Liability of Directors, Managers and Other Persons Concerned
Members of the board of directors, managers, founders, liquidators and other persons specified by law may face liability if they breach, through their fault, the obligations arising from the law or the articles of association. The loss suffered by the company and the direct loss of a shareholder or a creditor are not the same; the right to claim and the person to whom compensation is to be paid are determined according to the type of loss.
In a liability review, the following are
- The scope of the duty, authority and obligation
- The process by which the decision was taken and its informational basis
- Delegation of authority and the duty of supervision
- Fault, loss and adequate causal link
- The distinction between the company’s loss and direct loss
- The scope and effect of the release resolution
- Whether the loss can be attributed to more than one person
- Statute of limitations and the competent court
- Interim protection and asset measures
- Links to criminal, tax, competition or bankruptcy processes
assessed together.
Loss of Capital, Over-Indebtedness and Restructuring
Deterioration of the company’s equity structure, loss of capital or signs of over-indebtedness may give rise to special assessment and reporting obligations for the management body and, where necessary, the obligation to convene the general assembly. A wrong or delayed action may have consequences for directors and creditors as well as for the company.
In this process, the following are
- Legal assessment of the current financial position
- The management body’s obligations to identify and report
- The general assembly agenda and remedial measures
- Options for restoring, increasing or reducing capital
- Shareholder financing and restructuring of debts
- The legal limits of options for transferring assets or the business
- Negotiation with creditors and the security structure
- Links to composition with creditors (konkordato), bankruptcy and liability risks
examined. Where the legal assessment of financial statements requires it, the work is carried out in coordination with certified public accountants, independent auditors and finance specialists.
Termination of the Company, Liquidation, Supplementary Liquidation and Revival
A company may terminate on grounds provided in the law or the articles of association, by a general assembly resolution, merger, bankruptcy, dissolution for just cause or another legal ground. Termination and the company’s deregistration from the registry do not take place at the same time; in the liquidation process, the company’s receivables and debts must be determined, creditors protected, assets converted into cash and the remaining value distributed.
In this scope, the following are
- Assessing the ground for termination or dissolution
- General assembly and trade registry procedures
- Appointment or replacement of the liquidator
- Call to creditors and payment of receivables
- Management of pending lawsuits and enforcement files
- Sale of company assets and the liquidation share
- Liquidation balance sheet, closing and deregistration procedures
- Supplementary liquidation where assets or transactions emerge later
- Conditions for returning from liquidation
- Action for revival (ihya) of the company where there is a legal interest
addressed.
A Company’s Debt and a Director’s Liability Are Not the Same
Not every commercial loss automatically gives rise to director liability. Authority, obligation, the information on which the decision was based, fault, loss and causation are examined together. For the company’s loss and a shareholder’s direct loss, the right to claim and the party to whom payment is owed may differ.
Assess without delay in financial difficulty
Loss of capital and over-indebtedness require different assessments. Reviewing current financial statements together with a financial specialist helps determine the management body’s duties and the available options. Current interim calculation regulations are checked separately.
Identifying the real need in liquidation and revival
A company being inactive does not mean that its legal personality has ended automatically. If there is a pending lawsuit, a forgotten asset or a debt, the deregistration entry, the liquidation documents and the legal interest are examined. Requests for revival and supplementary liquidation are not uniform procedures that make the company active again for every purpose.
Priorities at the first consultation
The company’s current financial position, personal sureties, public debts, the dates of the management role and existing notifications should be presented together. Definite collection, release from liability or closing within a specific period cannot be promised.