4 - Directors' liability for contraventions of capital maintenance rules

Summary

Introduction

Directors' duties have received more attention from comparative lawyers than other topics covered in this book, not least because their relevance extends into the fashionable theme of corporate governance. More than the previous chapters, therefore, this chapter can build on an existing comparative scholarly literature.

The present chapter follows in the wake of the chapter on capital maintenance by focusing on the personal liability of directors for committing acts amounting to unlawful distributions. However, in the course of the argument, salient features of the general law on directors' duties in England and Germany will be explored so as to ensure that the analysis is rooted in a solid understanding of the relevant doctrinal structures, which, in this area, differ considerably as between England and Germany. It will be shown that the different doctrinal approaches in the two systems lead to practical differences for directors' liability. Again, the substantive analysis will be closely interwoven with terminological clarifications on key concepts such as ‘duties of care’ and ‘fiduciary duties’, on the one hand, and ‘Sorgfaltspflichten’ and ‘Treuepflichten’, on the other. These are further examples to demonstrate the perils of terminology in comparative law where there is a failure to appreciate the contents of what may appear to be little more than convenient labels. Several of the insights gained from this wider analysis will be put to use again in chapter 5, dealing with the personal responsibility of directors for trading in the vicinity of insolvency.