Two current decisions are addressing the question, whether an (externally hired) managing director of a limited liability company can be regarded as employee. While being denied by the Federal Labor Court in its decision of 21 January 2019 (file no. 9 AZB 23/18), the Federal Court of Justice grants an externally hired managing director the status of an employee (decision of 26 March 2019, file no. II ZR 244/17). Nonetheless, the two decisions are not contradictory.

The German Trade Secrets Act has come into effect on April 26, 2019. It was intended as a facilitation of law enforcement in Europe, but now it leads to vast bureaucracy. Companies need to figure out technical and organizational measures to protect their own data. In this article, we will illuminate what this means for transactions and how to deal with the biggest “risk factor” – employees.

The Federal Court of Justice [BGH] deals in its decision dated 28 January 2019 (file no. II ZR 364/18) with the issue, whether in analogous application of section 179 German Stock Corporation Act [AktG] the transfer of all company assets of a limited liability company [GmbH] within the framework of a sale and purchase agreement is ineffective towards the buyer without an approving resolution of the shareholders’ meeting. The BGH extensively comments on the structural differences between a GmbH and a stock corporation and rejects an analogous application of section 179 AktG to a GmbH. Nevertheless, the BGH considers an approving shareholders’ resolution internally necessary. According to the BGH, the contracting party may only rely on the unrestricted power of representation of the managing director if he was unaware of the abuse of the representative power and if this abuse was not obvious to him.

The “proportionate default liability of the other shareholders” for uncollectible contribution debts of co-shareholders which was significantly expanded most recently by the German Federal Court of Justice [BGH] has considerably increased their risk of becoming liable beyond the amount of their original capital contribution. Acquirers of limited liability company’s [GmbH] shares should always be aware of these liability risks.