Managing director of an s.r.o.: rights, duties and liability

The managing director of a limited liability company (s.r.o.) is the company’s statutory body, which manages the company and represents it externally. It is one of the most important positions in a company, bringing broad powers but also considerable responsibility. In this article, we go through in plain terms what a managing director may do, what they must do and what they are actually liable for.

Who can be a managing director

Any individual (natural person) who meets the statutory conditions, such as having a clean criminal record, can become a managing director. The managing director does not also have to be a shareholder of the company – they may be a hired manager. A company may have one or more managing directors, and the exact way in which they act is governed by the memorandum of association.

Rights of the managing director of an s.r.o.

The managing director of an s.r.o. has the right to manage the company’s day-to-day activities, conclude contracts, represent the company before authorities and decide on operational matters. The scope of their powers may be restricted internally by a decision of the shareholders; externally, however, they act on behalf of the company.

• Representing the company externally and signing on its behalf.
• Managing day-to-day operations and making decisions.
• Concluding business contracts within the scope of their powers.
• Communicating with authorities and institutions.

Duties of the managing director

The position comes with a number of duties that must not be underestimated. The managing director must act with due professional care and in the interests of the company.

1. Keeping proper accounts and ensuring that tax obligations are met.
2. Convening the general meeting and informing the shareholders.
3. Filing applications for changes to be entered in the Commercial Register (ORSR).
4. Protecting the company’s assets and acting for its benefit.

Liability of the managing director

The managing director is liable for any damage they cause to the company by breaching their duties. When acting, they must put the company’s interests before their own. If they neglect, for example, tax or registration obligations, they may face consequences not only towards the company but also towards third parties.

Remuneration and relationship with the company

The managing director’s relationship with the company is governed by a contract on the performance of the office (zmluva o výkone funkcie), which may also regulate the remuneration, the scope of duties or the conditions for ending the office. This area has implications for tax and for social and health insurance contributions, which depend on the form in which the remuneration is paid. An incorrect set-up can lead to unnecessarily high contributions or to tax uncertainties, so it pays to set it up carefully and in line with current regulations. Always check the specific rates and conditions, as they may change.

Several managing directors and the way they act

A company may have several managing directors, with the memorandum of association determining whether they act individually or jointly. This arrangement has practical significance – it affects who can bind the company externally and how. Acting individually makes decision-making more flexible, while acting jointly provides greater control, as important acts must be approved by several people. The choice should therefore be adapted to the size and nature of the company.

• Acting individually allows faster decision-making.
• Acting jointly brings greater mutual control.
• The way the managing directors act is entered in the Commercial Register.
• The set-up should be adapted to the company’s needs.

Why advice is important

The position of managing director of an s.r.o. is not just a formal title – it carries real responsibility. Bilvao’s accountants will help you set up processes so that the managing director fulfils all their duties and avoids risks. Properly kept accounts and timely fulfilment of tax obligations are also among the best protections against unpleasant consequences.

Related articles: Is the managing director liable for the company’s debts?, Reducing and increasing a company’s share capital, Memorandum of association vs. deed of incorporation.

Frequently asked questions

Does the managing director also have to be a shareholder of the company?

No, the managing director does not have to be a shareholder. They may be a hired manager who runs the company without holding an ownership interest in it. A company may also have several managing directors, with different ways of acting set out in the memorandum of association.

What exactly is the managing director liable for?

The managing director is liable above all for damage caused to the company by breaching their duties, for example by neglecting accounting or tax obligations. They must act with due professional care and in the interests of the company. The scope of liability is set out in more detail in current legislation.