The duty of loyalty in the GmbH is a central conduct obligation for everyone involved in a German limited liability company. It requires every shareholder — and to a certain extent also managing directors — to behave loyally and considerately towards the company and the fellow shareholders.
Put simply, the interests of the GmbH and of the other shareholders must be appropriately taken into account in all decisions — in case of doubt, they take precedence over personal interests. This principle has been clearly emphasised by case law, in particular by the Federal Court of Justice, and forms a fundamental pillar of German company law.
Who is bound by the duty of loyalty in the GmbH?
The duty of loyalty primarily concerns the shareholders of a GmbH. Every shareholder — whether majority or minority — must behave in an appropriately loyal manner towards the company and the fellow shareholders.
Alongside the shareholders, the company's officers must also act loyally. Managing directors of a GmbH are subject to statutory duties of care and loyalty — they must act in the best interests of the company and, for example, protect corporate assets and not engage in competing side businesses. Even the company itself may be subject to such duties.
What does the duty of loyalty specifically require?
The company-law duty of loyalty obliges a shareholder to safeguard the interests of the company within the framework of the corporate purpose defined in the articles of association and to refrain from any conduct apt to harm the company in its legal or economic concerns. In addition, the shareholder is required to give appropriate consideration to the legitimate interests of the fellow shareholders.
The company-law duty of loyalty imposes conduct obligations on shareholders in two respects: on the one hand vis-à-vis the company itself, on the other hand in relation to the fellow shareholders. From the underlying legal concept of the duty of loyalty also follows — in line with § 243 (2) AktG — a prohibition for every shareholder against pursuing special interests insofar as this would lead to disadvantage or harm to the company or the fellow shareholders. The following points must be observed:
• No harmful exercise of rights
• Placing the interests of the company first
• Consideration for the fellow shareholders
• Safeguarding confidentiality and know-how
Special duties may exist in times of crisis. The precise scope of the duty of loyalty always depends on the individual case. Not every uncomfortable decision is automatically a breach of the duty of loyalty — the courts carry out a careful weighing of the circumstances.
What happens if the duty of loyalty is breached?
A breach of the duty of loyalty is by no means a minor matter, but can have serious legal consequences. Thus, internal company resolutions or measures may be challenged or declared void if they are based on disloyal conduct. In exceptional cases, claims for damages may result.
Conclusion: Loyalty as a Success Factor in the GmbH
The duty of loyalty in the GmbH may at first glance appear to be an abstract legal concept, but it is of the utmost importance for the functioning interaction in any company. It ensures that fairness and trust between the shareholders are preserved and that the company is not endangered by the selfish behaviour of individuals. Practical tip: as a shareholder, always keep in mind that you are part of a community with a shared goal. Open communication, transparency and a focus on the well-being of the company pay off.
If you are ever unsure whether a particular behaviour breaches the duty of loyalty — be it your own or that of a fellow shareholder — do not hesitate to seek expert advice. As specialist attorney for commercial and corporate law, Mr Maximilian Rohrbach will be pleased to advise you.
