Manager liability and attorney experience: how to avoid risk and protect your function?
Author of the article: JUDr. Jakub Dohnal, Ph.D., LL.M., ARROWS (office@arws.cz, +420 245 007 740)
Being a manager or a member of a statutory body is not just about leading a company to success - it's also about being able to take responsibility for key decisions. One bad decision can lead to millions in damages or even personal liability. Did you know that your liability for damages can be unlimited? Or that you can pay out of your own assets if your company goes bankrupt? Find out how to avoid legal risks, protect your position and act with peace of mind even in the most difficult situations. 
Managerial liability in the Czech legal environment
The role of managers and members of statutory bodies is demanding and full of challenges. In the Czech Republic, the liability of these persons is regulated by the Business Corporations Act, which requires them to act with due care. This includes three key duties: loyalty to the company's interests, informed decision-making and protection of the company's interests.
Breach of these obligations can have significant legal consequences. A manager who causes damage to the company by his/her actions is obliged to compensate the company in full. This means that his liability is not limited and can affect not only the company's assets but also his personal assets.
Risk of bankruptcy and prosecution: increased demands on managers
If a company goes bankrupt, the liability of managers becomes even more complicated. The law presumes that the management has taken all steps to avert it. If it is proved that these steps were not taken, the court may decide that the manager is obliged to replenish the company's assets for the damage caused.
It is therefore essential for managers to closely monitor the company's financial situation and take immediate action in the event of a risk of bankruptcy - consult legal experts, take steps to stabilise and map out all available protection options.
The responsibility of managers is not only in the area of civil law. Certain decisions may constitute criminal offences, for example, where embezzlement, fraud or breach of duty in the management of other people's property is suspected.
The risk of criminal liability highlights the need for careful decision-making and consultation with experts. Managers are advised to have a legal team available to help them understand not only the current legal framework but also its practical implications for their work.
How to protect yourself? Key steps to minimise risk
A proactive approach to protecting against legal consequences is a cornerstone of effective corporate governance. Key steps managers can take include:
- D&O liability insurance
D&O insurance is one of the most effective protection tools. It covers the costs of legal defence, damages and any claims arising from criminal prosecution. This insurance provides managers with the assurance that even in the event of a mistake, they will have sufficient financial cover. - Regular training and advice
Legislation and its interpretation are constantly evolving. Regular training and consultation with experts allows managers to stay ahead of the curve and make informed decisions that minimise the risk of legal consequences. - Transparency and documentation of decisions
Every decision should be properly documented and justified. Transparency in the decision-making process is not only a sign of professionalism but also evidence of due diligence in the event of litigation.
Today is your day of change
Acting as a manager comes with responsibilities that can be demanding, but with good preparation and professional support there is no need to worry. Turn to our experts to help you develop an effective strategy to minimise risk and ensure your decisions are always compliant. Today is the last day you'll ever have to tackle this problem alone.