Corporate & governance
Directors must balance commercial judgment with legal duties to the company. We advise on appointments, service contracts, governance procedures, conflicts of interest and the assessment of potential personal liability.
Scope of our advice
The analysis depends on the legal form, allocation of responsibilities and the decision concerned. Capital maintenance, compliance supervision, information gathering and financial distress deserve particular attention. Board records should explain the basis for significant decisions.
What needs attention
Internal delegation does not necessarily remove supervisory obligations. D&O insurance also needs to be checked for notification requirements, exclusions and conflicts between insured parties.
Documenting decisions and responding to warning signs
Governance arrangements should identify who prepares decisions, who approves them and how compliance concerns reach management. A written allocation of responsibilities can improve accountability, but it needs reporting and escalation mechanisms. Significant investments, related-party transactions and distributions require a reliable factual basis. We examine the information available at the time of the decision, the alternatives considered, conflicts and the company’s financial position rather than judging a decision only by its eventual commercial outcome.
How the legal work is organised
When a possible breach emerges, the company needs a controlled response that distinguishes fact-finding from decisions about liability. We assess evidence preservation, independent representation, insurance notification and the authority to pursue or settle claims. Directors’ service contracts, indemnities and D&O cover are reviewed together, including relevant exclusions and conflicts between insured persons. In financial distress, immediate duties take priority over a longer investigation. The work product may include a board decision framework, a response chronology and a documented allocation of urgent actions.
Four practical examples
Illustrative scenarios explaining typical legal issues; these are not statements about specific client mandates.
Related-party deal
A director proposes a contract with a business owned by a relative. We examine conflicts, approval processes and arm’s-length documentation.
Practical approach. Document the conflict and obtain the appropriate independent review and approvals. A commercially favourable price alone does not answer questions about authority, disclosure or the process used to protect the company.
Risky expansion
The board considers a major overseas investment. We structure the information and approval process and record the assumptions underlying the decision.
Practical approach. The decision record should show material assumptions, downside scenarios and the funding impact. It should also state when management will revisit the project if those assumptions no longer hold.
Compliance failure
Management learns of repeated unlawful sales practices. We advise on preserving evidence, stopping the conduct and assigning an independent investigation.
Practical approach. Assign investigation oversight outside the implicated reporting line. Remediation should address the cause of the failure and include a check that revised controls operate in practice, not merely a new policy document.
Liquidity crisis
Cash forecasts reveal a serious shortfall. We review immediate duties and obtain insolvency advice promptly rather than relying on a planned refinancing.
Practical approach. A current liquidity picture and reliable payment forecast are essential. The response should allocate responsibility for daily updates and specialist assessment while avoiding commitments based on an unconfirmed rescue plan.
Preparing the first discussion
Prepare articles, management rules, board papers, financial forecasts, relevant approvals and service contracts. For a potential claim, include the insurance policy and communications with insurers, but avoid making admissions before coverage and strategy are considered. Identify which records existed when the decision was made and which explanations were created only afterwards.
Related expertise
Set up a German company · Shareholder agreements · Corporate disputes
Discuss your business matter
Tell us which parties and countries are involved, what you want to achieve and whether a deadline is approaching. We will clarify the scope, the appropriate legal team and the fee arrangements before work begins.
Reference: German Limited Liability Companies Act. English translations of German legislation may lag behind the authoritative German text. Application depends on the facts and the relevant current law.