Liability of the member of the management board of a limited liability company acting as a limited partner towards limited partnership

D. GmbH & Co. KG (hereinafter referred to as the "debtor") solicited investor funds and made them available to the insolvent D. AG as loans for the acquisition of real property. The loan agreement provided for extensive collateralisation of the loan. For this purpose, the debtor transferred to D. AG 510,000 euros on 31 May 2012, among other things. 

Only the debtor's limited partner, i.e. U. GmbH, which also acted as management board member in other fund companies, was entitled to manage the company’s business. One of the management board members of U. GmbH was the defendant in the court proceedings, who, however, was not involved in the carrying out of the disputed money transfer on 31 May 2012. At the time of this transfer, however, only a small fraction of the entire loan granted until then had been collateralised, which was contrary to the loan agreement. 

The plaintiff, insolvency administrator of the debtor, filed a claim against the defendant pursuant to Sec. 43 (2) of the German Limited Liability Companies Act (GmbHG) for payment of a partial amount of 200,000 euros due to the transfer that took place on 31 May 2012.

The aforementioned legal provision based on which the claim was filed regulates the joint and several liability of management board members who violate their obligations towards the company. Thus, the company may in principle claim damages from its management board member who violates the due diligence of a prudent businessman.

The BGH clarified that a limited partner who acts as a management board member, just like a general partner who acts as a management board member, must exercise the management board member duties with the level of due diligence required for this purpose. Should the management board member of the limited liability company acting as the limited partner exercise his management duties in a limited partnership in a negligent manner, the limited partnership would be entitled to claim damages from that management board member pursuant to Sec. 43 para. 2 GmbHG in conjunction with the contract with protective effect on third parties, the prerequisites of which the BGH affirmed in the present case.

To substantiate this separate and direct claim of the limited partnership against the management board member, the BGH pointed to the extension of the scope of protection arising from the management board member's relationship which establishes his status as a member of an executive body and employee of the limited liability company acting as the limited partner to cover the relationship between the limited partnership and that management board member.

In particular, such an extension of liability was needed for reasons of good faith. This is because the limited partnership is usually not entitled to directly influence the member of the management board of the limited liability company acting as the limited partner, for example, by having a right to give instructions. 

Since, in the present constellation, management errors inevitably always and primarily affect the limited partnership to the detriment of the limited partnership, the limited partnership, in the view of the BGH, also comes into contact with the performance of the managing director as intended.

Furthermore, the BGH clarified that the interest of the limited liability company being the limited partner acting as the management board member in including the debtor in the scope of protection described above was known to the defendant as the management board member of the limited liability company being the limited partner and that this extension of liability was reasonable to him. This would also apply if the management of the debtor was not the only task of the limited liability company acting as the limited partner, which served as a management board member also in other fund companies. The limited partnership should rely on the fact that the member of the management board of its limited liability company in its managing capacity will perform his tasks with the necessary level of care and attention, irrespective of the number of other management functions he has taken on or other tasks outside the company.

The BGH also did not reject an extension of liability in the aforementioned meaning because the management of the debtor was not the defendant's task according to the internal division of responsibilities. 

The defendant was supposed to prevent the transfer mentioned above despite the fact he was not responsible for that according to internal regulations.

In justifying the defendant's breach of duty, the court stated that the management board member, due to his overall responsibility for the company, had supervisory duties which he had to fulfil properly. In particular, the management board member was required to always and immediately investigate indications of undesirable developments or irregularities in another department. According to the BGH, there are no reasons why this duty should be treated differently in the case of a management board member who is not responsible for a specific area. In this respect, the court held that the lack of responsibility for the management of the company's affairs is sufficiently taken into account by reducing the management duties to supervisory duties.

The presented ruling of the BGH has fundamental significance for situations where a limited partnership needs to be protected and for the liability of management board members in the context described in more detail above. A member of the management board of a limited liability company being a limited partner acting in a managing capacity for a limited partnership can no longer avoid liability under Sec. 43 para. 2 GmbHG by putting forward an argument that he did not act as general partner.

By the same token, a management board member may also not deny liability due to the fact that he was not internally responsible for a certain transaction. 

The BGH thus extends its previous case law according to which the scope of protection arising from the management board member's relationship which establishes his status as a member of an executive body and employee of the limited liability company acting as the general partner in a limited partnership should be extended to the limited partnership with regard to the management board member's liability under Sec. 43 para. 2 GmbHG, also in the aforementioned case where management is performed by a limited liability company acting as a limited partner.

Therefore, it is rightly irrelevant for the liability of a management board member whether a limited liability company acting as a general partner or a limited liability company acting as a limited partner has taken over the managerial function in  the limited partnership, since it is the managerial function and not the type of shareholder position that is decisive.