The Companies Act in Slovenia regulates the liability of members of the management or supervisory body for their duties on behalf of the company. A Slovenian law firm explores the implications of Articles 263 and 264 of the Companies Act and the standard of diligence and honesty that must be followed by these members while performing their duties.

Duties of the Administration or Management

The administration has various duties, including planning, coordinating, and monitoring the activities of the company depending on various circumstances. There should be effective implementation of control by the administration, and it should exist formally or informally. There is some discretion in such cases.

Business Decisions

A business decision is when the manager consciously chooses between two or more legally permissible alternatives. In such cases, the manager can refer to a wide field of free judgment when selecting one of these options. Managers, however, have no discretion when making legally bound decisions.

Business Judgment Rule

The “business judgment rule” states that if a business decision turns out to be harmful, it does not automatically mean acting contrary to the required standard of care. Members of the management and control bodies are required to use due diligence and act honestly while performing their duties. Accountability can be avoided for the consequences of their decisions if they behaved in good faith and with reasonable care even if the decision was eventually detrimental to the company they undertook to serve.

Article 263: Diligence and Liability

Article 263 of the Companies Act outlines the standard of diligence and honesty that members of the management or supervisory body must follow while performing their duties. Members must act with the diligence of a conscientious and honest businessperson and safeguard the company’s trade secrets. Unless they can establish that they executed their obligations honestly and conscientiously, members of the management or supervisory body will be equally and severally accountable to the firm for damage originating from a breach of their duty.

Article 263(3) provides that members of the management or supervisory body shall not be obliged to compensate the company for damage if the act by which damage was caused to the company is based on a lawful general meeting resolution. However, the supervisory board or the board of directors’ approval of the act does not exclude the damage liability of the members of the management body.

The company may only waive or set-off claims for compensation three years after the occurrence of the claims, provided that the general meeting agrees, and a written statement of non-objection is obtained from a minority holding at least one-tenth of the share capital. This statement must be included in the minutes of the general meeting.

Article 263(4) states that creditors of the firm may pursue a claim for damages by the company against members of the management or supervisory body if the company is unable to repay them.

Article 264: Liability for Damage Arising from Interference of Third Parties

Article 264 of the Companies Act provides that people who use their influence over a company to intentionally induce the members of the management or supervisory bodies, the procuration holder, or the authorized person to act to the detriment of the company or its shareholders shall compensate the company for the resulting damage. Shareholders shall be compensated for the damage they suffered irrespective of the damage they incurred through the damage caused to the company.

In addition to the members of the management or supervisory body, anyone who derives benefits from a damaging action, if such action is committed intentionally, shall also assume joint and several liability. A company’s compensation claim may also be pursued by the company’s creditors if the company is unable to repay them.

Conclusion

The liability of members of the management or supervisory body under Articles 263 and 264 of the Companies Act is an important aspect of corporate law in Slovenia. It sets a high standard of care for these members, requiring them to act with the diligence of a conscientious and honest businessperson, and to safeguard the trade secrets of the company they serve. Failure to comply with these duties may result in joint and several liability for damages. However, the “business judgment rule” provides some protection for members of the management or supervisory body who act in good faith and with due care even if those actions are subsequently found not to have been effective or even appropriate. Not every mistake calls for a claim for damages.

Both companies and their management or supervisory bodies should be aware of the regulations and legal compliance required of them to avoid any legal issues. They should consult with skilled Slovenian lawyers or law firms who can give legal services and legal advice on Slovenian law, such as Slovenian corporate law, civil law, and litigation. They can ensure compliance with the law and avoid liability for damages resulting from acts or the actions of various parties with respect to Articles 263 and 264 of the Companies Act.

You can find more information on our legal services on our web page and more information on legal counsel in general on the web page of the  Bar Association of Slovenia. More information on the relevant legal acts, including the Companies Act can be found on the web page of the  Ministry of Justice.