unternehmensnachfolge-anwalt.at
Mag. Bernhard Brandauer, Rechtsanwalt
When family succession needs more time, an external managing director can carry the business. What appointment, service agreement, limits and liability really require.
In many family businesses the right moment for a handover does not coincide with the moment when a family member is ready to take on management responsibility. An external managing director can bridge that gap. They carry operational responsibility, keep the business functional and create room for a structured succession plan. That only works if the role is set up cleanly in legal terms, rather than being treated as an interim arrangement with vague limits.
A non-family managing director is a full corporate officer. They are appointed by shareholder resolution under section 15 GmbHG, generally represent the company towards third parties without restriction under section 18 GmbHG and are liable under section 25 GmbHG with the care of a prudent businessperson. Anyone treating them as a mere stand-in ignores that responsibility. Anyone letting them act without a framework makes it harder to bring control back into the family later.
The article shows how to design the role as a deliberate bridge. It separates appointment as an officer, the service agreement, internal limits and practical communication with family, employees and customers. The initial consultation checklist helps to prepare a first meeting.
The check separates goal, limits and return of control. The result can be sent to the firm with your key facts.
Already know you want to get in touch? Go straight to the enquiry form.
Regulate appointment, representation and the internal reporting line in one step. An external managing director who carries a crisis needs backing through clear resolutions and defined interaction with the shareholders and the family.
Consider whether the original mandate should be adjusted. The service agreement, reserved matters and communication with staff must fit permanence. Otherwise a hidden long-term arrangement drifts into a transition scheme.
Define which matters specifically require consent and within which decision deadline. A list that is too wide blocks the business, a list that is too narrow weakens control. Internal limits generally do not take effect against third parties under section 20 GmbHG.
Internal portfolios, amount limits and four-eyes rules bind management internally. Externally, representation under section 18 GmbHG remains generally unrestricted. Both must be aligned so that responsibilities are clear internally and reliable externally.
A clear reporting rhythm with metrics, risks and milestones enables steering without touching operational detail. The report is the central basis for shareholder decisions and is documented in writing.
Service agreement, handover plan and knowledge transfer are aligned with the target date. A handover phase with clear allocation of responsibilities is built in before the agreement ends. Section 16 GmbHG allows the appointment to be revoked; contractual claims remain separate.
Experience, competence, advisory board consent or completed education can be milestones. Service agreement and reserved matters are linked to those milestones. This shields the family from making the return decision emotionally instead of substantively.
Before appointment there should be a succession orientation: who could take over, under which conditions and within which timeframe? Only with that preparation can the mandate to the external managing director be phrased sensibly.
The appointment of a managing director is made by shareholder resolution under section 15 GmbHG. It establishes the position as a corporate officer with all its rights and duties. Separately from that stands the service agreement, which regulates the contractual relationship: duties, remuneration, bonuses, termination, non-compete, confidentiality and side activities. This separation is not a legal subtlety but the basis for a clean transition.
Section 16 GmbHG allows the appointment to be revoked without automatically extinguishing contractual claims. For the family this means: anyone planning the return of management can end the officer position at a defined moment without moving the service agreement along the same timeline. Both layers need their own treatment.
In drafting it makes sense to describe the roles of the external managing director, the interim or transition goals and the shareholders' recourse rights concretely. Vague formulas such as 'for as long as necessary' create no clarity. The article on trial management orders the related constellation of an internal candidate and shows where the two models can sensibly be kept apart.
Section 18 GmbHG governs representation of the company towards the outside. Managing directors generally represent the company judicially and extra-judicially. Internal restrictions and reserved matters bind management under section 20 GmbHG in the relationship with the company but generally do not take effect against third parties. This separation is central to designing external management.
In practice, internal limits are usually implemented through a list of reserved matters, portfolio order, amount limits, four-eyes principles and reporting rules. These tools work because they enable clear internal steering without undermining external operational capability. The external managing director knows what is permitted, and the shareholders retain control over strategic decisions.
The design must be workable. A list that makes every stationery purchase subject to consent is worthless. A list that captures only management-board resolutions on acquisitions, real estate contracts and credits above a threshold is effective. The article on information rights for passive family shareholders orders the reporting side that belongs to external management.
