The liability of the managing director of a limited liability company (GmbH) under section 64 of the Limited Liability Companies Act (GmbHG)

In the Federal Court of Justice rulings on 'Centros', 'Überseeing' and 'Inspire Art', the European Court of Justice has further strengthened the freedom of establishment within Europe and overturned the 'seat theory' that prevailed in a number of countries. Consequently, this means that foreign companies can open branches in Germany whilst retaining their corporate identity under company law. This naturally includes the application of foreign law on German soil. In its judgement of 13 March 2003, the Federal Court of Justice confirmed this, thereby providing legal clarity. The issue at stake, therefore, is who must file for insolvency and when, and who, if applicable, is liable for payments made after the company has become insolvent. This paper aims to highlight, in particular, the question of who bears this liability in the case of an English limited company operating a branch in Germany.

In the Federal Court of Justice rulings on 'Centros', 'Überseeing' and 'Inspire Art', the European Court of Justice has further strengthened the freedom of establishment within Europe and overturned the 'seat theory' that prevailed in a number of countries. Consequently, this means that foreign companies can open branches in Germany whilst retaining their corporate identity under company law. This naturally includes the application of foreign law on German soil. In its judgement of 13 March 2003, the Federal Court of Justice confirmed this, thereby providing legal clarity. The issue at stake, therefore, is who must file for insolvency and when, and who, if applicable, is liable for payments made after the company has become insolvent. This paper aims to highlight, in particular, the question of who bears this liability in the case of an English limited company operating a branch in Germany.