Risk management of company insurances for Mittelstands-AG and Mittelstands-GmbH

– Why insurance contracts should be held by shareholders –


For family entrepreneurs, the risk of insolvency has an annual probability of around 1%. Then an insolvency administrator takes over
the management of the business, whereby a conflict is pre-programmed if the interests of the former managing director are different from those of the
Administrator. Conflicts of this kind can also arise if, in the context of a sale of shares or anticipated succession, there is a change in the ownership of the shares.
The company is not affected by a change in the shareholder structure or even a change in the management.



It would make sense from an entrepreneur’s point of view to always keep a hand on the insurances personally, for example, by
within the framework of a sole proprietorship as policyholder. Premiums incurred – plus a possible small surcharge for negotiating with risk carriers,
i.e. insurers or insurance intermediaries – can then be charged on to the Mittelstands-GmbH or Mittelstands-AG without hesitation.
If cleverly designed, any obligation to account for and declare value added tax can be avoided.


Requirements for the insurer

From the insurer’s point of view, the address of the companies must be identical and there must also be partial identity of persons. Then the insurer can
design a policy with one policyholder, but for several companies as insured persons. This is also often the case when
one of several undertakings is closed down and some of its assets are transferred.


underinsurance protection

Figuratively speaking, a liability umbrella is agreed and in practice only a fraction of insurance policies are needed. In practice
However, it happens that intermediaries prefer to provide each company with its own policy without examining the risks in detail – only in the event of a claim.
often too low a sum insured is then recognised, at least in the case of one company.


Pitfalls in corporate legal protection insurance

Any file from the bankruptcy court automatically moves to the prosecutor’s office. Experts report that around 99% of all insolvencies do not occur until about a year after
The application for insolvency proceedings must be filed before the material maturity of the insolvency proceedings. Then, after the opening of insolvency proceedings, there may be a surprise investigation by the public prosecutor’s office against
Shareholders and/or business managers come. Then, however, the legal expenses insurance often no longer provides cover after the insolvency administrator has
has already been terminated.

This is because the insurer will regularly ask the insolvency administrator to declare whether he will enter into the contract, § 103 InsO. If the insolvency administrator
fails to make a declaration without delay, he may no longer insist on performance of the insurance contract on behalf of the company. This is also the opinion of the Federal Court of Justice (BGH)
in the judgment of 08.11.2007, Az. IX ZR 53/04.


Another trap awaits the manager in the fine print. Often you can employees, so also business managers inexpensive in the company legal protection policy.
also insure. It is only in the event of a claim that it often emerges that cover only exists in the capacity of an employee before the labour court.
– but not in the capacity of the defendant institution before the district court.


Trap with manager liability (D & O insurance)

In many cases, there is hardly any question of cover being granted even if it is claims-made cover. This is because these types of insurance require a
(still) effective current insurance contract even at the time when an alleged claim for damages or other allegation is made.


However, it may be in the interest of an insolvency administrator, a new shareholder or a new management to secure further insurance premiums.
or to let the existing contracts continue to run “claim-free” in order to prevent premium increases after notification or settlement of claims.


Deviating policyholder and asset protection

A further advantage of this arrangement can be achieved by the fact that any other permanent supply contracts and other business assets can also be included in a
The company’s shares can be held by a sole proprietorship and then made available to the company’s own GmbH or AG by way of a lease.


Saving the pension scheme in the event of insolvency

In the case of the involvement of a GmbH or AG as a non-operational and therefore risky intermediate holding company, which transfers the operating assets to the operating
leased out to companies operating on the market, a further limitation of liability can be achieved. If the intermediate holding company grants a pension commitment to its managing director,
This, together with the associated reinsurance policies taken out by it, remains completely unaffected by the insolvency of an operating company.
It could be even more advantageous to simply place the operating company next to it without any holding relationship at all. Then, in the event of its insolvency.
and missing rent payments immediately all connections by notice of the lease contract cut – for lack of then still existing business premises and inventory may be
the insolvency administrator will then be content with a few banana boxes of files stored in a shipping company.



by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm



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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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