(Compliance) Managing Director Criminal Law Risks

(Compliance) Managing Director Criminal Law Risks

In my professional practice, I often have to deal with clients who have come to the attention of investigative authorities because they have taken over the office of managing director for someone else, as a straw managing director, for courtesy or family ties.

They are regularly told by real, genuine managing directors that they don’t have to do anything else, that everything is safe and everything is taken care of.

But with the assumption of office, properly: with appointment as Managing Director, one also fulfills many legal obligations attached to the office of Managing Director.

This article is intended to provide a high-level overview of the risk one exposes oneself to, and does not claim to be exhaustive.

The proper performance of an office, i.e. actually managing the business of a company, regardless of the type of company, involves a great responsibility and is associated with many risks.

It is also the fact that in the case of courtesy acquisitions that I am considering, the acquirer does not get any insight into the inner workings of the company and the business transactions that take place. So he is often “surprised” by mail from investigating authorities, tax offices and courts. The background is that the company he/she represents as the Managing Director has faced financial difficulties and has not met its obligations (the Managing Director is actually responsible).

It is clear that the tax consultant was no longer paid, so the bookkeeping was no longer kept, sales tax advance returns were no longer filed, employee contributions to social security were no longer paid, and payroll taxes were no longer paid. No timely bankruptcy petition was filed. But health insurance companies have provided one, and the bankruptcy attorney is at the door.

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What seems like an extreme exaggeration and pessimism is the reality of my day-to-day work.

Clients who come to see me in such a situation usually face the following criminal charges:

  • Delayed bankruptcy according to § 15a paragraph 4 InsO
  • Social Security Fraud/Wage Withholding and Abuse, Section 266a of the Criminal Code
  • Bankruptcy offenses, §§ 283 ff. StGB
  • Tax evasion, § 370 AO

If you have been in the unfortunate position of having taken over the governance of a corporation out of courtesy or other altruistic reasons and are now being victimized due to the above allegations, do not hesitate to contact us.

We are specialist lawyers in criminal law and deal with commercial criminal law matters nationwide.

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