When is a GmbH managing director personally liable?

A GmbH doesn't always protect against personal liability. When a managing director must personally answer to the company for breaches of duty — and what additional liability risks arise in a crisis.

The GmbH legal form is meant to protect the shareholders’ private assets — for the managing director, that protection is not unlimited. Managing directors must exercise the care of a prudent businessperson in conducting the company’s affairs; if they culpably breach this duty, they are personally liable to the company for damages (§ 43(1), (2) GmbHG — German Limited Liability Companies Act). This covers typical breaches of duty in day-to-day business — from risky transactions entered into without consultation to breaches of internal policies.

How I can help you

• Assessing whether a breach of duty under § 43 GmbHG exists in your specific case
• Advice on liability risks for payments made during a financial crisis
• Preventive advice to avoid liability risks in day-to-day business
• Representation where claims have already been brought against you as managing director

Liability under § 43 GmbHG and special crisis-related grounds for liability

The standard under § 43 GmbHG is the care of a prudent businessperson — this includes, for example, careful review before major decisions, compliance with the law and the articles of association, and safeguarding the company’s interests. Where there is a culpable breach of duty, the managing director is personally liable to the company.

Separate from this are special grounds for liability that only apply once the company is in financial crisis: once insolvency or over-indebtedness has occurred, managing directors are, as a rule, no longer permitted to make payments from the company’s assets — the exception being payments that remain compatible with the care of a prudent and conscientious manager even at that point. If the managing director acts against this, they must reimburse the company for the payments made (§ 15b of the German Insolvency Code, InsO). This obligation to reimburse is a separate ground for liability alongside § 43 GmbHG, and becomes especially relevant in practice during a crisis.

More on managing director liability and contract law on the Contract Law page.

How I proceed

I first examine which ground for liability is at issue — a general breach of duty under § 43 GmbHG, or payments made during a crisis under § 15b InsO — and what defences are available. Even more important is preventive advice: a managing director who knows where the boundaries lie, particularly once a crisis is emerging, can usually avoid personal liability.

Get in touch early — especially once a financial crisis is emerging, every week counts.

This article provides general information and is no substitute for legal advice in an individual case. Last updated: 2026-06-17.

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