Liability of directors of a public limited company
The principle of liability
Art. 754-755 CO provide that members of the board of directors and everyone involved in the management or liquidation of a public limited company are liable to the company, its shareholders and its creditors for damage caused by intentional or negligent breach of their duties.
The conditions for liability
A liability action requires four cumulative conditions: damage, a breach of a statutory or by-law duty (such as the duty of care and loyalty under art. 717 CO), intentional or negligent fault, and a causal link between the breach and the damage.
Directors' duty of care
Art. 717 CO requires directors to perform their duties with all due care and to safeguard the company's interests in good faith. This duty is assessed according to the nature of the role held and the specific circumstances, including the size and complexity of the company.
Who can bring a liability action
The company itself, a shareholder for damage suffered by the company, or creditors directly in the event of the company's bankruptcy can bring a liability action, according to standing rules specific to each situation (art. 756-757 CO).
Frequently asked questions
Can a director be held liable for a simple management error?
Yes, if that error constitutes a breach of the duty of care under art. 717 CO and causes damage, even without intent to harm: negligence is enough to establish liability (art. 754 CO).
Who can bring a liability action against a director?
The company, a shareholder for damage caused to the company, or creditors directly in the event of bankruptcy, according to the standing rules of art. 756-757 CO.
Can a director limit their liability through the articles of association?
Liability to the company, shareholders and creditors under art. 754-755 CO is mandatory in nature and cannot be excluded in advance by the articles of association or an agreement.