CEO's Ban on Competition

Generally, the law forbids managing directors from entering into competition with their own company – duty of loyalty. This especially relates to interesting business opportunities which are in the company’s line of business or even a competing company.

Director’s Liability

Each and every important position is prone to liability. Managing directors are especially subject to liability, be it by creditors, law, tax or prosecuting authorities. This page will introduce to most common liability traps that a CEO can encounter.

Eligibility for CEO

Managing directors are in a special position as they not only run and represent the company but also have a lot of responsibilities. German law has decided not have every nincompoop be able to fill this vital position. You have to be eligible for this assignment. We will describe this to you below.

Liability During Crisis and Bankruptcy of the Company

The period when a company is in a liquidity crunch that may lead to the company’s insolvency is the most problematic time for a managing director! The CEO has the highest duties and obligations. His or her civil law and criminal law risks go hand in hand. The following Q&A will give you a basic idea and guidelines for what to consider.

Liability Traps During day-to-day Business of the Company

The CEO has extensive duties to observe during normal ongoing business. LG2G has listed the most common duties.

• sweeping clause: duty to duly lead the company,
• certain payments to shareholders,
• activities towards creditors of the company,
• tax duties,
• forwarding social security premiums,

They all will be introduced further below.

Liability Traps While Founding the Company

As the legal representative of a corporation, a lot is expected of you. Dangers sometimes come from inside the company and sometime from outside. We will be describing liability risks while the company is being founded.

Managing Director = CEO = Geschäftsführer

The managing director has to carry out many duties and cope with a lot of liabilities – all depending on the exact situation and financial status of the company. This is true for any kind of corporation, be it a GmbH, AG, PartnerschG, or whatever. No matter what the name might be, the managing director has more or less the same duties.

Managing Directors in Social Security

Due to dwindling trust in the statutory scheme of social security, it might be a good idea for a CEO to go “private” and be self-responsible for the full social security package. If you are not a major shareholding director then you will often hear conflicting information on your status.

Quitting as CEO

Some managing directors like their job and some CEOs hate their employment. This page will tell you all about you need to know successfully exit the company.