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Aggravated risk of personal recourse to the managing director to pay an administrative fine

The risk for managing directors of a limited liability company (GmbH) to pay administrative fines in person increases by a recent decision of the Frankfurt Higher Regional Court ("OLG").

Background

An interim injunction was issued against a company (the defendant #1) and its managing director (the defendant  #2) under penalty of an administrative fine in the event of an infringement. After a violation of the interim injunction, the Frankfurt Regional Court imposed an administrative fine of EUR 5,000 on the managing director. At the time of the infringement, the interim injunction had been served on the managing director - but not on the company.

The managing director filed an appeal on point of law against the administrative fine on himself with the OLG.

The decision of the OLG Frankfurt of April 23, 2019, Ref. 6 W 20/19

The appeal on point of law was not successful.

The OLG confirmed that the determination of an administrative fine against the managing director pursuant to Section 890 of the Code of Civil Procedure in case of a cease-and-desist order issued against a company and its organ is permissible as an exception, provided that – at the time of the infringement – the cease-and-desist order had been served on the organ but not yet on the company.

This is an exception to the Federal Court of Justice's principle that, in the case of a title issued against a company and its organ, an administrative fine may only be imposed on the company. At the time of the infringement the interim injunction had only been served on the managing director and not yet on the company, with the result that it would not have been legally permissible to impose an administrative fine against the company. Therefore, this case should not be treated differently than if the interim injunction had been issued against the managing director alone.

Advice

Thus, the OLG extends its jurisdiction with regard to exceptions to the principle that an administrative fine pursuant to Section 890 of the Code of Civil Procedure may only be imposed against the company – and not against the acting organ. This is due to the fact that the principle only applies if it is legally permissible to impose administrative fines on the company (the title needs to be served to the company before imposing an administrative fine on it). If this is not the case, enforcement against the managing director in person remains permissible. There is no danger in such cases of a double claim and payment – i.e. that both the company and the managing director have to pay.

Therefore, managing directors should use caution when cease-and-desist orders are issued both against the company and themselves. This jurisdiction extends the possibility to impose administrative fines on managing directors in person. It must be assumed that the imposition of an administrative fine on the managing director in person is to be feared whenever an imposition on the company is not possible.

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