1) Managing Directors of Limited Liability Companies
A German Limited Liability Companies (Gesellschaft mit begrenzter Haftung – GmbH) is similar to the English Limited. As the English Limited each GmbH is obliged to have at least one managing director who is responsible for managing the affairs of the company. The managing director represents the GmbH and is registered in the Commercial Register (Handelsregister). There is no national register like the Companies House in Germany. Almost every local court has its own commercial register in which companies are registered that have their registered seat within the jurisdiction of the court.
2) Appointment of Managing Directors
Managing directors are appointed by the shareholders of the GmbH. The shareholders will make a resolution within a shareholders’ meeting. Usually managing directors are appointed by a simple majority of the votes cast unless the minutes of the GmbH provide otherwise. If there is no managing director or the managing director quit the court may appoint a new managing director. Only natural persons not subject to any restriction on their capacity to transact business may be appointed. As far as non-EU citizens are concerned it will usually be necessary that there are not travel restrictions since although the managing director dos not have to live in Germany it is necessary that he is entitled to travel to Germany any time in order to fulfil his duties. Previous convictions for certain criminal offences may prevent a managing director from being appointed.
3) Removal of Managing Directors
Managing directors can be removed from office at any time by the shareholders’ meeting by a simple majority. There is not reason necessary to justify the removal. Most managing directors will also have a service agreement which is similar to an employment contract. This agreement is not affected by the removal. It will be necessary to terminate this agreement. The removal itself is not a reason for an instant termination. Thus if there is a long termination period or the agreement was concluded for a fixed term (which is often the case) it might be necessary to pay at least the remuneration until the agreement can be terminated. This fact is the reason for “the golden handshake” which prominent managing directors receive if the shareholders which to terminate the service agreement instantly.
A managing director can resign from office at any time. However, a resignation without notice and a justifying reason at an undue time will almost always be considered as breach of contract. The managing director will be liable for damages. If the managing director ceases to be a managing director he will be deleted from the commercial register. This is done by underlining the name of the managing director in the commercial register.