Liability : chapter 10

• DOI: 10.10520/EJC74085
• Author: Christoph Jaehne
• Date: 01 January 2008
• Published date: 01 January 2008
• Pages: 159-175

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CHAPTER 10

LIABILITY

10.1 Introduction

The liability of members can take on various forms. It can be one of

joint and several liability, personal liability, liability for repayments and

criminal liability.

Given the fact that the GmbH and the close corporation are legal en-

tities apart from their members, this has implica tions for the extent of

their personal liability and subse quently the protection of creditors.

Generally, in the GmbH as well as in the close corporation only the

assets of the entities alone are available to creditors in discharge of

liabili ties of the entities.

Nevertheless, the Acts also try to protect the creditors. But they use

a different approach.

10.2 GmbH

10.2.1 Approach share capital

The GmbH approaches to protect creditors through the com pulsory

establishment of share capital to which every mem ber must give a

contribution. According to §13 GmbHG only the assets of the com-

pany alone may be utilized in case of its liabilities. Con tribution, rais-

ing of capital and main te nance are strictly regulated and enforced

through the Act given the fact that normally members’ private assets

are not liable for debts of the GmbH.1

Members cannot be re leased from their obligation to make con tribu-

tions and no set-off is allowed with regard to the com pany’s claim.2

Liens in connection with non-cash con tributions are re stricted3 and the

adequacy of non-cash contributions has to be stated in a report.4

In rare cases of the piercing of the corporate veil (so-called ‘Durch-

griffshaftung’), however, the strict distinc tion between company as-

sets and members’ private assets receives no attention with the result

that a member be comes personally liable for debts of the GmbH.5 This

1 See Scholz-Westermann, GmbHG introduction, note 19 et seqq. with

further literature. Seeing the resemblance to South African company

law in this regard, Olbrisch/Du Plessis, 1997, TSAR 316 submit that

“the most essential structural difference between the GmbH and the

close corporation pertains to share capital”.

2 §19 (2) 1st and 2nd sentence GmbHG.

3 §19 (2) 3rd sentence GmbHG.

4 §5 (4) GmbHG.

5 For further literature regarding this complex subject, see Scholz-

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arises also espe cially in connection with the one-man GmbH, where

the economic identity is very ap parent although formally different legal

personalities exist.

Piercing of the corporate veil may arise if the legal form of the juristic

personality is misused, or if a distinction between GmbH and one-

man member leads to results incompa tible with the principles of good

faith.6 It must be no ted, however, that piercing of the corporate veil

can only take place if no other claims against the members exist.

10.2.2 Subsidiary liability

To protect creditors as far as possible the GmbHG installs a system

of subsidiary liability.

Here the above-mentioned obligations regarding the initial con tri bu-

tion have to be referred to. They describe through which procedures

(collection proceedings, absence liabil ity, joint lia bi lity to cover) the

system of subsidiary liability tries to protect creditors.7 It has to be

kept in mind that these regu lations have a compelling character and

cannot be changed through the articles of association.

10.2.3 Articles of association / resolution

Further liability may occur if the members made provision in the ar-

ticles of association,8 or pass a unanimous re solu tion9 to authorize

supplementary contributions to the share capital in addition to the

capital already sub scribed to by the members.10

10.2.4 Loans, guarantees

No loan may be made out of the assets of the company to any director

or representative, which is required for the main tenance of the share

capital. A loan made in contra vention of this regulation must be repaid

forthwith.11 Loans to members are possible as long as the mainte-

nance of the required share capital is not being violated. In the case

of contravention, however, the loans must be re funded.12

Westermann, GmbHG introduction, note 10 et seqq.; Scholz-Em-

merich, GmbHG § 13, before note 55; note 76 et seqq.

6 ‘Treu und Glauben’, §242 BGB (principle of good faith).

7 See in chapter 8.3.2.1.1, ‘Obligations with regard to the initial contribu-

tion’ the corresponding sections.

8 §26 GmbHG, the members have to pass a resolution accord ingly.

9 §53 (3) GmbHG.

10 A member then, however, has the right to abandon his share, see

chapter 8.3.2.1.2.2, ‘Unlimited supplementary contribu tions’.

11 §43a 2nd sentence GmbHG. With regard to the possibility in the close

corporation of getting f‌inancial assistance for the acquisition of a member’s

interest, see chapter 6.5.2.7.2, ‘Financing the purchase of member’s

interests by others’.

12 §§30 (1), 31 (1) GmbHG. Regarding loans of members to the GmbH,