No profits für Geschäftsleiter

Abstract

To what extent must company directors account for profits they made in connection with their office? When answering this fundamental question, the German law displays an incoherent patchwork. This article sets out to develop a coherent concept and proposes a strict no-profit rule.The article begins by exploring the justification for such a rule on a broad comparative and historical basis. It gives particular attention to English law, which provides landmark judgments, as well as seminal doctrinal writings. The analysis shows that the duty to account for profits is an inherent aspect of the directors’ undertaking of single-minded loyalty to their companies. This duty arises from the nature of the parties’ fiduciary relationship. It is not triggered by breach of duty or wrongdoing. Also, it cannot be justified by deterrence.838The article continues to explore the statutory basis for the no-profit rule in German law. It argues that this rule can be derived from § 667 of the German Civil Code (in case of public or private limited companies) or § 716(3) of the German Civil Code (in case of general or limited partnerships). Next, it clarifies the extent of the duty set out in these provisions. It shows that the directors must disgorge all the profits that are caused by and attributable to their directorship. Finally, it illustrates these two criteria by an in-depth analysis of relevant cases, e.g. personal exploitation of business opportunities and post-termination profits.