Managing director: Responsibilities of a GmbH's MD in Germany

Responsibilities of a managing director (MD) at a GmbH

The central responsibility of a GmbH managing director (MD) is to implement the company objective and ensure that all necessary measures are taken to achieve its goals. This includes representing the company’s interests, safeguarding its assets, protecting confidential information and acting as the legal representative of the GmbH. MDs must prevent harm to the company and protect it from external risks.

An MD does not have to be a shareholder. They are appointed and removed by the shareholder meeting, which may also issue binding instructions. Internal restrictions in the managing director contract do not usually affect third parties. Contracts the MD signs remain binding even if internal rules are breached. However, the MD may then be held personally liable.

Duty of management

The MD is responsible for managing the company’s day-to-day operations. This includes:

• Implementing the business purpose according to the articles of association
• Managing administrative and organisational tasks
• Informing shareholders and executing shareholder resolutions
• Representing the company externally
• Fulfilling the statutory duty of care

While tasks can be delegated, the MD must supervise all delegated work. If several MDs are appointed, responsibilities may be divided, but each MD remains legally responsible for all duties.

Obligation to maintain the share capital

MDs must safeguard the GmbH’s share capital in accordance with §§ 9, 19 ff., 31 GmbHG. This includes ensuring capital contributions are paid in, monitoring all payments and preventing hidden profit distributions. The MD is personally liable for payments that endanger the share capital.

Accounting responsibilities

The MD is responsible for proper accounting and financial reporting. Within the first three months of the fiscal year, they must prepare the annual accounts and management report and present them to the shareholders.

Additional obligations include:

• Preparing and submitting tax returns on time
• Paying all taxes due
• Submitting advance VAT and income tax returns
• Withholding and forwarding wage tax
• Reporting relevant changes to the tax office

Obligation to notify the commercial register

MDs must notify the commercial register of key company changes (§ 78 GmbHG), including:

• Registering the GmbH (§ 7 GmbHG)
• Submitting updated shareholder lists (§ 40 GmbHG)
• Registering amendments to the articles of association (§ 54 GmbHG)
• Registering capital increases or reductions (§ 58 GmbHG)

Obligations to employees

The MD ensures compliance with labour law and workplace safety. Responsibilities include:

• Ensuring occupational safety
• Complying with labour regulations (
• Registering employees with health insurance funds
• Withholding and paying social security contributions (learn more about getting your company number)
• Checking driving licences if company vehicles are assigned

Fiduciary duties

Fiduciary duties 💬Treuepflicht require the MD to act in the company’s best interest. This includes:

• Maintaining confidentiality of trade secrets
• Observing the duty of loyalty
• Avoiding conflicts of interest
• Avoiding competition with the company
• Refraining from misusing their position for personal advantage

Non-compete obligations can also apply after termination if agreed in the contract.

Duty to convene the shareholder meeting

The MD must convene the shareholder meeting when required. Unless otherwise stated in the articles of association, meetings must be called at least one week in advance by written notice signed personally by the MD and must include venue, time and agenda.

A meeting is mandatory when:

• Capital contributions must be collected
• The articles of association need amendment
• Shareholders holding at least 10% request a meeting
• Annual accounts are to be presented
• The company is to be dissolved or liquidated
• Half of the share capital is lost
• The company enters particularly high-risk transactions

The MD must implement all resolutions passed by the shareholders.

Duty to provide information

Shareholders have an unrestricted legal right to information. The MD must provide access to all documents and data upon request. Failure to comply may justify immediate termination of the MD’s contract.

Liability risks for GmbH managing directors (MDs)

If a managing director (MD) fails to fulfil their duties properly, they can be held personally liable. Liability applies internally (towards the GmbH and its shareholders) and externally (towards authorities, customers, suppliers and other third parties). In serious cases, criminal liability may also apply.

Internal liability

Internal liability applies when the MD harms the GmbH or its shareholders. Key situations include:

• Liability for damages due to breach of trust or duty (§§ 43 para. 1–2 GmbHG; § 826 BGB)
• In many cases, liability can be limited to intent and gross negligence

External liability

External liability applies when the MD harms third parties. It cannot be contractually limited. Key risks include:

• Tax liability for unpaid company taxes (§§ 69 ff. AO)
• Liability for maintaining share capital (§ 43 para. 3 GmbHG in conjunction with § 30 GmbHG)
• Insolvency-related liability (e.g., delayed filing)

Criminal liability

The MD may face criminal charges in cases such as:

• Tax offences (tax evasion, tax understatement; §§ 370, 378 AO)
• Insolvency offences (delayed filing; § 15a InsO)
• Bankruptcy offences (§§ 283, 283a StGB)
• Breach of accounting obligations (§ 283b StGB)
• Fraudulent or preferential treatment of creditors (§§ 283c–283d StGB)
• Withholding or misappropriating wages (§ 266a StGB)
• Environmental offences (§§ 324 ff. StGB)

Duties of the GmbH MD during a crisis or insolvency

In times of financial distress, the managing director of a GmbH has heightened legal obligations. They must maintain a continuous and realistic overview of the company’s economic situation and act immediately if warning signs appear.

Key duties in a crisis

• Convene a shareholders’ meeting: If half of the share capital is lost, the MD must immediately call a shareholders’ meeting. Failure to do so can trigger personal liability.
• Insolvency filing obligation: The MD must file for insolvency within three weeks of the company becoming insolvent or over-indebted. Missing this deadline can result in private liability and, in serious cases, criminal consequences.
• Asset protection: The MD must ensure that company assets are protected. Any payments that endanger the company’s existence, especially disbursements to shareholders during insolvency, may trigger personal liability.
• Prohibition of business transactions after insolvency: Once the company is insolvent, the MD may no longer conduct normal business operations. Continuing transactions can constitute insolvency fraud.
• Social security contributions: Unpaid social security contributions (especially employee contributions) can lead to criminal liability for the MD.
• Tax obligations: The MD is personally liable for tax debts caused intentionally or through negligent bookkeeping or late filing of returns.

Insurance considerations

Although not all risks can be insured, GmbH MDs should discuss coverage options with a specialist. In particular, D&O insurance (directors and officers liability insurance) can provide important protection. Learn more about insurances for founders here.

Lean more about an MD’s salary here.