by corporate and service-contract law, and MDs are usually outside the Kündigungsschutzgesetz (the Unfair Dismissal Act). A controlling shareholder-director, one holding more than 50% of the voting rights, is normally not subject to compulsory social insurance either.

Powers and limits of authority

Two rules govern how the managing director represents the company, and outsiders rely on both.

First, the default mode of representation. Where a GmbH has several directors, the default is joint representation (Gesamtvertretung): the directors are "nur gemeinschaftlich zur Vertretung ... befugt", authorised to represent the company only jointly, unless the articles grant Einzelvertretungsbefugnis (sole power) (§35 GmbHG). A sole-shareholder-director's transactions with their own company engage §181 BGB on self-dealing and must be recorded in writing.

Second, and most important for third parties, internal limits do not bind outsiders. The articles or shareholders can restrict the director internally (§37(1) GmbHG), but against third parties "eine Beschränkung der Befugnis der Geschäftsführer, die Gesellschaft zu vertreten, [hat] keine rechtliche Wirkung", a restriction on the directors' authority to represent the company has no legal effect (§37(2) GmbHG). A director who exceeds an internal limit breaches their duty internally, but the transaction stays valid toward an outsider. External representation power is, in effect, unlimited. Do not assume that a clause in the articles protects the company against a third party; it does not.

Duties, standard of care and personal liability (§43 GmbHG)

The standard of conduct is set by §43 GmbHG: the managing director must apply "die Sorgfalt eines ordentlichen Geschäftsmannes", the diligence of a prudent businessman. The core duties that flow from this include managing the company, keeping proper books, preparing and filing the annual financial statements, preserving the share capital, and meeting all statutory filing and tax obligations.

Breach is expensive and personal. Directors who breach their duties "haften der Gesellschaft solidarisch für den entstandenen Schaden", are jointly and severally liable to the company for the resulting damage (§43(2) GmbHG). Section 43(3) GmbHG adds a special liability for breaches of the capital-maintenance rules (§30/§33 GmbHG), which is not discharged by shareholder authorisation where restitution is needed to satisfy creditors. Claims under §43 expire after five years (§43(4) GmbHG). Because the exposure is real, D&O insurance (directors' and officers' liability cover) is common for German managing directors and is worth considering before you accept the role.

The insolvency-filing duty (§15a InsO)

The sharpest single edge of the role is the insolvency-filing duty.

On illiquidity (Zahlungsunfähigkeit) or over-indebtedness (Überschuldung), the managing director must file for insolvency "ohne schuldhaftes Zögern", without culpable delay, and at the latest within 3 weeks of illiquidity or 6 weeks of over-indebtedness (§15a(1) InsO). Intentional breach (Insolvenzverschleppung) is punishable by up to 3 years' imprisonment or a fine (§15a(4) InsO); negligent breach by up to 1 year (§15a(5) InsO). Personal liability to creditors runs alongside.

These deadlines are short and they are hard. If the company is in distress, the time to take advice from insolvency counsel and a Steuerberater is immediately, not after the three or six weeks have run.

Managing director vs CEO

For a GmbH there is no statutory "CEO" office. The Geschäftsführer is the top executive organ of the company; "CEO" is an informal English label with no equivalent in German GmbH law. In a stock corporation (AG) the term loosely maps to the chair of the management board (Vorstand), but that is a different legal form. In a GmbH there is no board sitting above the managing director except the shareholders' meeting (and, where the company has one, an optional supervisory or advisory board). So the answer to "who is higher, CEO or managing director?" is that, for a GmbH, the managing director is the office that German law actually recognises.

How much does a managing director earn?

There is no statutory salary figure; the following is market data, not law. Average total managing-director compensation was approximately €182,000 per year in 2023 (source: firma.de, accessed 2026-06-10), with broader surveys placing the range at roughly €114,000 to €204,000. Remuneration must be "angemessen", appropriate and at arm's length, particularly where the director is also a shareholder. If it is not, it risks being treated as a hidden profit distribution (verdeckte Gewinnausschüttung); raises of more than 10% may attract scrutiny (sources: firma.de; steuerberatung-breit.de, accessed 2026-06-10). Treat these figures as indicative market data and confirm the appropriate-pay analysis with a Steuerberater.

Common error vs correct German-law position

Topic	Common error	Correct German-law position
Organstellung vs Anstellungsvertrag	"The MD role is just a job or employment relationship."	The corporate appointment (Organstellung, revocable any time under §38 GmbHG) is separate from the service agreement (Dienstvertrag, §611 BGB); revoking one does not end the other.
Internal vs external authority	"Limits in the articles bind the director, so third parties are protected."	Internal limits have "keine rechtliche Wirkung" against outsiders (§37(2) GmbHG); external representation power is unlimited and the transaction stays valid.
Residency	"You need a resident or German director."	No residency or nationality requirement (§6 GmbHG); only practical caveats apply (ability to enter Germany; tax-domicile shift for a foreign-only board).

Next steps

• Appoint your first managing director during formation. If you are still incorporating, see how to set up a German GmbH, where the first MD is appointed.
• Bring in a resident or local appointee. Where a foreign owner needs a German-resident director, read about the nominee managing director in Germany and what a legitimate appointment does and does not achieve.
• Change a director. To add or remove a director after formation, see how to register a managing-director change in the Handelsregister.

You may also want to understand who appoints and revokes the director, namely the GmbH's shareholders, and a fuller treatment of managing director duties in Germany.