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

5. April 2012

Liability of managers and supervisors

More and more companies in Germany file indemnity claims against former managers. The amounts demanded rise constantly. Conergy AG e.g. has filed a claim against former managers of EUR 268 m, similar proceedings (partly also claims of third parties against members of the supervisory board) did or do exist in the cases of Siemens, Volkswagen, Porsche, Infineon, Post, Scania, Bayerische Landesbank etc. The running dispute between the Kirch family and Deutsche Bank / Mr Rolf Breuer seems to end in a settlement on the basis of an indemnity of at least EUR 800 m (!).

Also in the case of former CEO Rolf Breuer the question will rise whether Deutsche Bank will sue Mr Breuer for indemnity. The German Federal Court has ruled in 1997 (“ARAG/Garmenbeck”) that there is a principle obligation of the supervisory board to sue managers and that the supervisory board itself can be held responsible if it doesnt make use of a possible claim. This ruling explains the rising number of claims as well as the tremendous sums of indemnification claimed which go far beyond the means of former managers. In the case of Mr Breuer e.g. it is obvious that, even with a salary of some EUR 5 to 10 m per year, he will not be able to afford a major part of these EUR 800 m.

According to German law there is no legal limitation of indemnity claims against managers. A principally possible limitation by agreement is not usual in practice. Although there are considerable parallels to the liability of CEOs of GmbHs (limited liability companies) and the liability rules in German labour law German parliament has not changed German Aktiengesetz lately. This situation can only be adjusted either by a contractual clause or by the individual decision of the company to reduce its claims against managers with respect to image problems occuring otherwise.