Limitation of liability and statute of limitations for damages caused by a member of the governing body of a business corporation

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Specific circumstances limiting the liability of the governing body for damage to the business corporation.

If a member of the governing body is not equipped with the knowledge or skills necessary for the proper performance of certain activities entrusted to him (e.g. bookkeeping, legal services), he may delegate this activity to a professionally equipped third party. In such a case, when an activity had been delegated to an expert, the member shall not be liable for damage caused by such activity. However, the member of the governing body must act diligently (reasonably) when selecting such person, must provide that person with cooperation, and manage and at the same time sufficiently control that person. To limit liability, all of these conditions must be met, again from the perspective of managerial due diligence.

In general, the obligation to compensate damage caused by a member of the governing body to a legal person can never be limited in advance. Such a legal act would be deemed invalid. However, the right of a legal person to claim compensation for damage caused by a member of the governing body may be subject to the statute of limitations set by the Civil Code. The subjective time limit for filing a claim (from the discovery of the damage) is 3 years, the objective time limit (from the occurrence of the damage) is 10 years, and, in the case of an intentional act, 15 years. The subjective time limit for filing a claim runs from the moment when a person who is entitled to claim the damage on behalf of the legal person (e.g. a new member of the body) becomes or should have become aware of the damage.

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Additional information

Reference to legal acts

§ Section 609 at seq of Act No 89/2012 Coll., Section § 53 of Act No 90/2012 Coll.

Responsible Public Authority

Ministerstvo spravedlnosti
Datová schránka: kq4aawz

Last checked at 14.12.2020

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