What you need to know about the role of the management in the UG

Every UG needs at least one managing director to represent the company both internally and externally. As the central management person, the managing director has a variety of tasks and duties that are essential for the legally compliant operation of the UG. In this article, you will find out what requirements are placed on the managing director, what legal obligations exist and what you should pay particular attention to as a founder.

Facts

Managing director in the UG: The most important facts at a glance

Here are the 5 most important points at a glance for managing a UG (Unternehmergesellschaft):

Legal Requirements
The managing director must be of legal age, legally competent, and must not have committed any criminal offenses such as insolvency crimes, fraud, or embezzlement. Additionally, any adult, regardless of nationality, can become the managing director of a UG.

Responsibilities and Duties
The managing director’s tasks include the operational management of the UG, legal representation, bookkeeping, tax declarations, and compliance with statutory obligations. They are also responsible for properly conducting shareholder meetings.

Liability of the Managing Director
Although the UG has limited liability, the managing director is personally liable in cases of gross negligence, intentional breaches of duty, or failure to comply with insolvency filing obligations.

Shareholder Resolutions
Key decisions, such as profit distribution or capital increases, are made through shareholder resolutions, which the managing director is responsible for implementing.

Remuneration and Employment Contract
Managing directors typically receive remuneration, which is subject to taxation. For shareholder-managing directors, the taxation is classified as business income, while for external managing directors, it is treated as income from employment.

Difference

Management and shareholders - what's the difference?

The managing director of a UG can either be a shareholder who simultaneously takes over the management (so-called ‘managing partner’), or he can be an employed managing director (external managing director).

Both forms of management are subject to the same legal duties and responsibilities. The main difference is that the managing partner owns shares in the company and is entitled to vote at the shareholders' meeting, whereas the external managing director does not hold any shares and therefore has no right of co-determination in shareholder decisions.

Requirements

Who can become a managing director?

To become the managing director of a UG (Unternehmergesellschaft), you must meet certain legal requirements. Here are the key points summarized for you:

Minimum Requirements
You must be of legal age and legally competent. This means that any natural person who is at least 18 years old and possesses the necessary legal capacity can assume the role of managing director.

Disqualifications Due to Criminal Records
There are legal barriers that prevent certain individuals from becoming managing directors, such as:

  • Insolvency Offenses: If you have been involved in or responsible for an insolvency proceeding in the past five years, you cannot be appointed as a managing director. This rule ensures that only individuals with a record of responsible financial management can take on this role.
  • Criminal Offenses under § 6 Para. 2 GmbHG: Individuals convicted of specific offenses (e.g., fraud, embezzlement, or insolvency-related crimes) are barred from serving as managing directors for five years. This provision is designed to foster trust in management and ensure the UG operates in a legally compliant manner.

Important Qualifications
While no specific professional qualifications are required, a solid understanding of economic, legal, and entrepreneurial matters is highly advantageous. In particular, expertise in accounting, tax law, and employee management is essential to handle daily challenges effectively and lead the UG to success.

Tasks

Management: tasks and important details about a responsible job

As a managing director, you represent your company both internally and externally. You are authorized to conduct business on behalf of the UG and make decisions that influence the strategic direction of the company.

You are not only responsible for the UG's economic success but also for ensuring compliance with legal obligations. From meeting tax deadlines to maintaining proper bookkeeping, as a managing director, you actively shape the success and future of the company.

Here are key questions you should always keep in mind:

What requirements must you meet to become a managing director of a UG?
In addition to being of legal age and legally competent, there are specific legal exclusions (e.g., criminal convictions) that may prevent you from taking on the role.

What are your duties and responsibilities as a managing director?
As a managing director, you are responsible for the legal, fiscal, and operational management of the UG. This includes financial management, compliance with legal regulations, and communication with authorities.

How can you become a managing director of a UG?
You can be appointed as either a shareholder-managing director or an external managing director. Both roles come with different rights and responsibilities, especially in relation to the shareholders' meeting.

How does liability for managing directors work?
Managing directors are personally liable in cases of duty violations or gross negligence. It’s important to secure appropriate protection against certain risks to minimize personal liability.

Appointed

How is the managing director of a UG appointed?

The shareholders’ meeting is responsible for appointing the managing director. If a managing director is appointed or terminates his/her office, this must be entered in the commercial register by a notary.

The exact rights and duties of the management are regulated in a management contract. Agreements on remuneration, notice periods and non-competition clauses are made there. It is possible for a managing director to have a secondary occupation, which must be recorded accordingly in the managing director contract.

Management Liability

How does management liability work?

As the management is bound by the shareholders’ instructions, it must implement all of the shareholders’ requirements. If she harms the company and disregards her duties, she can be held liable. If there are several managing directors, all of them are obliged to monitor compliance with the obligations. This is because all managing directors are generally jointly liable for errors made by the other managing directors.

The UG is a limited liability company, which is why the shareholders are generally not liable with their private assets. In contrast, the managing director may be liable with his or her private assets, whereby a distinction must be made between liability towards the company and towards third parties.

In particular, the managing director may be liable to third parties:

  • in the area of accounting, for example if he/she does not submit the annual financial statements.
  • he/she does not comply with his/her tax obligations
  • in the event of insolvency
Conclusion

Conclusion

As the managing director of a UG, you are not only responsible for the day-to-day running of the business, but also for the legal and financial security of the company. You represent the company externally and must protect the interests of the shareholders. Your tasks include bookkeeping, convening shareholders' meetings and carefully implementing high-risk decisions. With sound knowledge in the relevant areas and a clear management contract, you can successfully manage the UG and lead it to long-term success.

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FAQ

In our FAQ you will find answers to the most important questions about The Managing Director of a UG and your company founding.
The managing director oversees the operational, legal, and financial management of the UG. This includes bookkeeping, filing tax declarations, representing the UG externally, and ensuring compliance with legal obligations.
Any adult who is legally competent can become a managing director, provided they meet the legal requirements. However, individuals with certain criminal convictions (e.g., fraud or embezzlement) or involvement in recent insolvency cases may be disqualified.
While the UG itself has limited liability, the managing director can be held personally liable in cases of gross negligence, intentional misconduct, or failure to comply with insolvency obligations.
The appointment requires a formal resolution by the shareholders' meeting and must be registered with the commercial register (Handelsregister). Both shareholder-managing directors and external managing directors are eligible for the role.
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