Section 25 GmbHG binds managing directors to the care of a prudent businessperson. This duty applies to external managing directors in the same way as to family members. There is no reduced liability track for 'interim' or 'bridge'. Anyone who ignores this responsibility or tries to dilute it contractually endangers the business and risks internal liability that would then make the sensitive transition phase even harder.
For the basis of decisions the duty of care is particularly relevant. Decisions taken without a sufficient information basis are attackable. The external managing director should therefore document reporting lines, expert opinions and consultations. Shareholders should support this process rather than obstruct it. That is not a formality but the basis for evidencing the duty of care in a dispute.
For practical cooperation, joining forces with an advisory or supervisory structure is often useful. The external managing director can align strategic decisions with a family-advising body without giving up their own responsibility. What remains important: the board does not replace the duty of care nor the decision.
An external managing director operates in an environment where family, employees, customers and suppliers have different expectations. For the family, trust matters; for employees, stability; for customers and suppliers, reliability. The transition succeeds when these layers are addressed deliberately. A communication plan with responsibilities and occasions belongs in the handover concept.
Internally, clarity about the role is important. The external managing director is neither the new transferor figure nor the educator of the next generation. They carry responsibility, provide information and accept steering, without slipping into the family role. The article on the family council in the business shows how family discussions stay separate from the operations.
Externally, reliability counts. Customers need a contact person, suppliers need a clear signatory, banks need a convincing outlook. The external managing director shapes those relationships. The transferor remains visible without pulling operational steering back to themselves. This is leadership with role clarity, not a two-track structure.
An external managing director relies on a functioning knowledge base within the team. Customer relationships, price structure, production know-how, contract portfolio and payment terms are rarely fully documented. The transition succeeds when knowledge is transferred in a structured manner and kept alive. The article on key employees during the transition phase orders retention and role allocation.
In many cases the departing transferor is a knowledge source. Their role in the transition should be defined: available times, topics, reachability, limits. Without such order the external managing director either lands in a vacuum or in an environment in which the transferor continues to decide informally. Both weaken the position and hinder the return to the family.
A structured knowledge transfer sets priorities. What is critical knowledge, what is experience-based knowledge, what is dispensable? Only the critical part is formalised. The rest is built up through occasion-based documentation, joint customer meetings and regular reviews. The article on business transfer in family succession orders the operational elements in the transition agreement.
The bridge only works if its end is visible. The service agreement names duration, extension options and end conditions. The return is tied to persons and milestones. Those milestones should be verifiable: experience, education, success in leadership responsibility, advisory board consent where applicable. Emotional expectations delay succession more often than they support it.
Before the role change a handover window is built in. The external managing director works together with the family successor and responsibilities shift step by step. Formally, the officer position ends only with the revocation under section 16 GmbHG and the new appointment. Here too, service and officer levels remain separate so that contractual rights are preserved.
After the role change a follow-up phase is useful. The external managing director remains available for defined questions without undermining the successor position. Customers, employees and family experience a calm transition. The article on the right of first refusal for family shares shows how structured transitions can be secured on the share side. That way the leadership picture stays consistent.
No. Section 25 GmbHG binds managing directors to the care of a prudent businessperson. This duty applies regardless of whether the managing director is a family member or external and cannot be substantially reduced by contract.
Generally no. Internal restrictions bind management under section 20 GmbHG in the internal relationship. Externally, representation under section 18 GmbHG remains generally unrestricted. Reserved matters therefore need to be phrased precisely and supported by clear reporting processes.
Revocation of the appointment under section 16 GmbHG ends the officer position. Claims from the service agreement continue independently and must be handled according to the contractual terms. Both levels must therefore be separated at the time of contracting.
As much as can be tied meaningfully. Reserved matters, reporting rules and an advisory board can secure comprehensive control. Overly tight parameters, however, block operational decisions. The aim is a balance between operational capability and strategic control.
Book an initial consultation. We clarify the legal framework, critical documents and next steps. Callback within one working day.
Contact us