According to a ruling by the German Federal Court of Justice (Bundesgerichtshof) on July 14, 2026 under docket number II ZR 202/25, creditors holding judgments against British Limited companies with administrative seats in Germany can enforce those claims directly against the sole shareholder’s personal assets. The decision establishes that following the expiration of the Brexit transition period on December 31, 2020, such corporate entities lost their legal capacity as foreign capital companies under European freedom of establishment rules.
BGH Ruling Transforms Limited Liability Into Personal Debt
The case centers on a T. Limited, a company incorporated with its statutory seat in the United Kingdom but its actual administrative seat in Germany, which had been ordered by the Berlin Court of Appeal (Kammergericht) to issue injunctions, provide information, and make payments. According to court records cited by legal publisher Beck Online, the sole shareholder operated the business after the Brexit transition period expired without restructuring it into a domestic legal form.
According to the BGH judgment, British companies can no longer rely on Articles 49 and 54 of the Treaty on the Functioning of the European Union (TFEU) following the conclusion of the Brexit transition window. Instead, German courts apply the traditional “seat theory” (Sitztheorie), treating foreign-incorporated entities with domestic administrative headquarters according to the law of the actual place of business. Because the company featured only a single shareholder, the BGH ruled that it could not constitute a partnership, classifying it instead as a sole proprietorship (Einzelkaufmännisches Unternehmen). Consequently, the company’s assets transferred to the individual via universal succession (Anwachsung), leaving the owner personally and fully liable for all corporate liabilities.
Enforcement and Legal Consequences for Sole Shareholders
Creditors do not need to initiate a new declaratory lawsuit to pursue private accounts, real estate, or vehicles. Instead, they can obtain an enforceable execution clause directly against the individual under Section 727 Abs. 1 ZPO based on pre-existing judgments.
The court explicitly rejected arguments regarding legitimate expectations, retroactivity prohibitions, and the EU-UK Trade and Cooperation Agreement (TCA). The BGH noted that the transition period lasting until December 31, 2020, provided ample time for business owners to execute structural changes. Furthermore, the court clarified that a British Limited cannot be reinterpreted into a German UG (haftungsbeschränkt) retroactively.
Action Steps for Affected Business Owners
Recommended measures include:
- Conducting an immediate inventory to verify whether any corporate structures operating via a UK registration retain their effective management base inside Germany.
- Reviewing existing exposure to personal liability for legacy and ongoing debts, particularly where creditors hold active enforcement titles.
- Executing retroactive corporate restructuring or conversion into a domestic, limited-liability corporate form such as a GmbH or UG to shield against future obligations.
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