CMS Guide offers directors an invaluable aid to navigate their way through key rules in each country
Now in its 4th edition, the CMS Guide on Duties and Responsibilities of Directors provides an overview across 23 jurisdictions in Europe, focussing on the most common form of company in each.
Martin Mendelssohn, CMS Partner based in London comments, “Executives, especially in multinational groups, are frequently expected to become directors of companies in a variety of jurisdictions, often at short notice. Although most European countries have broadly similar rules, there are many differences of detail. Our objective is to clarify the rules for each country and answer those questions most frequently asked by directors – and those advising them – in these jurisdictions.”
- Ability of corporate entities to act as directors in European countries - this is prohibited in Poland, Switzerland and Hungary, for example, but permitted in certain circumstances in the UK and in Italy.
- Many states restrict the extent to which companies can relieve their directors from unspecified or future liabilities. Directors of a Swiss company can be released from liability with respect to matters which occurred during a given business year by means of a resolution passed at a shareholder meeting, provided that all material facts are disclosed. However, any shareholder who does not approve the release can bring a claim within six months after the corresponding shareholders´resolution. In Poland, the courts have powers to ignore arrangements that are designed to release management board members from liability.
- Under Czech law, if a company enters insolvency proceedings and is found bankrupt, all directors who served during the previous year are automatically disqualified for three years unless they can prove that they acted as a diligent business person would have done.
- Some states, particularly the UK, favour a one-tier board, while others require companies of a certain size to have a supervisory board. In Germany, for example, a company with more than 500 employees must have a supervisory board, some of whose members are elected by the employees; while in Poland a supervisory board is mandatory only if the company’s share capital exceeds around EUR 115,000 or the company has more than 25 shareholders.