How can I as a managing director protect myself from liability risks?
May 11, 2024 | 50,00 EUR | answered by Otto König
Dear lawyer,
My name is Eiko Kuhn and I am the managing director of a medium-sized company in the field of mechanical engineering. In recent months, I have been increasingly concerned about my liability risks as a managing director. My main question is: How can I protect myself as a managing director from liability risks?
The current situation is as follows: As a managing director, I bear a high responsibility for the company and its actions. I am aware that I can be personally liable if I violate my duties as a managing director or act with gross negligence. I am worried about this because I do not know all the legal aspects in detail and fear falling into a liability trap.
The current state is that I have not taken clear measures to protect myself from liability risks. I have taken out liability insurance, but I am unsure if it is sufficient to protect me in case of emergency.
My concerns mainly revolve around the fact that as a managing director, I could be personally liable for financial damages caused by the company. I would like to know what legal options exist to minimize my liability risks and protect my personal assets.
Therefore, as an expert in corporate law, I ask you: What specific steps can I take as a managing director to protect myself from liability risks? Are there specific contract clauses that can protect me? Or are there other legal instruments that I should consider?
I thank you in advance for your help and look forward to your expert advice.
Best regards,
Eiko Kuhn
Dear Mr. Kuhn,
Thank you for your inquiry regarding your liability risks as the managing director of a medium-sized company in the mechanical engineering sector. It is understandable that you are concerned and looking for ways to protect yourself from financial risks. As a lawyer specializing in corporate law, I am happy to offer you my expertise and will now show you the various ways in which you can minimize your liability risks as a managing director.
First and foremost, it is worth mentioning that you have already taken out liability insurance. This insurance can indeed help you be covered in many cases in case of emergency. However, it is important to note that liability insurance does not cover all liability risks, so it is advisable to take further measures.
One way to minimize your liability risks is to carefully fulfill your duties as a managing director. This includes compliance with legal requirements, proper business management, and regular monitoring of company activities. By carrying out your duties conscientiously, you can reduce the risk of personal liability.
Furthermore, special contract clauses in your managing director's employment contract can help minimize your liability risks. For example, provisions for liability limitation or insurance coverage can be agreed upon. It is advisable to have your employment contract reviewed by an experienced lawyer to ensure that your interests are adequately taken into account.
Another legal instrument that can help you is the establishment of a GmbH & Co. KG. In this type of company, the personally liable partners (general partners) are generally liable without limitation, while the limited partners (limited partners) are only liable up to the amount of their contribution. By restructuring your company, you can better protect your personal assets.
In summary, there are various measures that you, as a managing director, can take to minimize your liability risks. In addition to liability insurance, contract clauses, diligent fulfillment of your duties, and restructuring the company can help protect your personal assets. I recommend seeking individual advice to determine the appropriate protection measures for you.
I hope that this information has been helpful to you and I am happy to answer any further questions you may have.
Best regards,
Otto König
Lawyer specializing in corporate law
