Management Board Member Agreements

Our experience shows that many management board members are still performing their duties on the basis of an employment contract instead of a proper management board member agreement. As the Employment Contracts Act does not extend to management board members, we advise signing proper management board member agreements. Conclusion of a management board member agreement is in the interest of both management board members and the company.

A management board member agreement allows greater protection of the rights and interests of companies by defining non-disclosure and non-compete obligations. As Estonian legislation does not define what exactly can be regarded as company business secrets, we recommend stating an indicative list in the management board member agreement. Even if a general non-compete obligation is included in the Commercial Code we recommend further defining (prohibited) competitive activities, including their territorial scope and expiry date. For example, reporting obligations plus areas of responsibility and liability can also be further defined in the management board member agreement. As the Employment Contracts Act does not apply to management board members, clear and unequivocally negotiated contract terms are also...