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Discharge does not always protect against liability
In one of the latest rulings, the Supreme Court indicated that the discharge of duties granted to the company's management board may be challenged even years later, if the company's authorities were unaware of errors and irregularities in the activities of management board members. What does this mean in practice?
Granting discharge and liability of a member of the management board
The discharge is a key point of the annual shareholders’ meeting. The discharge of the duties of the management board members by the shareholders means approval of the correct performance of their functions for the given financial year.
Approval of the report on the activities of a given board member and granting him a vote of approval does not affect the exclusion of liability towards creditors for the company's obligations - its essence is to release the member of the management board who was granted discharge from liability for damage caused to the company.
A disloyal board member will answer to the company
The Supreme Court ruled in a case in which the company claimed damages of more than half a million from one of the management board members (Judgment of the Supreme Court of April 17, 2019, file ref. II CSK 295/18). At the end of the term, irregularities came to light which prompted the shareholders to take decisive action against the disloyal vice president. In the dispute before the court, the excluded member of the management board referred to the resolutions of the shareholders who each year granted him a discharge. As he pointed out, this must have meant that they were satisfied with his work and had no objections to it.
However, the Supreme Court pointed out that the discharge is not absolutely binding for the company's authorities. In a situation where it turns out that it was granted without essential information regarding the activities of the management board, then the company is entitled to bring claims.
This is important information! Perhaps the decision of the Supreme Court will allow the company’s authorities - if the statute of limitations has not yet expired - to claim damages for unreliable performance of duties by members of its management board. The ruling may also prove to be an important tool in an ongoing shareholder dispute – especially in a situation where the partners also hold a function in the management board of the company.
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