In its judgment of 14 October 2025 (Ref. II ZR 78/24), the Federal Court of Justice clarifies: The statutory duties of the governing bodies of a public limited company continue regardless of the extent of business activity. Neither the Management Board nor the Supervisory Board can invoke a ‘business hiatus’.
The case: No operational activity – but breaches of duty nonetheless
The proceedings concerned an unlisted public limited company which carried out virtually no operational business activities in 2013 and 2014. Subsequently, however, the management board entered into property transactions which proved to be contrary to the articles of association and caused considerable damage.
A former member of the supervisory board was subsequently sued for damages. The allegation: that he had breached his statutory supervisory duties.
Reporting obligations apply even in the absence of ongoing business
Of particular significance is the Federal Court of Justice’s statement regarding the provision of information to the supervisory board.
The Management Board remains obliged to
- to inform the supervisory board regularly,
- to report on significant developments,
- disclose risks and
- to notify the Supervisory Board immediately of any extraordinary business transactions.
This applies even if the company has not generated any significant revenue for a prolonged period or has ceased its operational activities.
No activity does not mean no risks
Even in companies that are supposedly dormant, assets may exist, such as property, shareholdings, trademark rights or receivables. These assets require ongoing monitoring.
Liability risks for supervisory board members
The ruling serves as a reminder to supervisory board members that their monitoring duties do not depend on the company’s workload.
In particular, a supervisory board must not rely on
- that ‘nothing will happen anyway’,
- that the management board does not provide reports,
- or that a low level of business activity justifies reduced control requirements.
Rather, the supervisory board must actively ensure that it receives the information necessary to perform its supervisory function.
Failure to do so may result in personal liability risks.
Implications for corporate governance and compliance
The decision fits seamlessly into current case law on organisational and supervisory duties.
For companies, this means that corporate governance does not end with day-to-day operations.
Even dormant companies require:
- effective reporting channels,
- documented board resolutions,
- regular supervisory board meetings,
- compliance structures and
- a transparent risk assessment.
In particular, corporate groups with numerous subsidiaries should check whether so-called ‘dormant companies’ are in fact being properly monitored.
Practical guide: What executive and supervisory boards should do now
Management boards
- Document regular reporting
- Report significant business transactions immediately
- Identify risks in dormant companies as well
Supervisory boards
- Actively enforce reporting obligations
- Document meetings and resolutions
- Regularly review assets and risks
Groups of companies
- Review governance structures for dormant companies
- Clearly define responsibilities
- Design compliance systems to be consistent across the group
Conclusion
The Federal Court of Justice’s message is clear: a public limited company may suspend its business activities – but not its corporate obligations.
Management boards must continue to report even in dormant companies. Supervisory boards must continue to monitor. Anyone who assumes that the absence of operational activity also suspends legal obligations exposes themselves to significant liability risks.
For family businesses, holding companies and corporate structures in particular, the ruling should serve as a prompt to critically review existing governance and compliance processes.
The most important points in brief
- Directors’ duties continue to apply in full even in the case of a dormant public limited company.
- Supervisory board members are liable if they neglect their supervisory duties.
- Companies should regularly review governance and compliance structures, even for inactive companies.
