Requirements for statement of a managing director regarding reasons of exclusion

With an application for registration of a managing director, the latter has to assure the Registration Court that there are no impediments to his appointment. Among other things, the prospective managing director must personally declare that she has not been convicted of certain criminal offenses in the last five years – both in Germany and abroad. Since April 12, 2017, this assurance must also refer to the newly introduced offenses of Section 265 (c) of the German Criminal Code - StGB (sports betting fraud) and Section 265 (d) StGB (rigging of professional sports competitions), but not to Section 265 (e) StGB (examples for particularly severe cases).

The case

The company had applied for registration of a change of management along with personal declarations by the managing directors, in which they assured that there are no circumstances that preclude their appointment in accordance with Section 6 (2) sentence 2 (2) and (3) and sentence 3 of the German private limited liability company act - GmbHG. However, in the declaration, the criminal offenses for which there had been no conviction in the past five years were listed individually and enumeratively. The new offenses introduced with the entry into force on April 12, 2017 of the 51st Criminal Law Amendment Act under Section 265 c StGB (sports betting fraud), Section 265 d StGB (rigging of professional sports competitions) and Section 265 e StGB (especially serious cases of sports betting fraud and the rigging of professional sports competitions) were not listed.

The decision of the Oldenburg Higher Regional Court of January 8, 2018 – 12 W 126/17

In accordance with Section 6 (2) sentence 2 (2) GmbHG, a person cannot be a managing director if such person has been convicted of, amongst other things, Sections 265 (b) to 266 (a) StGB in the five years prior to the application for registration as managing director. The Oldenburg Higher Regional Court had to deal with the hitherto unresolved question as to whether this reference to the German Criminal Code is to be understood as a static reference (with the consequence that reference is made only to the entry into force of Section 6 (2) sentence 2 (2) of the Criminal Code) or a so-called dynamic reference (i.e. reference is made to the Criminal Code in the version valid at the time of application). In a statement, the German Notary Institute pleaded for an interpretation as static reference, in view of the history of origin as well as the purpose of the provision. On the other hand, the Oldenburg Higher Regional Court opted for a dynamic reference based on the clear wording. Therefore, the assurance of the managing director must also refer to the newly introduced provisions of Section 265 (c) StGB (sports betting fraud) and Section 265 (d) StGB (rigging of professional sports competitions); only a reference to the standard examples of Section 265 (e) is unnecessary, since it only concerns sentencing regulations.

Implications for the practice

The outcome of the decision is correct. According to Section 82 Para. 1 No. 5 GmbHG, false information in the so-called negative assurance of the director is punished with imprisonment of up to three years or a fine. In the case of static reference to a historical legal situation, the range and scope of this criminal law provision would not be sufficiently substantiated.

The decision also shows how error-prone the so-called negative assurance of the managing director is, in particular if each individual article in the Criminal Code is listed enumeratively. Because then any new regulations in the Criminal Code must be closely monitored and listed – even if in terms of content these have to do either with the regulatory matter of company law or with the typical sphere of obligation of the managing director of a GmbH. It is therefore easier – and equally permissible – simply to assure that the managing director has never (or in any case not in the last five years) been convicted of a criminal offense at home or abroad. In the light of the severe criminal consequences managing directors (especially if they do not feel completely at home in the German legal environment) should consider having the registration checked or drawn up by a lawyer.