GER: Consumer Protection for Sole Shareholders?

Jun 6, 2025 Benn-Ibler Rechtsanwälte

When does a sole shareholder of a limited liability company (GmbH) undertaking joint and several liability for the company’s liabilities qualify as a consumer? Are they then entitled to the protective mechanisms of consumer loan law? These questions were addressed by the German Higher Regional Court of Stuttgart (hereinafter Oberlandesgericht) in one of its most recent decisions.

Joint liability of sole shareholders

In the case at hand, the sole shareholder and managing director of a GmbH (a German private limited company) joined a loan agreement with a lubricant manufacturer as a joint and several debtor. The GmbH was to use the loan to set up business operations in Turkey. When repayment failed, the plaintiff brought a claim against the defendant personally. The defendant invoked consumer protection provisions, particularly the right of revocation under Sections 355 and 495 of the German Civil Code (Bürgerliches Gesetzbuch, hereinafter BGB), as well as excessive demands going against good morals under Section 138(1) of the BGB.

^{Distinguishing between private and commercial activities of corporate officers}

The Oberlandesgericht in Stuttgart rejected both the consumer status of the sole shareholder and the argument that the assumption of liability goes against good morals, because joint liability was not based on an independent decision by the sole shareholder as a private individual; rather, it was an integral part of the GmbH’s commercial activity. Given the sole shareholder’s role as beneficial owner and sole decision-maker, joint liability is to be attributed to the business sphere.

The court also clarified that the principles regarding financially overburdening relatives as an act of going against good morals cannot be transferred to economically active shareholder-managing directors.

OLG Stuttgart, 6 U 139/24, 29 April 2025