According to the statutory regulation, the definition of the duty of due care includes not only the duty to act with due care, i.e. with a certain quality, but also the duty of loyalty, which differs fundamentally from foreign legislation ¹ E.g. Great Britain or the Federal Republic of Germany. where the duty of due care is generally perceived separately from the duty of loyalty.

The duty to act with due care can be understood in a twofold sense, namely both as a measure of conduct in the performance of duties, which defines how a member of the statutory body is to perform a certain duty, and, in addition, as a duty in the legal sense, the content of which is the obligation to act with a certain standard of care in the performance of activities.

Content of the duty od due care

• The duty of loyalty

The duty of loyalty as a separate obligation is not directly enshrined in the Civil Code or the Business Corporations Act. It is understood as a duty to act in the interests of the company and not to put one’s own or other’s interests ahead of the interests of the legal entity.

Regarding foreign interests, reference may be made to the jurisdiction of the Supreme Court, in particular to the decision of the Supreme Court of Justice Case No. 29 Cdo 3864/2008 according to which it is part of due care that the managing director gives priority to the interests of the company over the interests of the shareholder who promoted him/her to the office by the weight of his/her votes and does not allow himself/herself to be influenced by the shareholder when exercising the powers of a managing director in a limited liability company. Similarly, reference may be made to the decision of the Supreme Court of Justice, Case No. 27 ICdo 62/2017, according to which a member of the body should not do anything that is manifestly contrary to the interests of the company without good reason, even when he or she is not performing the duties associated with the performance of the function.

• Duty to act with (due) care (diligence and knowledge)

The second part of the duty of due care is the duty to act with care and knowledge.
The concept of the duty of due care can be understood to mean that a good manager acts responsibly and conscientiously with respect to the company and takes care of its assets in the same way as if they were his own assets, he is obliged to recognize the need for professional assistance from a specially qualified entity, and to provide such assistance, but he is not required to be equipped with all the professional knowledge relevant to that function in the statutory body, but the basic knowledge to recognize impending damage and to prevent it from being caused to the assets under his management and the duty to recognize ² Refer to the Supreme Court decisions 5 Tdo 1224/2006 and 5 Tdo 1412/2007.

• Obliged persons

The duty of due care is directed towards the elected members of corporate bodies. It therefore applies equally to members of cooperatives, companies, associations of unit owners, etc. As regards the nature of those bodies, they are both statutory bodies and control bodies of legal persons. Where the instrument of incorporation provides for other elected bodies, the duty of good administration also applies to their members.

The decisive factor in determining whether a member of a body is subject to the duty to exercise due care is not whether he or she has been elected to office, but whether the body is an elected body. It is therefore true that members of elected bodies whose office has otherwise arisen, e.g. managing directors appointed by the shareholder of the company, members of the supervisory board elected by employees, members of bodies appointed by the court, co-opted members, etc., are also obliged to act with due care. Other persons who are obliged to act with due care are the liquidator (see §193 CC), persons who are effectively in the position of a member of an elected body, although they are not a member of such a body, regardless of their relationship to the corporation (see §193 CC). § 90/2012 Coll., on Business Corporations Act (hereinafter referred to as “BCA”) ³ Also referred to as a de facto or shadow leader according to the literature.

• Presumption of breach of the duty of due care

According to the second sentence of Section 159(1) CC, it is deemed that a person who is unable to act with due managerial care although he must have become aware thereof upon accepting or in the discharge of the office and fails to draw conclusions for himself is presumed to act with negligence. Although it speaks of the duty of due care, this provision, by its terms, is directed at one of the components of due care, namely the (due) care of a member of an elected body, i.e. the duty to act with due care and knowledge. However, this is a rebuttable presumption, i.e. the member of the elected body concerned can always adduce evidence that he acted with due care. The degree of knowledge required in a given case will depend to a large extent on the circumstances of the particular case.

The irrebuttable presumption of a breach of due care is the case of Section 255 BCA, according to which where a company acquires from its founder or shareholder, during the first 2 years after its incorporation, any assets for consideration exceeding 10% of its subscribed registered capital, the consideration must be determined so that it does not exceed the value of the acquired assets as determined in an expert opinion.

In the next upcoming installment, you will learn more about the business judgment rule and how it is viewed by the law and Supreme Court case law.