What Executives Should Remember (Not Only) During A Pandemic

• Law Firm: Schoenherr Attorneys at Law
• Subject Matter: Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Corporate and Company Law, Directors and Officers, Insolvency/Bankruptcy
• Author: Mr Jan Farbiak
• Published date: 27 February 2023

In Slovakia, the exercise of powers by company executives like managing directors or board members involves a relatively wide range of legal obligations and liabilities.

The aim is to ensure that executives perform their duties professionally and to protect the company and its creditors.

In charge in times of crisis

Being a company executive has become more demanding due to the unprecedented COVID-19 pandemic. In this context, executives need to pay even more attention to the principle of loyalty, especially in terms of acting in the best interests of the company. Though the possibilities of terminating an executive are not limited by law, executives should always critically evaluate the impact on the company of a possible resignation during a crisis while also considering their statutory liability.

"Being a company executive has become more demanding due to the unprecedented COVID-19 pandemic. In this context, executives need to pay even more attention to the principle of loyalty, especially in terms of acting in the best interests of the company."

Risk in resignation of a company executive

If the company is in danger of incurring damage, the resigning executive is at least obliged to inform the company of the measures that need to be taken to avert such damage. Otherwise, the executive will be liable for the damage incurred by the company due to their inactivity. When resigning, it is equally important for the executive to assess whether the resignation at the time of the crisis will not have a liquidating effect on the company. Therefore, if the general meeting is unable to appoint a new director, which may well be the case in a crisis scenario, this could ultimately lead to the company's liquidation.

In the case of a joint-stock company, Slovak law stipulates that the board of directors is obliged to immediately inform the supervisory board of all facts that may significantly...