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Executives bear enormous responsibility. Anyone who manages or oversees a company must make decisions every day whose consequences often only become apparent years later. When things go wrong, personal liability looms – without any upper limit.
As a specialist firm in commercial and corporate law, we have been advising managing directors, board members, and supervisory board members on complex corporate law matters for 28 years. Our expertise covers compliance, corporate governance, mediation, and both out-of-court and court representation in corporate officer liability disputes.
This article explains what D&O-related Disputes mean under German law, which statutory provisions apply, and how those affected should respond strategically.
The term D&O stands for Directors & Officers – the senior governing bodies and officers of a company. D&O-related Disputes are liability disputes that arise when these individuals are accused of a breach of duty and claims for damages are asserted as a result.
There are three main scenarios:
1. Internal Liability (Innenhaftung): The company itself pursues its managing director or board member – for example, following a change of ownership or in the context of insolvency proceedings.
2. External Liability (Außenhaftung): Third parties, such as creditors or contractual counterparties, assert claims directly against the corporate officer.
3. Coverage Disputes (Deckungsstreitigkeiten): The managing director holds a D&O insurance policy, but the insurer refuses to pay by invoking exclusion clauses.
All three scenarios can be existentially threatening for the person affected, because liability is not limited to the company’s assets.
German corporate law sets out clear liability rules for corporate officers. For GmbH managing directors, the central provision is § 43 GmbHG. Under § 43 para. 1 GmbHG, managing directors must apply the diligence of a prudent businessperson in all matters of the company. If they breach this duty, they are jointly and severally liable to the company for the resulting damage under § 43 para. 2 GmbHG.
For members of a public company’s (AG) management board, § 93 AktG applies – a provision that is substantively parallel in structure. Supervisory board members of an AG are subject to the same standard of care under § 116 AktG. Liability falls on all members jointly and severally in principle, even where responsibilities are internally allocated among departments. An internal division of duties does not release other corporate officers from liability unless clearly documented oversight structures are in place.
Not every mistaken decision automatically gives rise to liability. The so-called Business Judgment Rule – codified for AG management board members in § 93 para. 1 sentence 2 AktG and extended by case law to GmbH managing directors – protects business decisions under certain conditions.
Under this rule, there is no breach of duty if the corporate officer could reasonably assume, at the time of making a business decision and on the basis of adequate information, that they were acting in the best interests of the company. The conditions are:
Those who document these points are in a considerably stronger position in any dispute. Minutes, expert opinions, and written decision memoranda are therefore not mere bureaucratic overhead – they are central pieces of evidence.
Internal liability is the typical scenario in D&O-related Disputes. Here, the company itself seeks damages from its own officer. The classic case: an insolvency administrator asserts claims against a former managing director after the company’s collapse, on the grounds that they filed for insolvency too late or continued making payments after the company became insolvent. A change of shareholder or findings in a due diligence process can also trigger such claims.
External liability concerns liability to third parties. § 15a InsO is a protective statute within the meaning of § 823 para. 2 BGB: anyone who fails to file for insolvency in time can be held liable in tort for damages, with different heads of loss applicable depending on the creditor group – for example, the quota loss of existing creditors or the reliance loss of new creditors. Tax authorities and social security agencies also have special enforcement rights against corporate officers. This liability hits the managing director directly from their personal assets, without any shareholders’ resolution being required.
In practice, there is a recurring pattern of triggers:
1. Delayed Filing for Insolvency: Under § 15a InsO, the application must be filed no later than three weeks after the onset of illiquidity and six weeks after the onset of over-indebtedness. Missing these deadlines triggers liability.
2. Payments After Onset of Insolvency: The relevant provision is § 15b InsO, which obliges managing directors to reimburse payments made after the company became insolvent or over-indebted; the limitation period is generally five years under § 15b para. 7 InsO, or ten years if the company was listed at the time of the breach. This should be distinguished from § 43 para. 3 GmbHG, which specifically covers violations of the capital maintenance obligation under § 30 GmbHG.
3. Compliance Violations: Absent or inadequate compliance structures can lead to damage caused to the company by employees or third parties, for which the managing director is responsible.
4. Insufficient Documentation of Business Decisions: Anyone who fails to adequately justify and document a risky transaction forfeits the protection of the Business Judgment Rule in any dispute.
5. Inadequate Supervision: Insufficient oversight of co-managing directors or subordinate employees in critical areas.
Two recent developments in case law have advanced the legal position. Under more recent case law, liability for delayed insolvency filings (Insolvenzverschleppung) is not limited to damage arising before the end of the term of office, meaning former officers can still face claims after leaving their role. Anyone vacating a senior position is therefore well advised to create clear documentation at the point of departure and, where appropriate, to agree contractual provisions on post-tenure liability.
With regard to D&O insurance, the courts have clarified that, as a matter of principle, it is the insurer who bears the burden of proving a knowing breach of duty; the case law of the higher regional courts (OLG) sets demanding requirements for establishing specific subjective knowledge (cf. OLG Frankfurt, judgment of 28 April 2021, 3 U 6/19). Coverage disputes with a D&O insurer should therefore always be reviewed by a lawyer, since premature refusals are frequently open to challenge.
The limitation period is a distinct strategic issue in D&O disputes. Under § 43 para. 4 GmbHG, the company’s claims for damages against managing directors are time-barred after five years. According to established case law, the limitation period begins with the accrual of the claim and runs independently of knowledge: it starts running as soon as the damage has arisen in principle, regardless of whether the company is aware of it.
This has an important practical consequence: damage that is concealed by internal power dynamics, or that only comes to light upon a change of shareholder, may already be partially or fully time-barred by that point. Conversely, the limitation period protects former managing directors who have left office – but under some circumstances it also places those affected under time pressure if claims are asserted shortly before expiry. In individual cases, claims in tort under §§ 823 ff. BGB may be subject to different limitation rules, making a thorough examination of each case essential.
Anyone who recognizes that a D&O dispute is imminent or already under way should act immediately.
First, all relevant documents should be secured and organized without delay: minutes, emails, decision memoranda, advisory opinions, and annual financial statements. These will later serve as the central body of evidence.
At the same time, the D&O insurer must be notified immediately. Insurance conditions typically impose reporting obligations whose violation can jeopardize coverage. In light of recent case law, coverage refusals should not be accepted without challenge.
Furthermore, independent legal representation is indispensable, as the interests of the insurer and the insured are not identical. Finally, it should be assessed whether an out-of-court settlement is achievable and economically sensible. Many D&O disputes end in settlement, because the company, the managing director, and the insurer share a common interest in a resolution without years of litigation.
Are you facing a claim in connection with D&O-related Disputes, or would you like to secure your liability exposure at an early stage?
→ Book an appointment (https://www.kanzlei-manz.com/termin-buchung/)
D&O-related Disputes are among the most serious legal risks that executives can face. Personal liability has no upper limit, the limitation period runs regardless of the officer’s own knowledge, and BGH case law continues to develop dynamically. Early legal advice, careful documentation of business decisions, and a robust compliance system are the most effective protective measures.
We have been advising clients proactively for 28 years – before any claim arises – and represent them resolutely when a dispute ensues.
As a specialist attorney in commercial and corporate law, Certified Compliance Officer, and Master of Mediation (MM), we combine legal expertise with strategic dispute resolution.
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