German GmbH Managing Director Statutory Representation Mechanics
Managing directors possess absolute external authority under German law; internal expenditure limits create personal liability but cannot invalidate third-party contracts.
Section 266 Stgb
Meaning
Criminal statutes in the German Penal Code define the offence of breach of trust or embezzlement. This section 266 stgb penalizes individuals who abuse their power to dispose of another person’s property or violate their duty to protect financial interests. It is a tool for prosecuting white-collar crime and corporate mismanagement.
Fiduciary Breach
The offence requires a relationship where the perpetrator has a legal obligation to care for the assets of the victim. Under section 266 stgb, a managing director who causes financial loss to their company by making unauthorized payments can be held liable. This duty arises from the position of trust inherent in corporate leadership.
Damage Proof
Proving the crime requires evidence of a concrete loss to the assets under the perpetrator’s care. The application of section 266 stgb involves comparing the actual financial state of the company with the state it would have been in without the breach. High-risk investments that deviate from the business judgment rule often trigger investigations under this law.
Prosecutors must demonstrate that the asset value decreased as a direct result of the specific action taken.
Actor Mindset
Prosecution depends on showing that the actor knew they were violating their fiduciary duties.