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Special Representatives in German Associations: Delegation of Duties and Liability

Special Representatives in German Associations: Delegation of Duties and Liability

In order to cope with the number of tasks that arise, clubs or associations in Germany have the option of a special representative in accordance with Section 30 of the German Civil Code (BGB). If an association has a special representative, some of the tasks of the management board can be transferred to them and delegated. This often also applies to the day-to-day management of the association, and the special representative then acts as the managing director of the association.

We explain the requirements for the appointment of a special representative, the scope of a possible delegation of duties and the consequences under German liability law:

Requirements for the articles of association

The articles of association must define the specific tasks or business areas for which the managing director is to be responsible. A so-called minimum provision is sufficient for this, according to which the articles of association merely stipulate a specific area of activity for which autonomous and board-like independence is intended. However, the provision in the articles of association should be clear and unambiguous.

Appointment of the special representative

The appointment of a special representative is generally the responsibility of the general meeting. However, the articles of association may also provide for the appointment of another body, such as the management board.

Power of representation and duties of the special representative

The scope of the power of representation to which a special representative is entitled is determined by the provision in the articles of association. In case of doubt, the special representative is authorized to represent all legal transactions within the scope of business assigned to him/her in accordance with § 30 sentence 2 BGB. It should be noted that he is nevertheless bound by the instructions of a superior body. It is also possible, in accordance with Section 30 sentence 2 BGB, to limit the power of representation of the special representative by means of a provision in the articles of association

As a special representative can also be assigned comprehensive management board activities by way of delegation of duties, depending on the specific regulation in accordance with Section 27 para. 3 BGB, the question arises as to how far the extent of the activities transferred from the management board to the special representative can go by way of the so-called delegation of duties by the governing body.

A delegation of duties by the executive body is when the articles of association or an authorization in the articles of association transfer the duties of the statutory management board to another person or another body in such a way that the board itself is relieved of fulfilling these duties to such an extent that it only has a supervisory function.

The statutory management board cannot escape this selection and monitoring responsibility with regard to the managing director or special representative. Three principles apply to this residual responsibility of the management board:

  1. The statutory management board remains ultimately responsible for those tasks that cannot be delegated from the outset (e.g. the obligation to file for insolvency pursuant to Section 42 (2) BGB).
  2. The management board retains joint responsibility in the sense of a plausibility check obligation for measures in which the management board itself is involved through external acts of representation.
  3. A distinction must be made as to who is responsible for appointing the special representative. If, for example, the management board is responsible, it is also responsible for the selection and, if applicable, the obligation to replace the special representative. If, on the other hand, the general meeting has appointed the special representative, the statutory management board has no further residual responsibility for the assigned area of responsibility.

Liability of the special representative

Like the management board, the special representative is responsible to the association for the management of the business assigned to him and is also liable according to the same principles as the members of the management board. However, the special representative is often implemented as part of the professionalization of the association and receives remuneration for his activities, meaning that the liability privileges for honorary association bodies do not apply.

Liability consequences of the delegation of duties for the management board

When considering the consequences of the delegation of duties by the management board, a distinction must be made as to whether it is a case of permissible delegation or a case of impermissible delegation.

If the special representative acts within the scope of fulfilling the management matters assigned to him on the basis of a permissible delegation, this does not give rise to any liability on the part of the management board. Attribution is ruled out as the special representative is not a vicarious agent of the management board member. The delegation is based on the provisions of the association’s articles of association, which is why the special representative acts exclusively within the scope of the association’s duties. Only the selection, instruction or supervision of the special representative by the management board in breach of duty can trigger liability on the part of the management board.

If, on the other hand, tasks are delegated that cannot be delegated, the management board acts in breach of duty. It should be noted that although the conduct of the special representative is not attributed to the management board, it must be assumed that the delegation in breach of duty has become the cause of the damage as an independent breach of duty by the management board.

Our experienced attorneys for German association law will be happy to help you with further questions about special representatives in associations.

Continue reading:
Design of Statutes and Bylaws for Nonprofit Organizations in Germany
Attorney for The Law of Associations And Federations in Germany

Johannes Fein

Attorney Johannes Fein works in WINHELLER's departments of Tax Law and Tax Advisory and the Law of Nonprofit Organizations. He is a legal and tax counsel for nonprofit organizations, trade- and professional organizations, nonprofit limited liability companies and cooperative associations as well as foundations.

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