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Attention: managing directors at sole proprietorships

 

Who can call themselves managing directors?

The term “managing director” is a tricky business for sole proprietorships. In general, it is not forbidden to call yourself “managing director of a sole proprietorship”. However, this is linked to the condition that no one may be misled by the term “managing director”. The temptation for a sole proprietorship to use a CEO title to make the company and position look more professional and important can be great. However, the line between image enhancement and deception is fluid. We have summarized the most important facts, information and tips for the legal notice of your sole proprietorship so that you don't get lost in the dangerous waters of "managing directors in sole proprietorship":


Who is a managing director?

The managing director in the true sense of the word is the legal representative internally and externally of a “legal person”. Legal persons are, for example, the UG and the GmbH. In order for these companies to be able to act, they need a natural person to lead the company: the managing director.

 

Managing director and sole proprietorship

The term "managing director" is colloquially used very freely for managerial positions in companies. Nevertheless, even in everyday language, a managing director is more likely to be associated with a limited liability company, i.e. H. the entrepreneurial company (limited liability) or a GmbH. As a rule, no managing director is employed in sole proprietorship, but the sole proprietor himself leads the company. As a result, a non-corporate individual may misrepresent that they are doing business with a limited company rather than a sole proprietorship with private liability.

 

Can you call yourself “managing director of a sole proprietorship”?

Although there is no general prohibition for sole proprietors to call themselves "managing directors", you should not, as sole proprietors, see this as a license to use the expression. In specific cases, the case law ruled against sole proprietorships who viewed themselves as managing directors. The reason given against the designation “managing director” in connection with a sole proprietorship is “misleading customers and business partners”. In a ruling by the Munich Higher Regional Court of November 14, 2013, paragraphs § 5a (3) of the Unfair Competition Act (UWG) and § 5 of the Telemedia Act (TMG) were used as the legal basis. These sections of the law speak of “unfair” or misleading business actions, as the statement “managing director of a sole proprietorship” can also be used for purposes of deception.

In the case mentioned, it was an online retailer who had listed himself as managing director in several imprints. The judges stated in the grounds of the judgment that the indication of a managing director in the imprint no longer makes it clear to the consumer whether they are buying from a sole proprietorship or a company with limited liability. The law regards this information as important because it can influence the purchase decision.

Owner or manager

As a sole proprietor, what is the alternative to the managing director title for sole proprietorships? "Owner" is a good substitute here to let others know that you make the decisions in the company. Employees of a sole proprietorship can receive powers of attorney and power of attorney, but the sole proprietor and owner takes on the external representation of the company and works on their own account and at their own risk.

Caution: risk of being misled! As a sole proprietorship, you will quickly find yourself on the black ice when you use the term “managing director”. In order to have a secure footing, you should generally refrain from using the title “managing director” if you run a sole proprietorship.

firma.de tip on the legal notice for sole proprietorships

Be sure to revise your imprint if you have designated yourself there as the managing director. Because that can offer warnings a surface to attack and result in legal action.

In the imprint of a sole proprietorship in particular, you are obliged to provide specific information and to correctly inform customers or business partners. Always give the exact business name in the imprint for sole proprietorships. If you are not entered in the commercial register, you are not allowed to use a fantasy name. With your full name, i. H. First and last names in the imprint are always better advised to you as a sole trader. Third parties can always see from the imprint of your sole proprietorship that it is a sole proprietorship, who is the legal contact and who can be called upon in the event of liability.

 

The information published on our site is all written and checked by experts with the greatest care. However, we cannot guarantee the correctness, as laws and regulations are subject to constant change. Therefore, always consult a technical expert in a specific case - we will be happy to put you in touch.

firma.de assumes no liability for damage caused by errors in the texts.