Liability of Managing Directors under German Stock Corporation Law

I. Introduction | II. Legal Framework for Liability of Managing Directors | 1. Liability to the company (“internal” liability”) | 2. Liability to creditors or shareholders (“external” liability”) | III. Taxonomy of Managing Directors’ Duties | 1. Duty of care | a) Duty to act lawfully | b) Duty of care in the narrow sense (and business judgment rule) | c) Duty to monitor | 2. Duty of loyalty | a) Duty to not compete | b) Duty of confidentiality | c) Duty of loyalty in the narrow sense | IV. Elements of a Cause of Action against Managing Directors | 1. Breach of duty | 2. Fault (and reliance on experts) | 3. Damage to the company | 4. Causation | 5. Burden of proof | V. Enforcement of the Company’s Claim for Damages | 1. Supervisory board | 2. Shareholders | 3. Creditors or insolvency administrator | VI. Conclusion