This article deals with the law of the Slovak Republic and its application by Slovak courts and authorities.
Many entrepreneurs believe that a limited liability company fully protects them from personal liability. In reality, "limited liability" applies mainly to shareholders and their contributions. However, a director who manages the company has separate duties, and breaching them can result in liability extending to their private assets.
The foundation of a director's position is the duty to act with professional care and in the company's interest. In practice this means making informed decisions, protecting company assets, keeping proper accounting, and not putting personal gain ahead of the company's interest. If a director breaches these duties and causes the company harm, they may be required to compensate for it.
Increased risk of personal liability arises mainly when the company faces financial difficulties. If a director fails to respond in time to an imminent insolvency, favours some creditors over others, or continues doing business at the expense of creditors, they may be liable for the resulting damage. Neglecting tax and levy obligations or failing to meet statutory reporting duties is equally risky.
It is important to know that a director's liability does not automatically cease when the role ends. You may bear responsibility for decisions made during your term even after resigning or being removed. That is why it pays to keep documentation of important decisions and be able to prove that you acted responsibly and with sufficient information.
Risk can be significantly reduced through prevention. We recommend continuously monitoring the company's financial health, keeping proper accounting, documenting key decisions, and consulting a professional at the first signs of trouble. Clearly defined internal rules and timely dispute resolution reduce the likelihood of ending up personally liable.
If you are unsure whether your actions as a director comply with the law, or you are dealing with a specific risky situation, we are happy to help. At kohút & partners in Zvolen, we will assess your case for a fixed agreed price and get back to you within 24 hours. Do not hesitate to contact us and gain certainty before a problem arises.