The board represents a legal entity, such as a company. This means that it acts on behalf of that company. In general, the company is liable for the actions of the board. However, under certain circumstances, the board can be held liable. Both internal liability (towards the company) and external liability (towards third parties) may apply.
Internal and external liability
The executive board is obliged towards the company to perform its duties properly. It can only be held liable successfully by the company if it can alsobe seriously accused of improper performance of its duties. A board member can be held externally liable if the company acts negligently towards a third party, whereby the board member in question can be held accountable with due diligence.
High bar for liability
The standards for liability of executive board members is thus deliberately high. This is related to the fact that board members may be expected to take certain risks. In doing so, a board member should not feel inhibited in determining and implementing the company's strategy. A director can only be successfully held liable if they have taken irresponsible risks, resulting in demonstrable damage.
As a result, anyone who wants to impose liability on an executive board member of a company must be well prepared. Thorough advice from a specialist is indispensable. This applies all the more to individual board members who are(or risk being) held liable. Heron Legal's lawyers regularly assist shareholders and board members in both national and international liability proceedings. Please contact us for professional advice.
In business, it often happens that disputes arise between parties. This could include, for example, a conflict over a contract, a delay in payment or a violation of intellectual property rights. In such cases, hiring a lawyer can be very important.
