Is the managing director liable for the company’s debts?

The managing director is an executive body whose right and duty is to manage the company and act on its behalf. When the company is founded, the managing director makes no contribution and takes no part in paying up the share capital. They are not even liable for the company’s debts.

The managing director is obliged to perform their duties with due professional care so as to prevent damage to the company they manage. Otherwise, the managing director is liable with all their assets for any damage they cause in the performance of their office, as set out in Section 135a of Act No. 513/1991 Coll., the Commercial Code, as amended.

Should such a situation arise, if the company does not recover the damage caused by the managing director from the managing director, the creditors may recover it directly.

The managing director can be released from liability for damages, both towards the company and towards the creditors. To establish the release from liability, it must be proven that the managing director acted in the performance of their office with due professional care and in good faith that they were acting in the interests of the company.

Another advisable step would be for the managing director, while in office, to leave individual major business steps and decisions to be approved by the general meeting or the shareholders.