What managing directors should know and implement now
Since the German Corporate Stabilization and Restructuring Act (StaRUG) came into force in January 2021, the responsibility of managing directors and board members in companies with limited liability (e.g. GmbH, AG, GmbH & Co. KG) has expanded significantly: Section 1 StaRUG obliges them to continuously monitor developments that could jeopardize the company’s continued existence – long before an acute crisis becomes apparent. In economically uncertain times, this provision is more relevant than ever.
What does Section 1 StaRUG actually require?
Managers must ensure that their company remains economically viable.
This includes:
- Continuous monitoring of the economic situation
- Identification of going concern risks (e.g. sudden drop in sales, expiring financing without succession)
- Initiation of suitable countermeasures (e.g. financing negotiations, restructuring planning)
The monitoring obligation is not only relevant in the event of imminent insolvency, it begins at the first signs of a crisis.
What is considered a going concern risk?
The IDW cites numerous examples, e.g:
- Dependence on short-term financing without a fixed term
- Foreseeable covenant breaches in loan agreements
- Loss of key customers or suppliers
- Political or regulatory changes with a significant impact
As soon as such risks are identified, there is not only an obligation to plan, but also to document.
What are the penalties for breaching the monitoring obligation?
Any manager who fails to monitor and thereby escalates a crisis is no longer acting in accordance with their duties. The consequence:
- Personal liability for damages, e.g. creditor claims
- Criminal liability for delay in filing for insolvency (Section 15a InsO)
- Loss of relationships of trust with banks, investors and shareholders
What we can do for you
We help you set up a customized early warning system – tailored to the size, sector and complexity of your company. For smaller companies, simple structures with regular liquidity checks and early indicators are often sufficient.
In times of crisis, every week counts! Let us work together to ensure that you can react in good time.