Directors’ duties are set out in the Commercial Code, which is supplemented by a number of other binding provisions. They include:
- making arrangements to properly maintain prescribed records and accounts
- monitoring on an ongoing basis the value of the company’s equity and its debts to evaluate whether the company is in crisis (a director who finds out or taking all circumstances into account should have found out that the company is in crisis, is obliged in accordance with the requirements of professional care to do everything that any other reasonably careful person would do in a similar situation to overcome such crisis)
- maintaining a list of shareholders (if required by law)
- informing members, shareholders and the company’s bodies about the company’s affairs
- submitting annual financial statements, proposals for profit or loss distribution and annual reports to the general meeting for approval
- applying for proper registration of relevant facts with the Commercial Register; directors submit proposals for the registration of (and any changes to) the relevant data with the Commercial Register and are responsible for ensuring that the registered information is correct
- convening a general meeting on the basis stipulated in the Commercial Code
- submitting to the general meeting a report on the company’s business affairs and assets at least once a year
- notifying and explaining obligations to the supervisory board (or in the case of a limited liability company, when a supervisory body is not established, to the general meeting) with regard to the main business plans and the development of the company’s business and assets
- immediately informing the supervisory board of all facts that may impact on important company business or assets, and
- convening an extraordinary general meeting and submitting proposals for remedies if company losses exceed one third of its registered capital.
Directors must exercise their range of powers with due managerial care and in accordance with the interests of the company and all its members or shareholders. Directors are obliged to obtain and take into account all available information regarding the decision and not to disclose confidential information and facts to third parties if such disclosure might be detrimental to the company, its partners or shareholders. A director may also not put his/her own interests, the interests of third parties or the interests of his/her partners before the interests of the company.
Directors must ensure that the company complies with all statutory requirements and that the company fulfils its duties and obligations in a proper way and on time (e.g. administrative law requirements, business licenses, environmental requirements, proper payments, social security insurance, payment of taxes, tax declarations, labour law, commercial law requirements). The law sets out many sanctions, particularly financial sanctions, for breaches of these requirements.
If the company becomes over-indebted under the Bankruptcy Act, a director must submit without undue delay a bankruptcy petition to the court. In the event of failing to file for bankruptcy the director will be obliged to pay a penalty amounting to EUR 12,500.00, unless (i) he/she proves that he/she was authorised to put measures in place to overcome the insolvency and after acting with due care filed the petition immediately after learning that the implemented measures will help to overcome the insolvency or (ii) within 30 days from learning about the over-indebtedness he/she instructed a restructuring trustee to prepare a restructuring report and file an application for restructuring with the relevant court that granted this application.