In addition to the duty to act with due care and the necessary knowledge, the duty of loyalty is also part of the duty of due care. It is the duty of loyalty that is the focus of the rules on conflicts of interest. According to Section 54(1) of the BCA Act, the following applies that if a member of a body of a business corporation becomes aware of a conflict that may arise between his or her interest and the interest of the business corporation during the exercise of his or her office, he or she shall inform, without undue delay, other members of the body of which he or she is a member as well as the supervisory body, if established, or, failing that, the supreme body. . The same shall apply mutatis mutandis to potential conflicts of interest of persons who are closely related to the member of a body of the business corporation, and persons influenced or controlled by that member.

Pursuant to Section 54(4) of the BCA, the company may respond to such a reported potential conflict of interest by suspending the performance of the duties of a member of an elected body for a specified period of time. In practice, however, such conduct is exceptional and it is sufficient for the purpose of the provision that the company is informed of the potentially dangerous situation and can monitor the conduct of the member of the body in a targeted manner. If the suspension takes place, the member concerned may not – wholly or to the extent decided by the company – exercise the powers which belong to the body concerned. Pursuant to Section 48(1)(e) of Act No. 304/2013 Coll., on Public Registers, the suspension is entered in the Commercial Register.

The obligation to notify a potential conflict of interest does not extinguish the obligation to act in the interest of the company. ¹ § 54 para. 3 BCA. According to Section 55(1) of the BCA, if where a member of a body of a business corporation intends to sign a contract with the corporation, he or she shall inform corporation: this also applies to a contract concluded between a company and a person close to a member of its body. The obligation can also be fulfilled by informing the general meeting. The law does not prescribe the form (verbal information would also suffice). The notification must also include a statement of the conditions under which the contract is to be concluded. This again applies similarly to contracts concluded between the company and persons close to a member of the elected body of the corporation or persons influenced or controlled by him.

Pursuant to Section 56(1) of the BCA, the rules set out in Section 55 of the BCA also apply to the securing and consolidation of debts or to the accession to a debt of a member of an elected body.

The company’s supreme or supervisory body may prohibit the conclusion of contracts that are not in the company’s interest.

According to § 57 BCA the provisions of Sections 55 and 56 shall not apply to contracts concluded in the ordinary course of business. As to the assessment of whether the case is an ordinary commercial relationship, the criteria set out by the Supreme Court in its judgment of 9 December 2009, Case No. 23 Cdo 3867/2007, according to which it is necessary to assess in particular:

• the type of transaction in question, i.e. whether it arises from the company’s business,
• the financial dimension of the transaction, i.e. its intensity, and in particular its comparison with other transactions (contracts) which the business corporation in question has normally entered into at the relevant time. If a contract is significantly out of line in terms of its size (intensity) with the financial size of other contracts entered into by the business corporation at around the same time, it is unlikely to be a contract entered into by the business corporation in the ordinary course of business, the uniqueness of the transaction, i.e. whether it is a standard transaction.

The Business Corporations Act does not expressly address the consequences of a breach of duty in the event of a conflict of interest. The Supreme Court stated in its resolution of 8 December 2015, Case No. 29 Cdo 4384/2015: „However, if a member of the statutory body violates the obligation to inform about a (possible) conflict of interest pursuant to Section 54(1) and (2) of the CC, the existing conflict of interests of that member of the statutory body with the interests of the business corporation prevents him/her from legally acting on behalf of the business corporation (the actions of such a member of the statutory body are subject to Section 437 of the CC with all the consequences arising therefrom).“ As a result, such action by a member of an elected body would be relatively invalid. ² I.e. the company as the party to be protected by the provision of § 437 CC could invoke the relative invalidity of the legal act.