Prof. Dr. Gunter M. Hoffmann Hintergrund Prof. Dr. Gunter M. Hoffmann Hintergrund Prof. Dr. Gunter M. Hoffmann Hintergrund Prof. Dr. Gunter M. Hoffmann Hintergrund

14. December 2012

De Facto Management of a Company

The de facto management is a nightmare for many who work in or for a company. Crediting banks fear often to get into a position of de facto management by advice to clients as well as this can be the case for consultants or supervisory resp. advisory boards. If there was in deed a de facto management to be deemed, the consequences would be considerable: the de facto manager usually has no adequate insurance (no D&O insurance etc.), he has to face liability claims according to sec. 43 and 64 GmbH (Limited Liability Companies Act) respectively sec. 92 AktG (Public Companies Act) and to defend against the district attorney if the management is under suspicion of having committed crimes (fraud, breach of trust, bankruptcy, insolvency crimes etc.). The mere attorney costs are enormous then.

In practice it is repeatedly of extreme importance whether a de facto management can be deemed at all. The German Federal Court rules that the de facto manager controls solely the fate of the company, that he dominates the registered manager and that he maintains an outstanding role in the leadership of the company. In addition, the de facto manager has to produce a considerable external effect because it is clearly not sufficient for the assumption of a de facto management if the registered manager is merely underling to the de facto manager while the latter does not represent the company with respect to business partners, public authorities etc., however. As a result the assumption of a de facto management follows the principle of the protection of trust of the commercial intercourse. The German Federal Court postulates in this regard dominance in six of the following eight areas: business policy, organization, personnel, commercial relationships to business partners, conduct of the banking affairs, manager salary, conduct of the tax affairs, conduct of the bookkeeping.