Attorneys for German Corporate Law in Kaiserslautern

Facts: The parties were the sole shareholders of a German GbR that held commercial real estate in Landstuhl. The partnership agreement stipulated that upon the termination of a shareholder, the company is not dissolved, but the share of the departing party accrues to the remaining shareholders. The defendant terminated his membership as of Dec 31, 2014. The property was later compulsorily auctioned off. Since the parties disputed the distribution of the surplus proceeds (approx. 86,000 euros), the amount was deposited at the German Local Court (AG) Landstuhl. The plaintiff demanded the release of the entire amount to herself.

Key Norms:

• Secs. 705 et seq. BGB (Principle of accrual): In a two-member GbR, the departure of a shareholder (with a continuation clause) leads to the company assets automatically passing to the remaining shareholder by way of universal succession.
• Sec. 812 Para. 1 Sentence 1 Alt. 2 BGB: Unjust enrichment claim to consent to the payout (since the defendant, as a formal party to the deposit, blocked the payout without a legal basis).

Decision: The German Higher Regional Court (OLG) Zweibrücken ruled in favor of the plaintiff. She is entitled to the entire deposited proceeds. With the departure of the defendant, the assets of the GbR (the real estate in Landstuhl) automatically accrued to the plaintiff as the last remaining shareholder ("accrual"). She thereby became the sole owner without the need for a separate transfer in the land register. Since the auction proceeds take the place of the real estate (subrogation), this solely belongs to the plaintiff. The defendant must consent to the payout.

Conclusion: If the penultimate shareholder departs from a two-member GbR with a continuation clause, the entire company assets (incl. real estate) pass to the last shareholder without a transfer act. In the event of a later compulsory auction, this person is the sole beneficiary of the surplus proceeds.

Facts: A former managing director of a German GmbH sued against his termination without notice. The lawsuit was initially filed at the German Labor Court in Kaiserslautern and later referred to the civil courts. It was directed against the GmbH, represented by the remaining, sitting managing director. The defendant GmbH challenged the admissibility of the lawsuit before the OLG Zweibrücken: It was of the opinion that in a lawsuit against a (former) managing director, the company must not be represented by the sitting managing director, but exclusively by a representative explicitly appointed by the shareholders' meeting.

Key Norms:

• Sec. 46 No. 8 GmbHG: Allocation of competence (Stipulates that the shareholders' meeting is responsible for representing the company in lawsuits against managing directors).
• Sec. 35 GmbHG: Legal representation (Regulates the principle that the GmbH is represented in and out of court by its managing directors).

Decision: The German Higher Regional Court (OLG) Zweibrücken decided via an interlocutory judgment that the lawsuit is admissible. The court clarified: Although Sec. 46 No. 8 GmbHG fundamentally assigns competence to the shareholders' meeting, if the latter remains inactive and does not appoint a special litigation representative, no "representation gap" arises. Rather, in this case, the power of representation remains with the sitting managing director in accordance with Sec. 35 GmbHG in order to ensure the company's capacity to act.

Conclusion: If a departed managing director sues their GmbH, they do not necessarily have to direct the lawsuit to the shareholders' meeting. As long as the shareholders do not pass a deviating resolution (silence of the shareholders), the GmbH is effectively represented by the remaining managing directors.

Facts: The plaintiff, Sparkasse Südwestpfalz (as the legal successor to Stadtsparkasse Zweibrücken), claimed damages from its former CEO in Zweibrücken. The defendant had granted a customer ("R") massive account overdrafts and loans over years (total volume over 1 million euros), although no adequate collateral was provided and internal competence rules (approval of the credit committee) were disregarded. The board member relied unchecked on the customer's statements regarding allegedly upcoming real estate sales that were never realized.

Key Norms:

• Sec. 18 KWG: Creditworthiness check (Obligation of the bank to have the economic circumstances of the borrower disclosed).
• Sec. 14 SparkG Rh.-Pf.: Duties of care of the board (Management on own responsibility observing the "diligence of a prudent and conscientious manager").
• Sec. 93 AktG / Sec. 43 GmbHG (analogous): Statute of limitations (The court applied the short limitation period of 5 years applicable to corporations to the savings bank board member as well).

Decision: The Higher Regional Court (OLG) Zweibrücken ordered the ex-board member to pay approx. 323,000 euros to Sparkasse Südwestpfalz, but dismissed the rest of the lawsuit. The court indeed confirmed massive breaches of duty by the defendant in all nine credit decisions in dispute (violation of Sec. 18 KWG, disregard of lending limits). However, the plea of the statute of limitations applied to the earlier cases. The court decided that the short 5-year limitation period of corporate law (instead of the then-usual 30 years) also applies by way of analogy to public-law savings banks, in order to avoid an unjustified tightening of liability compared to board members of GmbHs/AGs. Only the actions after December 1996 were not yet time-barred.

Conclusion: Savings bank board members are personally liable for damages from lending if they fail to conduct creditworthiness checks (Sec. 18 KWG) or disregard committee reservations. Contributory negligence by the bank (e.g., lack of supervision) does not exonerate the board member in the case of intentional action. Crucial for practice: The liability of savings bank board members is subject to the short 5-year limitation period analogously to stock corporation/GmbH law.

Facts: 1. Fußball-Club Kaiserslautern e. V. sued former board members for damages. They had concealed secret supplementary contracts with players from the DFB/DFL during the licensing procedure. The consequences were a heavy fine and a points deduction, which led to massive revenue shortfalls in television money.

Key Norms:

• Sec. 27 Para. 3 BGB in conjunction with Secs. 664, 670 BGB: Basis of liability (Board member is liable like an agent for breaches of duty).
• Sec. 112 AktG (analogous): Representation in litigation (The supervisory board represents the association in lawsuits against (former) board members).
• Sec. 315 BGB: Review of equity (The association penalty imposed by the DFL is subject to judicial review for equity).

Decision: The German Regional Court (LG) Kaiserslautern ordered the ex-board members to pay over 500,000 euros. The court evaluated the behavior as a grossly negligent breach of duty in accordance with the norms mentioned above. The defendants' objection that they had relied on employees ("division of responsibilities") did not take hold: Correct licensing is an unassignable core task of the board.

Conclusion: Board members are personally liable for damages (incl. association fines and revenue losses) caused by faulty licensing documents. They cannot exculpate themselves in the case of elementary core duties by delegating to third parties.

Facts: A GmbH located in Kaiserslautern took recourse against its lawyers. The background was a liability lawsuit against the former managing director of the GmbH in Kaiserslautern, who had breached his supervisory duties (embezzlement by an employee, convicted by the AG Kaiserslautern). The accusation against the lawyers was that they had overlooked an exclusion period (Sec. 70 BAT) agreed upon in the employment contract, as a result of which the claims against the managing director had expired.

Decision: The German Regional Court (LG) Kaiserslautern dismissed the recourse action. The lawyer's mistake (overlooking the deadline) caused no damage because the exclusion period in the employment contract was invalid from the beginning. The contract in Kaiserslautern was only signed by the Chairman of the Supervisory Board. For a valid limitation of liability, however, the mandatorily required resolution of the competent body (shareholders' meeting or entire Supervisory Board) was missing. Without this resolution, the Chairman had no power of representation to validly agree on this clause.

Conclusion: Agreements on liability reliefs (such as exclusion periods) in employment contracts of German GmbH managing directors are invalid if they are not covered by a formal resolution of the competent body; the sole signature of the Chairman of the Supervisory Board is not sufficient. In lawyer recourse, overlooking such an invalid deadline does not lead to liability, as the original claim against the managing director legally persists.