168 JURIDICA INTERNATIONAL 21/2014
Partner, Law Ofﬁ ce VARUL
Personal Liability of a Director
to Creditors in the Case of Thin
Capitalisation of a Company
The foundation of a limited-liability capital company*1 is its capital, and the concept of limited liability
proceeds from this fact.*2 As shareholders of a company are liable for that company’s debts to the amount
of capital paid up, it is important for the creditors that the company retain its capital, since, in the event
that the company’s capital is used up, the unsecured claims of creditors remain partially or completely non-
covered. When a company’s capital falls below the statutory limit (a situation known as thin capitalisation),
the company enters a hazard zone. This can be considered to be a pre-insolvency situation.*3
It is generally recognised that a company director*4 is not liable to the creditors of the company and,
as a rule, has duties only to the company.*5 However, the situation changes when the company becomes
1 The most common types of companies with capital are the GmbH (for the German ‘Gesellschaft mit begrenzter Haftung’)
type of company, a form of company intended mainly for small and medium-sized entities, and the AG-type company (the
Aktiengesellschaft form, again as seen in Germany), meant primarily for large companies. The article deals mostly with the
liability of directors of a GmbH-type limited-liability company since that type of company is the most widespread and,
therefore, associated liability cases too are seen more often. For further explanation, in the countries analysed in the article,
counterparts of the GmbH are Spain’s ‘Sociedad de responsabilidad limitada’ (or ‘S.R.L.’), the ‘private limited company’
(abbreviated ‘Ltd’ in the company’s name) found in the United Kingdom, and the osaühing in Estonia (abbreviated ‘OÜ’).
The AG-type companies are considered in the article in relation to matters that are in principle regulated differently than
for GmbH-type companies. In the countries analysed in the article, counterparts of the AG are Spain’s ‘Sociedad Anónima’
(or ‘S.A.’), the United Kingdom’s ‘public limited company’ (or ‘Plc’), and Estonia’s aktsiaselts (abbreviated ‘AS’).
2 On the limited liability of shareholders of a company, see T. Raiser, R. Veil. Recht der Kapitalgesellschaften. [‘Corporate
Law’], Verlag Franz Vahlen 2010, p. 327 ff. (in German).
3 It is difﬁ cult to determine the pre-insolvency situation precisely since, at base, any kind of situation that precedes insolvency
could be considered to be a pre-insolvency situation. In general, it is possible to speak of the pre-insolvency situation when
the regular economic activities of a company are in a crisis but the problems that have arisen have not become irreversible
and permanent yet. In the context of this article, the pre-insolvency situation of a company is limited to thin capitalisation
when the company’s capital has fallen below the minimum statutory limit but the company has not become permanently
4 To explain the term used: in countries studied in the article, it is stated here that the counterparts of the well-known ‘director’
found in English law are the Geschäftsführer in a GmbH or Vorstandsmitglied in an AG in Germany, the administrador
in Spain, and a juhatuse liige (member of the management board) in Estonia. For greater readability, the term ‘director’ is
used throughout the article.
5 Breach of a director’s duties in a case of thin capitalisation may bring about the director’s internal liability to the company.
However, this issue remains beyond the scope of the present article. For more information about a director’s internal liability
in a case of thin capitalisation, see R. Bork, C. Schäfer. Kommentar zum GmbH-Gesetz, 2nd ed. RWS Verlag Kommunikations-
forum 2012, p. 974.